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Should Hotels Engage in Metasearch? A Look at PPC vs. Commission-Based Models

In the highly competitive hotel industry, maximizing bookings while managing costs is a perpetual challenge. Over the past decade, metasearch advertising has been a love-hate relationship for many hoteliers. Platforms like Google Hotel Ads and TripAdvisor have dominated this space, often requiring significant pay-per-click (PPC) investments. However, the landscape is evolving, and alternatives like SiteMinder’s Demand Plus are offering new ways to engage in metasearch without the traditional PPC risks.

The Metasearch Landscape: A Decade of PPC

Metasearch engines aggregate hotel rates and availability from various booking sites, allowing travelers to compare options and book directly. This visibility is crucial in a crowded market, but it comes at a cost. Historically, participating in metasearch meant engaging in PPC campaigns, where hotels pay each time a potential guest clicks on their listing.

Pros of PPC Metasearch:

  • Immediate Visibility: PPC campaigns can quickly elevate a hotel’s visibility on popular platforms.
  • Control Over Budget: Hotels can set daily or monthly budgets to control spending.
  • Direct Bookings: Successful campaigns can drive direct bookings, reducing reliance on OTAs (Online Travel Agencies) and saving on commission fees.

Cons of PPC Metasearch:

  • High Costs: Platforms like Google Hotel Ads can be prohibitively expensive, especially for smaller hotels.
  • Variable ROI: The return on investment can be unpredictable, with costs often outweighing the benefits if campaigns are not managed effectively.
  • Complex Management: Successful PPC campaigns require constant monitoring and optimization, which can be resource-intensive.

The Shift: SiteMinder’s Demand Plus

Recognizing the challenges of PPC metasearch advertising, SiteMinder introduced Demand Plus, a commission-based alternative. Instead of paying for clicks, hotels pay a commission on checked-out reservations, offering a more predictable cost structure.

Features of Demand Plus:

  • Commission-Based: Hotels pay a commission, typically around 15%, on confirmed stays rather than clicks.
  • Predictable Costs: By tying costs to actual reservations, hotels can better predict their marketing expenses and ROI.
  • Hands-Off Management: Demand Plus offers a more automated approach, reducing the need for constant campaign management.

Pros of Demand Plus:

  • Reduced Financial Risk: Without the upfront costs associated with PPC, hotels can participate in metasearch without risking their marketing budget.
  • Predictable ROI: With costs tied to actual bookings, hotels can better assess the effectiveness of their metasearch efforts.
  • Ease of Use: The automated nature of the program allows hoteliers to focus on other aspects of their business without the need for continuous campaign adjustments.

Cons of Demand Plus:

  • No Sales Volume Guarantee: While the commission model reduces financial risk, it doesn’t guarantee high booking volumes. Hotels may still need to complement this with other marketing strategies.
  • Potential for Higher Long-Term Costs: Depending on the commission rate and booking volume, the overall cost could potentially exceed a well-managed PPC campaign.

Conclusion: Which Approach is Right for Your Hotel?

The decision to engage in metasearch advertising, and whether to choose a PPC or commission-based model, depends on a hotel’s specific circumstances and goals. For hotels with the expertise and resources to manage PPC campaigns effectively, and who seek immediate visibility, the traditional PPC approach may still be viable. However, for those looking to minimize financial risk and prefer a more hands-off solution, SiteMinder’s Demand Plus offers a compelling alternative.

In the end, it’s about balancing cost, risk, and effort. Metasearch remains a crucial tool in the hotelier’s arsenal, and with options like Demand Plus, there are now more ways than ever to leverage this channel effectively. Evaluate your hotel’s unique needs, market position, and resources to determine the best strategy for your business.

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