Hotels that have not yet moved to the new exciting Pay Per Stay (PPS) offering by Google are missing out on a huge opportunity to capture demand without risking their cash flow.
NB: This is an article from Fornova
Unlike traditional Cost Per Click (CPC) bidding or paying a huge fee of up to 17% to agencies for a Cost Per Action (CPA) campaign, with PPS hotels only pay for confirmed stays – avoiding wasting money on cancelations.
As we mentioned in a previous blog, Google has made a strategic move during the COVID-19 pandemic to increase its dominance in the hospitality industry by turbocharging its platform to make life easier for hotels to convert sales – its PPS offering is central to this. But, despite the lure of only paying when a guest checks-out, many hotels are choosing to reduce their Google activity and focus on securing bookings via online travel agencies (OTAs), believing that there’s little demand to be captured and because their marketing teams are either furloughed or their marketing budget zeroed.
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You have to be in it to win it and hotels who make the most of Google’s improved platforms will be in the best position to optimize their distribution mix and secure those crucial early bookings. Not only should they be exploring the benefits of these platforms but they also need to take steps to ensure they remain visible on the metasearch engine.
That’s why Fornova is now a certified Google Hotel Ads Connectivity & Bidding Partner and is offering to all our clients the opportunity to connect to Google, while seamlessly managing their distribution data and leveraging Google’s enhanced hospitality products.
You may be wondering.. why should you take advantage of this offer? While some regions are starting to open their doors, there’s no denying that recovery will be slow.
So Google’s PPS model is a no brainer for most hotels for four compelling reasons:
- Protects your cash flow: As opposed to a usual Pay Per Click (PPC) campaign where you pay for clicks, with PPS you’re paying for guests. With a PPC approach hotels often pay several weeks, if not months in advance but with PPS hotels only pay Google, once a month, on the month following the guest checking out. In a major boost for cash flow cash from the booking could even stay in the hotel’s bank for several weeks before Google’s commission is due.
If you’re a hotel Revenue or Finance Director, how much value do you associate to this cashflow advantage – 1%, 2% – maybe more? Understanding this will help you gauge the benefits of the model.
- Eliminates cancellation charge risk: Taking advantage of the PPS service does not actually limit the risk of cancellation; rather, it removes the risk of being charged for bookings that did not happen – either by incurring CPC cost or having to reclaim the money via a tedious reconciliation process and negotiation with the publisher (in this case Google).
No more paying for a guest who books but gets cold-feet about staying during the pandemic and cancels (and no more paying for the guest again if they re-book nearer the time once they are more confident).
Distribution Directors should ask themselves: What is my average cancellation rate and can I estimate it with confidence during the COVID-19 crisis?
Once you have this estimation – notice that it isn’t just adding the percentage of the cancellations. The accurate formula is:
( Return on ad spend) / ( 1 – cancelation rate )
- Saves you from paying any of the customary fixed PPC fees: Google’s PPS removes the need to pay hefty fees to agencies to manage the complexities of a PPC campaign. While we’re not suggesting that agencies don’t deserve that fee – as managing a PPC budget is a real challenge – but with PPS it’s one less expense for hotels to meet, given their reduced budgets post-COVID-19.
- Defends Rate Integrity: This is the most important part of securing direct bookings – it is critical to building a successful relationship with Google, in this case, and can be hugely damaging to your brand if parity is not protected.
Fornova has optimized its industry-trusted Distribution Intelligence platform to offer a Google-focused service which automatically and dynamically increases conversion. It works by monitoring a vast number of dates on Google and removing outliers with severe parity issues from the feeds. With our latest solution, your distribution and marketing teams will get a much more detailed insight into distribution to ensure you maximize conversion.
The return that Google gains is also a deciding factor – for hotels that choose PPS, the higher the number of conversions, the greater Google’s return and the greater your hotel’s chances of being seen by a greater number of potential guests.
What are you currently paying your marketing agency per Google Hotel Ads booking?
Hotels have two options for managing their Google activity: They can take on an agency that will manage their PPC bidding for them – and although they may achieve fantastic results, if the cost of the agency may outstrip to value they deliver on PPC, then the benefit is negative. Alternatively, the larger chains may have in-house PPC expertise but with restricted marketing budgets, they may prefer their teams to be focusing on other areas rather than the time-consuming process of monitoring and adjusting Google platforms.
Moving to a PPS model reduces the risks for hotels and the burden on marketing teams managing these time-consuming tasks – freeing up their time to work with their distribution colleagues on strategic activity. In fact, there is an argument that we’ll explore in a future blog, for transferring the responsibility of managing Google Hotel Ads to the distribution teams.
We don’t expect every hotel to stop its PPC campaigns and move over to PPS. We aren’t recommending this to hotels that have enough volume and have been lucky and retained their experienced marketing teams or have a fantastic agency on-board. However, for the majority of the market, our recommendation is to give it a go and find out if there are benefits to be had. Chains can select only a percentage of their properties and compare the results over a three to six-month period.
Book on Google is an additional option for hotels, and is an effective way to convert sales by making life as easy as possible for potential guests. Let’s face it, most hotels would be the first to admit their own booking engines could be better!
Reach more guests by combining your distribution data with Google connectivity
Fornova works with some of the world’s largest hotels,online travel agencies (OTAs) and consumer brands to support their rate parity and e-commerce activity. As a trusted Google partner, we are combining the power of our Distribution Intelligence service with dedicated Google connectivity.
This, on the one hand, ensures rate parity across the board, but on the other, consistently providing accurate data to Google also improves search results! As part of the service, we constantly monitor your hotel’s rate parity situation on Google Hotel Ads and in cases when we identify severe issues, which cause a decline in conversion, we would take swift action to both remove said days from the Google feed and also to notify the hotel, in order to rectify the issue
Google has underlined how imperative it is to ensure hotels provide the highest quality of data to. Any mistakes – particularly around pricing, availability and, tax – could cost you dearly in the visibility stakes. And, remember – Google does constant spot-checks!
As hotels are bracing themselves for another tough 6 months on the path to recovery from COVID-19, the competition to capture demand will never have been greater. Optimizing how your hotel property or chain is using Google’s hospitality-focused services as part of your distribution mix, will ensure your business is the one at the top of the list of any guests considering taking their first trip away from home.