Hoteliers have been reacting to the official rollout of TripAdvisor’s Sponsored Placements, with some gladly welcoming the new slots – and with others, like one hotelier we spoke to, accusing the metasearch site of “double-dipping” in hotels’ advertising spend.
It’s not the first time such a scheme has been met with divided opinion. The Booking Genius programme, for example, is held by some hotels to provide a valuable segment of incremental bookings, but has been criticized by others for cannibalizing bookings and engendering loyalty for Booking.com at the expense of the hotel.
So, how can hoteliers know when to take part in new OTA or metasearch schemes – and when to abstain? Is it possible for such programmes to serve the interests of both the hotel and the third party? Let’s take a look at some examples.
Perverse incentives
This week, we spoke to a Canadian hotelier about their battle to remove their hotel from one of the major OTAs’ member pricing schemes.
“It was a fight to remove this clause from our contract, but I can’t wait to see the results,” the hotelier, who did not want to be named, told us. “Why do hotels offer 10% discounts off the rack for OTA customers? Not to mention the commission cost on top of that. I get baffled by other hoteliers who sign up for these traps. It is all false ROI.”
Hoteliers take part in programmes such as Booking Genius often for reasons like filling low-occupancy dates, or accessing a supposedly higher-quality group of guests from the OTAs’ frequent traveler programmes. Chief Tease Charlie Osmond, though, warns of the ‘perverse incentives’ that can actually lead to the hotelier losing out.
“What we’re seeing is, as soon as a hotelier gives e.g. Booking.com the ability to charge a lower rate to their closed user group, Booking.com suddenly have an incentive to actually increase their competition with the hotel. They know that they’ll convert guests better, as they have a lower rate. Now they’ve got an incentive to go and spend more money on Google ads and bring people to Booking.com,” Charlie tells us. “The immediate positive impact of increased bookings from OTA member rates is often offset by the negative hit hotels take on their AdWord pricing.”
