Is the Price War on Meta’s supporting Your Direct-Booking Strategy?
Let the OTA’s battle for the cheapest price on Meta’s.
It’s quite a while that I have been thinking of writing such a post, precisely, as of the very moment I finished writing Hotel Distribution Today & the Ikea Effect, a couple of months back.
All I kept thinking was: “is this really that bad?”
Are we really going to suffer the tortures of the damned, as many describe in our industry, especially now that Google wants to be THE player of the whole game?
In some of my previous posts I mentioned already that I would be scared if I was an OTA.
In fact, all major OTAs, starting from Expedia and Booking, recently reported poor performance in Q3.
Whilst Expedia’s CEO Okerstrom, a couple of years ago, pointed at Booking Group as their main competitor, now both BO and EX jointly point at Google.
As a hotelier, instead, at least for now, there is not much to worry about.
It’s simply too early to say what the role of Google will be for us.
In the meantime, we might see what the impact of this whole crazy hotel distribution world has become. This time, to our advantage.
- In the last year, worldwide and generally speaking, the number of direct bookings seems to be higher.
- In 2015, a so-called research conducted, by the way, by some of the biggest OTA’s, said that the Billboard-Effect was dead. As it turns out, in 2019 it is stronger than ever before.
Isn’t it weird?
I mean, despite all what’s going on?
By listening to all the negative news we have been sold to, just in the last year, we all should be suffering the most painful pain, professionally speaking.
In my constant activity of reverse-engineering facts, to see what may have caused the result we and our guests see, today I want to show you a quick thing that may, in my opinion, explain the positive direct-booking trend.
Ready. Let’s go.
Confusion: What You See Is NOT What You Get.
A simple search for 1 night returned 6 different pricing points out of 9 results.
Needless to say that the situation had changed further after a simple page refresh, like 5 seconds after I first saw the results above.
Which one is the right price?
First off, let’s define ‘right’. Because, poor me, I don’t know ?
But what I can tell you is that the only one who, in this particular case, shows the final price, is the Priceline Group (Booking, Priceline, Agoda).
All others? What-You-See-Is-NOT-What-You-Get.
Expedia, for example, doesn’t apply the city tax, whilst Priceline does.
Besides Expedia and Priceline Group, all others are what I call FIT Players, and we all know how they work.
Let’s see though the cheapest one, Trip.com, assuming people interested in booking this hotel might be clicking on Trip.com being the most convenient.
Ah, before that and just FYI, it took me 10 minutes to write down this paragraph. In this time, the results have changed all 3 times I refreshed my page.
CTRIP: What’s The Deal?
Check this out.
I clicked on the result of Trip.com on Google. The hotel is in Italy, but I am in Germany now. Fair enough, Trip.com pops up in German.
Besides, the price is already different than the one advertised on Google.
There may be taxes on top of it, that will add up to € 707, as advertised on Google, right?
Wait. Let’s pause it for a while.
Let me just change the language to English, so that we can all understand:
I got lost. Logic gone. Transparency unknown.
Let’s get practical here: I’m in Berlin, one of the most cosmopolitan cities in the world. People in Berlin who do NOT speak German are way more than those who do.
Simply put: what I did before, switching from German (because CTrip popped up in German, after detecting my German IP address) to English, is not weirdo, is the most common thing.
Why? Why? Why then is CTrip making fun of people in this way? What’s the deal? What’s in it for anyone?
But ok, let’s the the final price, both in German and in English:
No tax-trick that does the job. The final price is simply different, simply based upon language.
Just the Tip of the Iceberg.
Even with a pure-like-a-virgin situation in which all OTAs were in parity, the price displayed on Meta’s would be different, mainly because of – but not limited to – taxes.
If you (user) conduct the search from Germany, you should expect to see the price on Google being the total price you will pay at the end of the booking, including taxes.
Instead, if you were in New York, you should see rates before taxes, as this is how people in America are used to perceive prices.
I wrote a post some time ago with a case study, here.
This is exactly what the OTAs do when feeding MetaSearch Engines. And what most IBE’s don’t.
See It With His Eyes.
If we think with the mindset of who-offers-the-cheapest-deal-wins, we are actually missing out on a bigger picture.
Is our prospective customer simply, uniquely, and persistently looking for the cheapest price only, not giving a damn thing about everything else?
In other words, how does (s)he react when facing a scenario like the one above? His feelings, emotions, fears, concerns…
And ultimately, what does a prospective customer know about MetaSearch Engines, OTA’s, parity rate, FIT players, commissions, mark-up, hotel distribution, and so forth?
It’s like listening to greek for someone who only speaks english.
Simply put: try to wear his glasses for a while.
Because we, who work in the industry, might have got accustomed to this big mess hotel distribution has become, but it’s not difficult to imagine what we feel when we put ourselves in our guests’ shoes:
- lack of trust
- lack of transparency
- feeling stupid
Do I have to go on? You name it.
If you think like anxiety and feeling stupid are wildly exaggerated, you could ask your customers, directly when staying at your hotel or via survey, you’ll be amazed at what you will get in return and the specific words they will use.
Direct vs. OTA’s, each side has always had pros and cons.
When user didn’t feel particularly connected with the Brand of the hotel, thus the hotel was being perceived as a commodity, the odds that he was going to book via 3rd parties were extremely high.
This used to be one of the biggest – if not the biggest – advantage for the OTA’s.
Upside down: to me, it looks like they screwed all this up.
The ones whom travellers used to rely on, to feel safer when making a booking, are now the ones people tend to stay away from.
Of course this is just the beginning of a trend. Still so many people use the OTA’s to complete their bookings.
But the thing is: so far, do you think Google is being more of a threat for hotels or for OTA’s?