NB: This is a guest article by Pedro Colaco, president and CEO of GuestCentric.
A month after the deal of the year was announced, hoteliers and marketers are digesting how Priceline’s proposal to buy Kayak for $1.8 billion will impact on their digital strategy?
The ramifications of the deal are (or have the potential to be) huge.
Google is fighting for travel search
Many articles have provided opinions on why Priceline is getting hold of Kayak. Most of them mention mobile and how Kayak has built a great mobile strategy. Fine.
Priceline’s acquisition of Kayak has also been labelled in some quarters as an answer to Google Hotel Finder. Searches for hotels on Google are down a whopping 70% – in short: fewer people use Google as their starting point in their searches for hotels.
However, Google, as we know, is a very powerful and remains an immensely popular search engine, so Hotel Finder could arguably mean some serious competition as it expands and looks for significant market share.
An interesting article on Tnooz by Max Rayner last week showed Google is pushing organic results in travel below the fold, promoting advertisers and their own content from Hotel Finder.
A significant presence by Google on yet another search sector could mean anti-trust problems for the company. In 2010 the company already encountered problems with its purchase of ITA Software and subsequent commission of flight search tools from it.
The objections against Google was largely dismissed at the time, but if Google starts dominating the travel search sector it could mean a resurgence of such a problem.
Priceline is fighting back
I think that the purchase could be seen as a strategic manoeuvre to drive Google cost out of the business model and have Priceline and its affiliates dominating travel search.
An often overlooked piece of information is that Priceline is one of Google’s biggest customer’s, having spent $375.2 million in online advertising just in the third quarter of 2012. Priceline may be using Kayak as a way to bypass Google and consequently save up to $1 billion annually that it spends on Google.
Jeff Boyd, Priceline’s chief executive, commented at the time of the acquisition that the new owner “can be helpful with Kayak’s plans to build a global online travel brand”, especially in the light that Google is “rearranging” its traffic flows towards Google products to the detriment of others. In other words: game on.
If Google can get into legal trouble from anti-trust issues, so can Priceline. It’s obvious that Google has a very colorful past when it comes to anti-trust, which means that people tend to be paying close attention to its market share and related actions, but this doesn’t mean that if Priceline starts controlling a significant portion of the market it can’t also get into trouble.
After all, besides Kayak it owns several other companies that could be seen as dominating travel search, such as Booking.com.
What does it mean for hotel digital marketing?
For hotels and other travel related companies this only further reasserts their need to have a strong multi-channel digital marketing strategy and not rely on one search engine or a dominant OTA like Booking.com.
Hotels that have invested a great deal in SEO would be at a serious loss if Google lost importance when it comes to search in the travel sector. And those that depend on Booking.com and other Priceline companies could see themselves in trouble if the companies were to increase their fees due to their dominant position.
Booking.com’s past legal troubles, further magnify the issue with this kind of dependence. Earlier this year, Booking.com, along with several others, was cited for allegedly price fixing both in the UK and the US.
As such, it would only make sense that companies in the travel industry need to be able to not being dependent on a single channel and having enough of a digital presence that they are sought out by potential clients no matter on what search engine these are conducting the search.
Your hotel should run a multi-channel digital marketing strategy to avoid being overly reliant on Priceline or Google’s travel strategies:
1. Multiple sources for online reservations
Reservations should come from more than one source, so as not to be dependent on just one channel. In addition, you should give priority to direct reservations, i.e. the ones that come from your hotel website.
2. Great hotel website
A hotel website will be part of the client’s perception of your hotel. Make sure your website reflects the experience and values of your brand and property, it’s easy to navigate, it prominently displays your pictures and engages visitors to book;
3. Ability to run promotions online
In a dynamic marketplace, it is critical to be able to react to changes in demand and run special offers. Make sure your digital marketing software enables you to run promotions on multiple channels like your hotel website, hotel booking engine, mobile or social networks.
4. Mobile optimized reservations engine
Hotel searches on mobile are up 411% in 2012 and reservations by mobile devices have been on a steady rise. Your hotel reservations engine needs to be mobile optimized if you want to ride this trend;
5. Social media presence
A nice looking Facebook and Google+ page, maybe even a twitter feed, can go a long way in having a social media presence. More importantly it is a strategy to diversify your communication channels to consumers.
