The importance of Google Hotel Finder
Google Hotel Finder is a logical extension to Google’s Hotel Price Ads cost-per-click (CPC) advertising program, introduced in Q3 2010. This CPC lead-generation program initially started as a pilot with a number of big OTAs with the introduction of a pricing menu in the property Google Places page as well as in the Google Maps results pages.
Therefore, in my view, the introduction of Google Hotel Finder is not a “revolutionary” and “game-changing” event as some industry commentators claim. So what kind of an event is the debut of Google Hotel Finder?
- It is a “greed is good” moment: Google has figured out a smart way to generate incremental revenues from the search engine results real estate it provided for free in the past, such as Google Places, Google Maps, etc.
- It is also a natural progression of Google’s quest to provide the most relevant information and the best user experience. When users are searching for hotels, they care about three important pieces of information in the result pages: hotel location (proximity to where the user is going — Google has addressed this via the insertion of a Google Map in the results pages), price and availability. The real-time availability widget and the pricing menus in Google Places, Google Maps and Google Hotel Finder address the latter.
The Yellow Pages were supposed to do that and failed; CitySearch tried to do it and failed miserably. Why does Google need local content? First, more than 30% of all searches are local in character. Second, local content equals mobile content. Google is preparing for the dramatic entrance of the next digital medium that is already changing the way people access information and interact online — the mobile web.
Who are the winners from the new Google Hotel Finder?
- The OTAs are winners: Now the OTAs are dominating the pricing menus in each hotel’s Google Places page; in the past, the only way an OTA could seep onto a Google Places page was via an AdWords paid search ad.
- The major hotel brands are the winners: Once they implement the Google API and start pushing real-time availability and pricing information to Google, it becomes another direct online channel to pursue.
- The OTAs are also losers: Over the years the OTAs have become a type of meta search engine themselves. Expedia claims that 40% of its traffic researches hotels on Expedia but then visits and books on hotel branded websites. The OTAs will lose at least a portion of these “meta search” and “shopping around” users to Google Hotel Finder.
- All meta search sites, including Kayak.com, are definite losers. Now Internet users have a similar meta search environment to find the hotel, its location, pricing and availability and transact with the hotel or an OTA.
This is “pure” advertising; Google is not into charging OTA commissions. Google Hotel Finder is a straightforward cost-per-click (CPC) lead generation program. Every time a user clicks on a listing in the drop-down pricing menu on the property’s Google Place page, Google Maps or Google Hotel Finder, the advertiser whose listing in the pricing menu has been clicked on pays a CPC fee of 0.2%.
For example, for a two-night stay and ADR (including taxes) of US$100, the advertiser pays US$0.40 per click (two nights x US$100 = US$200 x 0.2% = US$0.40 per click).
Based on the property ADR, this fee could be lower or higher than the typical CPC fee of the property’s Google AdWords paid search campaigns.
In the future, Google is also planning a bidding pricing mechanism that will allow hotels to position themselves higher in the Google Hotel Finder results. Advertisers will be able to use a Google AdWords type of bidding and increase or decrease CPC based on their budgets and campaign objectives.
Who is participating in the Google Hotel Finder Program?
As mentioned, the Hotel Price Ads CPC program was introduced as a pilot program with OTA participation. All major OTAs today participate in the program.
All major hotel brands are working hard to implement the Google API (interface) between the brand central reservation systems and the Google back-end. Very soon we will start seeing real-time availability and pricing provided by the major brands in the pricing drop-down menus in Google Places, Google Maps and Google Hotel Finder.
As for the independent hotels, they have to push their GDS connectivity providers (such as Utell, SynXis, iHotelier, Genares, etc.) to implement the Google API and start serving real-time availability and pricing to the Google Hotel Finder and the drop-down pricing menus in Google Places and Google Maps.