Positive Effect of Covid-19: Metasearches Launch Commission Based Business Model
One thing Covid19 has taught us is that conditions that were previously considered highly unlikely, have suddenly become common practice in the travel industry. We have seen this with airlines waiving flight change fees, increased number of hotels and OTAs refunding non-refundable hotel reservations and the latest change to what used to be a rigid policy: Metasearches have launched a commission based advertising model for hotels and hotel resellers.
Google Hotels was the first metasearch to expand their business model to commissionable models: pay per booking and a pay per stay (PPS) model. Under the PPS model, you do not have any control over your visibility. The Google algorithm alone determines what searches your ads will appear for.
Trivago joined them recently, allowing hotels and OTAs to opt for a cost per acquisition model instead of the traditional cost per click model. It´s important to mention that Trivago currently is charging for all bookings and not per stay. This means that even if the reservation was cancelled after it was booked, the advertiser will be charged a fee.
Why now and why so important?
Due to low demand amid the pandemic, along with increased uncertainty in the market as to when the industry will completely recover, marketing budgets are being slashed. The first type of advertising to be cut is that which cannot be measured, such as TV ads, billboards, display ads and any other cost per click based advertising method.
Metasearch engines allow hotels and hotel resellers to get in front of the eyes of
high-intent customers who are most likely looking to book a hotel at that moment. Another interesting angle to this is seeing how Google is dictating the industry norm for the rest of the metasearch engines to abide by. Don´t be surprised if more metasearch engines will soon be announcing similar policy changes as well.
How will this impact the near future of travel marketing?
This is a very positive move that shows a desire (or a necessity for that matter) to engage in a mutual beneficial business model that will allow smaller hotels and hotel resellers to recuperate market share by investing in revenue generating advertising methods only. This is a much more sustainable business model for smaller OTAs that will allow them to participate in the huge market share of metasearch engine bookings.
It´s important to mention that this expansion of business models will most likely attract new hotels and OTAs to advertise on metasearch engines. This will increase price competition of course, which will most likely benefit the end traveler.