Conclusion
In the end, it could be anyone’s game. Just because Google is a giant when it comes to online searches doesn’t mean it will be able to dominate travel.
Similarly, just because Kayak has a great presence in the US market doesn’t mean it will be able to have enough of an international presence to tackle Google. Who knows, it might even be Hipmunk and Bing Travel that end up being the main players (Ed: Really?)
Will Google take ground away from Priceline and others in the travel sector? Will Priceline expand even further?
The most important thing is that hotels and travel suppliers have a diversified strategy that enables them to maximize direct relationships with consumers. Only this way will they be able to control their own destiny, no matter how the verdict falls.
[Ed] UPDATE:
Colaco has supplied an additional chart for the article above:
[Ed] UPDATE 2:
Interestingly, in an email, Google says searches within the hotels and accommodations category are growing slower than other categories, but searches for hotels are actually on the rise overall according to its internal data.
NB: This is a guest article by Pedro Colaco, president and CEO of GuestCentric.
NB2: Hotel pool laptop image via Shutterstock.
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This is a great post into the current state of hotel search. I was definitely surprised by some of the info.
One follow up – “Searches for hotels on Google are down a whopping 70% – in short: fewer people use Google as their starting point in their searches for hotels”. Is there a source to back this up? Over what time span was did the drop occur?
Thanks for the comment. The basis is Google Trends. Take a look at the search “hotels in New York”, for instance. April 2004 vs. November 2012 is down 67%.
http://www.google.com/trends/explore#q=hotel%20in%20new%20york
You can try many other searches and will see similar results, and will see the trend of search for hotels down by 60-75%.
Awesome, I appreciate the info
I think you are misinterpreting the Google Trends charts. Search volumes in absolute terms for all travel related queries are up dramatically since 2004.
–
What do the numbers on the graph mean?
The numbers on the graph reflect how many searches have been done for a particular term, relative to the total number of searches done on Google over time. They don’t represent absolute search volume numbers, because the data is normalized and presented on a scale from 0-100. Each point on the graph is divided by the highest point, or 100. When we don’t have enough data, 0 is shown.
–
From: http://support.google.com/trends/bin/answer.py?hl=en-US&answer=87285
Great article.
However, I feel I should point out that the stats for ‘hotel in new york’ clearly show a decline from 2004 – Present. However these stats are normalized as the relative searchvolume share of said searchterm against all searchvolume worldwide irregardless of searchterm.
Now since:
– Travel was relatively quick at the party of having lots of people search for terms like ‘hotel in new york’
- search volume worldwide (regardless of searchterm) on google has grown exponentially year over year (and has even been explosive in say China, Russia, Brasil)
To me this stat just shows that the relative searchvolume for this term against all terms has declined (which for a (big?) part may be attributed to the above reasons)
In other words these stats should be read differently. How? Hard to say exactly. All I know is that I’m near 100% sure that the decline in searchvolume for ‘hotel in new york’ in absolute figures is far less pronounced (if at all) than the above stat seems to imply at first glance.
Unfortunately I cannot paste a picture in this comment, but use this link that compares search for “hotels in New York” with searches for “Marriott Marquis”:http://www.google.com/trends/explore#q=hotel%20in%20new%20york%2C%20marriott%20marquis&cmpt=q
It shows that searches for the property are flat to up over the period and searches for “hotels in New York” are down 64%. I think this is clear evidence of the point I am trying to make, which is that Google is losing importance in wide hotel search.
The number of searches for hotels ARE NOT down on Google! On the contrary: The number of hotel and travel searches have increased on Google every year for the past 14 years. The graph merely depicts that searches for hotels as percentage from TOTAL searches on Google now consitute a smaller percentage compared to 2004. This is it! The main reason for travel searches to have smaller share is the rise of other categories of interest to the increasingly E-commerce obssessed consumers.
Hi Max,
Thanks for your comment. Maybe I am misinterpreting this here, but it looks like searches for hotels in New York is down 64% compared to “Marriott Marquis”.
http://www.google.com/trends/explore#q=hotel%20in%20new%20york%2C%20marriott%20marquis&cmpt=q
Could you please comment on this specific Google Trends graph?
