Understanding OTA marketing strategies

OTA marketingmost-popular2Expedia, Booking.com, Kayak and Hotels.com are prolific spenders on Google AdWords, regularly logging in the top fifty search engine marketers by spending an average of $67,250 per day. And that’s just on Google – so how does this ad spend play out across all search engines, including Bing and AOL?

The answers come from an OTA/hotels paid search analysis by search advertising monitors Brand Verity, who considered 100,000 search results. Specifically, the analysis looked at PPC ads that were triggered by hotels’ branded keywords – such as “New York Hyatt”. The findings show just how much the online travel agencies are outspending hotels, using their breadth of inventory and depth of pockets to deliver more in-bound paid clicks. In short, this study says that OTAs are indeed bidding against hotels in ad auctions – and are paying handsomely to rank concurrently or higher than hotel brands.

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Moreover, customers go to OTAs to simplify things and get access to a wide range of options.  Have a look at the Booking.com home page – here’s a breakdown of some of what you will see:

• Nice clear ratings – stars, text and numbers – customer can’t go wrong surely!
• Discount messages
• Thumbs up symbols – providing the customer who is not sure which way to turn with reassurance
• Latest booking 20 mins ago
• There are 32 people looking at this property

When someone searches XYZ Hotel in Google with the following query (just type the hotel name or the city name), the result is headed by the OTAs AdWords ads they buy from Google – and charged hotels through commissions – with the intended idea to get ahead of hotels website offers. (Booking.com is the number one buyer and appears at the top in search results.)

It’s interesting to note that when you click on the property, the number of people looking goes up and the time since the latest booking comes down. What this does is validate to the customer that he or she is looking at a good option and it begins to create a sense of urgency – better book that hotel before someone else does! This is called a ‘sub-conscious positive reinforcement’.

Best price guarantees and ‘savings’ messages are also dotted throughout. And that’s not all. There are further carefully worded phrases and tools to help the consumer dive for his or her credit card. Free booking and free cancellation are some you often see, again providing the consumer with peace of mind that they can change their mind.

The reality is that the cancellation policy tends to be no different than if the consumer had gone to the hotel direct, and you don’t tend to pay a booking fee when you phone a hotel or book on its brand website.

Think about your hotel. Does your website use the right keywords to rank in search engines? Even if it does rank well, the competition between you/any hotel and the OTAs is tough as they promote ads with messages like “Exclusive Discounts” or “Price Guaranteed” which work to disadvantage your business.

Furthermore, those ads are not true, since the best prices are generally the ones marketed by hotels directly. (Or at least they match the OTA discounts, although OTAs try to avoid this with their contracts and clauses.)

OTAs are one sales channel for your hotel pricing and marketing strategy, but not the only one. Hoteliers need to be very careful, because if we fail to certify our independence with intermediaries, we lose control of our business, and worse, we run the risk of cutting contact with direct sales in the digital sphere.

Online travel agencies are part of a sound sales strategy. These channels allow hotels and revenue managers to act fast, try promotions, stimulate buyers, support branding actions and many other goals. Among our distribution options, digital media should come first for costs, market penetration, customer reach, coverage and self-management of content.

About the author

Ahmed MahmoudAhmed Mahmoud has more than 18 years of international hospitality industry experience, specializing in revenue management implementation and execution. He began his career in 1992 holding a variety of management positions with such top hotel chains as Accor Hotels, Hyatt International and Starwood hotels. In 2006 Mr. Mahmoud founded revenueyourhotel.com, a website dedicated to revenue management and designed to help individual hoteliers and hospitality businesses improve their market penetration, deliver service excellence and increase their profitability. Ahmed also offers consulting and online training to both independent hoteliers and hotel chains. He is a frequent keynote speaker and seminar leader at many hospitality industry events in addition to his successful roles as an educator, author and consultant.

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