Google uses its search engine, google map, google airline and google hotel ads to enter the OTA market.
Google wants to get a partial of the OTA platform’s annual revenue of 100 billions.
Nowadays, it is difficult for consumers to leave Google’s various services.
Google uses crawler technology to integrate a large number of hotel room prices, air ticket prices, consumer reviews,
This makes booking.com more and more difficult to compete with Google.
Therefore, OTA platforms such as booking.com need to build a better consumer experience and provide more convenient services to consumers.
This will prevent Google from entering the OTA market.
In the early years, Google also intervened in the B2C shopping comparison market.
Around 2006, Google made various price comparison functions on eBay and Amazon all on google shopping.
But in the end, Google failed to defeat eBay, amazon, taobao, or even C2C shopping sites.
Why did Google lose the market in e-commerce?
I think the reason is not because of its wrong entry into the market, but for ecommerce, there are also various factors such as orders, shipping costs, cash flow, discounts, etc.
Google is good at searching, but doing other things is not its strong point.
Now that Google wants to enter the OTA market, OTA platforms such as booking.com and expedia.com are the first to be hit.
Therefore, Google first cooperated with hotels directly because the hotel itself has been dissatisfied with the 30%-40% commission charged by the OTA for a long time.
Google charges through the CPC method, which seems to save the hotel money.
So someone will fall into the arms of google hotel ads.
But now it’s time for us to think about the issue of investing in google hotel ads.
- Using google hotel ads is to change the form of seo or adwords ads originally made by google to sell to the hotel.
- The original seo or adwords cost is actually transferred to google hotel ads, and the information must be submitted to google in the google hotel ads format.
- Since consumers will not consider completing the entire transaction on Google, they trust OTA (this is also thanks to OTA’s continuous advertising to build consumer confidence), so joining google hotel ads will increase the burden of hotel staff to maintain information.
- Which is better, CPC or fixed commision? There is no answer to this question, so the hotel will be very distressed.
With Google and OTAs fighting, hotels benefiting from an important new distribution channel (along with Airbnb) is a major shift in industry dynamics.
This is a game changer, and hoteliers need to understand how Google adjusts its distribution strategy accordingly.
How does Google Hotel make money?
Google has expanded its advertising pool from traditional AdWords to through its hotel advertising products.
It is undeniable that hotel advertising products are better than the previous search experience, much better than adding an OTA index page.
The problems faced by major OTAs are related to the cost of Google’s advertising monopoly to drive demand, but the fact is that the problem is not that Google is demonstrating monopoly power.
The problem with OTAs is that Google is providing a better user experience.
When users search for hotels on Google, the highest bidder is shown in the results (SERP), and the highest bidder appears first.
Google dominates every search query, whether it’s a local or global search term, such as “best hotel” , “Best Price Hotel” or anything else.
In order to make more money from the services it provides, Google has done a few things:
Show more ad units.
In theory, each new advertisement increases the possibility of users clicking on the advertisement.
Of course, when advertising saturation pushes users to a new platform, there will be a turning point.
This is more difficult for Google to control, but in general, the rules of supply and demand stipulate that more advertisers with the same number of ad slots will result in higher bids.
Get more value chain.
Think of it like Amazon launching private label products to capture market share and increase profits.
For example, Google can start to manage the entire hotel reservation process and capture more value chains as an OTA.
All platforms want to control consumers and seize market share from those who rely on the platform to distribute and sell their products.
The only way for OTAs to compete is for users to come directly to them.
The only way for them to do this is to provide the best search experience possible.
One of the fastest ways to increase revenue is to expand overall advertising.
The Google Search Engine Results Page (SERP) used to be 30% of ads, now it’s 40%.
Once Google adds the Google Hotel Ads module, this will push the ad inventory up to 50% and make paid hotels displayed at top pages rather than organic results.
As Google adds more advertising spaces, organic traffic becomes less and less space, because the first few pages of search results are used by Google for advertising.
Even so, Google is still very concerned about user experience.
If users don’t come, there is nothing to sell.
So far, Google has avoided the point where users switch to a new platform.
The hotel module is easy to browse and convenient, which is a priority for consumers.
Google is constantly innovating around a better user experience and looking for ways to monetize this innovation.
Google’s hotel advertising transforms advertisers into suppliers.
Google created a new channel to compete for reservations and then used its competitive advantage to prioritize that channel over organic search results.
The biggest benefit of Google hotel ads for hotels is that it turns fixed commissions into bidding.
When bidding becomes crazy, the total amount may exceed the fixed commission.
Therefore, hotels should carefully observe the competition between google hotel ads and OTA, and use their budget appropriately to obtain the largest room revenue.
Google Hotels is a way to get more value by shortening the value chain.
Unlike hotels that distribute to OTAs, OTAs charge commissions to meet Google’s needs (almost similar to advertising arbitrage), and hotels can advertise directly on Google.
This shortens the value chain and, to a certain extent, balances the distribution rights dynamics that benefit the hotel.
Will Google become an OTA? Absolutely not.
Google has never and never wanted to deal with customer support, inventory, contract and other issues.
This is a huge problem that does not match Google’s core value.
I think OTA is a difficult business with low profit margins, and Google does not want to enter.
When google becomes ota, it will not really increase the value of google.
This is the same logic as Yahoo!, Yahoo! as the portal site, it does not operate e-commerce because of too many troubled things.
There are only two countries in the world where Yahoo! do their own shopping, one is Japan and the other is Taiwan.
The shopping in these two places has nothing to do with yahoo! headquarters, but with market competition.
What does Google’s strategy mean for your hotel?
The competitive dynamics of distribution are constantly changing and will always be in constant change.
For your hotel, the strategy that applies today is the same strategy that hoteliers used before.
First, focus on direct channels, because direct booking is always the most profitable.
To achieve direct booking, please build a website or app with a high conversion rate.
For consumers, easy-to-use websites and apps are important.
Modern websites and apps will build trust with potential guests, allowing them to book directly with confidence.
But I still need to remind myself that this strategy is only valuable for star-hotels.
To enable these direct bookings, the website must also have a fast-loading, intuitive, and mobile-friendly booking engine.
Next, once you strengthen your direct channels, you must implement a balanced distribution plan and do not rely too much on any single channel or third party.
You will need to use channel distribution tools, such as siteminder, to easily distribute to all other OTAs.
Your distribution plan should also include paid channels, such as keyword search, Google hotel advertising, and OTA advertising.
Must balance Google hotel advertising and keyword search bidding, and carefully analyze the profit trend over a period of time.