Pedro,
Not your fault alone. The way Google presents the information has misled many people to believe that search volume for particular term is down. The graph is misleading but if you rread the small print you would see that horizontal axis of the main graph represents time (starting from 2004), and the vertical is how often a term is searched for relative to the total number of searches, globally.
See how Wikipedia explains Google Trends:
Google Trends is a public web facility of Google Inc., based on Google Search, that shows how often a particular search-term is entered relative to the total search-volume across various regions of the world, and in various languages. The horizontal axis of the main graph represents time (starting from 2004), and the vertical is how often a term is searched for relative to the total number of searches, globally.[1] Below the main graph, popularity is broken down by countries, regions, cities and language. Note that what Google calls “language”, however, does not display the relative results of searches in different languages for the same term(s). It only displays the relative combined search volumes from all countries that share a particular language (see “flowers” vs “fluers”). It is possible to refine the main graph by region and time period. On August 5, 2008, Google launched Google Insights for Search, a more sophisticated and advanced service displaying search trends data. On September 27, 2012, Google merged Google Insights for Search into Google Trends. [2]
Thanks. So, how do you explain the flat line for Marriott Marquis and why overall search is down when compared to a specific property name?
@Pedro: (can’t reply directly on your comment)
“Thanks. So, how do you explain the flat line for Marriott Marquis and why overall search is down when compared to a specific property name?”
One of the reasons may come from the fact that consumers have learned to use more niche / longtail keywords in search engines. So longtail keywords (‘Hotels Meatpacking district’ etc. ) grab share of general keywords (hotels new york) .. As for ‘Marriott Marquis’: you can’t get more longtail than that.
We chatted here about our collective accounts we run in the hospitality vertical and while we do see impacts on certain markets (NY being one of them), you can’t take GOOG Trends data and apply that across an entire market like the US. There are many factors that go into this reasoning. However, we do concurr that in major markets there is a decline as seen in Google Trends data, but for the most part (and our clients rank very very well in top 8 rankings for the markets I refer to here) not seen a correlation in trends with actual referred traffic to the same degree as this purported number.
So I have to call out that basing a 70% decline in hotel search across the board isn’t true when just using GOOG Trends as the basis for the statement. Declines, yes. That major, no.
Both valid points.
I think ,however, that there is ample data in other US cities that are also down by 50%-70% (try hotels in Chicago, hotels in San Francisco, hotels in Miami, hotels in Los Angeles) . I am sure there are markets where this is not the case (e.g. hotels in Houston).
The point of the article is wider though. Market dynamics and search patterns are changing.If you ignore the Google trends data, we see organic and PPC traffic across our properties flat. This means that hotel managers should be aware that a Google-only focused strategy will lead to little to no growth and eventually will start declining over time, and that only a multi-channel strategy will work in the long run.
Hi Pedro,
Congratulations on a great article, you are on the money with regard to hotels being at risk to margin erosion due to their dependance on two horses, namely google and booking.com.
A mutli-dimensional digital strategy is nto the easiest route for a hotel but it is definitely the best long term bet for a hotel to protect their business.
Well done,
william.
In my view, the main reason for the acquisition of Kayak.com by Priceline is the fact that Priceline needs desperately to diversify its revenue sources and find an online media company to boost its media revenus. Priceline is under tremendous pressure from Wall Street to boost their online media revenue. They cannot open their prized entities priceline.com and booking.com to hotel and travel advertisers since this would jeopardize Priceline’s OTA commission revenue. Outside of TripAdvisor, kayak.com is the largest non-OTA travel site that operates on a pure advertising model: banner advertising, CPC, referral fees.
On the other hand, less than 1/3 of searches on kayak.com are for hotels – the rest are for air. Kayak.com is more of a competitor to TripAdvisor Show Prices than to Google Search. Google dominates hotel search for a reason: the search results provide deep and relevant information, the best mapping and directions, customer reviews via their Zagat’s acquisition, and now hotel availability and pricing via Google Hotel Finder. Kayak does even come close to the richness and relevancy of hotel information provided by Google.
@all
Colaco has supplied an additional chart – have inserted in the foot of the story above.
Thx.
KLM, ed
Can anyone explain why the search trend for “hotel in new york Marriot Marquis” is flat and not declining as the wider query “hotel in new york”, if data in google trends are shown as per how often a term is searched for relative to the total number of searches, globally?
If this is how data are represented in google trends, both queries should show same trend; and well, every query should have such declining (more or less) trend, as queries on google probably increase steadily as overall internet users grow… no?
Copy from my comment above (deep in a thread, which may get drowned) :
One of the reasons may come from the fact that consumers have learned to use more niche / longtail keywords in search engines. So longtail keywords (‘Hotels Meatpacking district’ etc. ) grab share of general keywords (hotels new york) .. As for ‘Marriott Marquis’: you can’t get more longtail than that.
P.S.: it IS indeed a fact that users are becoming more specific in their searches. (shouldn’t be too hard to find research about that) . Google suggestions / autocomplete or whatever it ‘s called of course also contributes to this effect.
Try google trends and include “hotel in new york”, “hotel new york”, “marriott marquis”, “hotel in amsterdam”and “hotel amsterdam”and see what shows up. What does this tell us?
Guys,
Let’s be reasonable here. Google Trends depicts hotel searches as percentage from total number of searches. If you see the horizontal axis decline over time this means that as a percentage hotel queries are a smaller portion from the total searches on Google BUT this does not mean that as absolute numbers hotel quesries are going down.
Google Trends is a free tool. Like all free tools Google Trends is not perfect. Same applies to Google Analytics, Google Keyword Tool, etc.
The fact is that Google projects 24% increasee in hotel queries for 2013, BUT:
* Desktop queries will be down by 4%
* Mobile queries will be up by 68%
* Tablet Queries will be up by 180%
I have the Google company chart– Kevin please email me to max@hebsdigital.com and I will email you the graph so that you can post it.
Max,
Tottaly agree with you!
Not only that but the way people search is changing along time.
Call it a Google Autocomplete effect, lazyness or whatever, the fact is that people aren´t search the same way.
The data above is overall on all search platforms, meaning it englobes mobile, desktop and tablet queries. That said, please take a look on to another Google Trends report (keep in mind the 20% error percentage that goes along Google freebies) and say if you fill the mobile vibe or not: http://www.google.com/trends/explore#q=hotels%20ny%2C%20hotel%20in%20new%20york%2C%20hotels%20in%20nyc%2C%20hotels%20in%20ny&cmpt=q
With the widespread of mobile platforms our search paterns are seriously changing.
That´s why Colaco article above missed the spot!
The assertion that hotel searches are down by 70% is not true. One keyword does not represent an entire category, nor does it represent a fair assessment of hotel search demand on Google as compared to any other search tool.
A bit more context:
* The use of long tail keywords — as in, super-specific searches such as “good hotel with view of central park and free breakfast” — has greatly increased, as people have become savvier searchers. In fact, 15% of daily queries on Google are queries we’ve never seen before.
* This trend holds true for hotel-related searches.
* The numbers on the Trends tool are not absolute growth numbers. Rather, interest level in particular keywords is indexed against the growth of overall search volume. To put it simply, growth in hotel searches may just be lower than that for other high-growth categories.
* Our internal data shows growth in search interest for hotels
In summary, searches within the hotels and accommodations category may be growing slower than other categories, but searches for hotels are on the rise overall according to our internal data.
Max is correct, and you can duplicate this experiment with other verticals. Google Trends records the following search decreases for the same period of time (look these up in Google Trends):
new york restaurants – down 73%
new york spa – down 83%
new york movies – down 41%
new york tours – down 79%
And so on. These declines are not due to people making fewer gross queries over time, nor are they due to external influences like a bad economy (if they were, we would observe a distinct plummet in 2008–this data ranges from 2004/5 to today).
Instead we see a steady decline in these specific local search queries, which is exactly what we would expect to see when more people across the globe gain Internet access and become more Internet savvy. Local -specific queries are getting diluted as global queries about other diverse global topics increase–thus, the decline.
This is why we can believe Google when they report, as they did in August of this year, that 83% of all travelers use search engines to plan their travel. See the PDF report by Google here: http://www.thinkwithgoogle.com/insights/library/studies/the-2012-traveler/
**Check that: the report says that 83% of travelers use the Internet to plan travel, and 93% of those start their planning with search engines.
Hi All,
Truly, thanks for all the comments. I was not expecting such a great debate about how to interpret Google Trends data, as that was not the point of the article at all (even though it was the only graph
.
Let me state what I think based on the observation of traffic on our customers websites and get away from the whole debate of how to interpret Google Trends data, whether those searches are the relevant ones, etc.:
- Traffic on most our hotel websites is flat
- Organic and PPC traffic on generic keywords to our customers sites is down, even the ones that engage SEO and SEM experts.
- Organic traffic using the the property name is up for our customers.
My conclusion: increasingly people are going direct to hotel search engines like booking.com and then typing the property name in Google. So, search for hotels on Google is not down overall. But search is much more specific like @geert-jan says, which means that Google is mostly a second step and not the entrance point for search.
So, here’s a recap of the article was trying to state, as it seems that we are focused on the less important aspect of it (agree or disagree with the below):
1- Google is losing importance as the “first door” to hotel search because it does not provide good answers. If you want to do a non-scientific poll, just ask around your friends, who starts their search by typing “hotels in NY” on Google or which alternatives they use. (@brandon thanks for the Google study. The slide says, 95% start with search. I agree, and that is my point of the article: people are recognizing other sites like booking.com or kayak as their search engines.)
2- To fight this trend, Google has developed their own search products (Hotel Finder and Flight Search), and as @max points out is increasingly investing in providing better answers with their acquisition of Frommer’s, Zagat, and who knows what follows. In addition, Google is pushing organic results below the fold, making it increasingly difficult for organic results to be relevant.
3- Priceline, with its Kayak acquisition is extremely well positioned to challenge Google on becoming the de-facto search engine for travel, i.e. “the front door”, as they already provide great answers to the questions consumers are asking, be it hotels, be it flights. They have two motivations to do that. As @max points out, to get into the media model. But, I think more importantly, they have an economic interest – lowering their whopping $1B a year online marketing expense.
4- Due to the threat of dominance of either player, marketing costs through either Priceline properties or Google for hotels will go up in the foreseeable future.
The conclusion is exactly what @william stated: hotels are at risk to margin erosion due to their dependance on two horses, namely google and booking.com.
I hope this comment clarifies what the article really meant to say, and not encroach further on the search is up or down debate.
Google’s presentation that I linked to above actually broke down the types of search guests use when making travel plans. If you look on slide 11, you will discover that 62% of leisure travelers start their travel plans on search engines. Only 46%, according to Google, start from OTAs.
Where you and I agree, however, is that it is increasingly becoming important for a hotel to own the top SERP listing for their own brand, and to have an excellent hotel website designed to encourage conversions. What is also clear by Google’s study is that guests are increasingly going directly to hotel websites to plan their trips, as I’m sure you agree.
Yes, overall we agree that hotels must work on conversion, as well as diversifying their traffic sources!
But somehow Google’s math doesn’t add up… 62% start on Google+46% start on OTA=108%
You’ll have to read the fine print to understand the study’s methodology. Participants were asked which sources they use to plan travel. They could chose more than one–and 62% chose search.
That’s my point. We shouldn’t take those numbers as too scientific. They are survey based.
Good article. Going to skip comment about the Google trends (enough here already). I blogged about the strategic advantages of PCLN buying Kayak last month. Certainly Google Hedge and Revenue Diversification are big reasons. Excerpt and link here:
“Paid Search Hedge – PCLN spends 24% of Net Revenue on Online Advertising – the lion share of this on Google AdWords. This is projected to grow 21% per year thru 2016 compared to a Net Revenue CAGR of 14.5%. Despite Jeff Boyd’s comments on CNBC today, the synergies of this deal (highlighted above), over the long term, could reduce this strong reliance on [Google] paid search.
http://blog.digitalmarketingworks.com/2012/11/pcln-gobbles-up-kyak_9.html
Pls comment. Happy Holidays.