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The Next Big Hotel Online Revenue Driver is Here: Google Hotel Price Ads (HPA).
By Sue Wiker and Sara O’Brien
Wednesday, 24th April 2013
 

There are a number of digital marketing initiatives that generate direct bookings, incremental revenues and high ROIs to the direct online channel such as SEO, SEM, email marketing and online media.

Over the past few years several new revenue-generating digital marketing initiatives have emerged that, until recently, were only available to OTAs and major hotel brands. Requiring sophisticated CRS access, advertising middleware technology, and out-of-range minimum monthly spends, these initiatives have traditionally been inaccessible to independent properties, smaller and mid-size hotel and resort brands, and casinos.

One such revenue-generating opportunity is the Google Hotel Price Ads (HPA) program, comprised of sponsored price listings that appear throughout the Google universe: from Google Hotel Finder to Google+ Local (formerly Google Places), Google Maps, and the traditional search engine results pages (SERPs).

These ads feature drop-down pricing menus that allow users to comparison shop by price; each listing features four vendors and their nightly rate.  Every click on an ad in the pricing menu results in a lead-generating fee paid by the advertiser in the form of CPC (cost-per-click), which varies based on how much the advertiser is willing to pay for the lead.

Google HPA works only if there is:

  • A real-time inventory availability and pricing feed structured specifically to Google HPA requirements
  • A dedicated advertising budget
  • Advertising middleware to:
    - Structure and translate the inventory availability and feed into “Google speak”
    - Manage daily and monthly budgets per property, campaigns and bids
    - Track conversions
    - Provide alerts and reporting
Google HPA is not a distribution channel, nor is it a “set and forget” initiative – it requires daily bid and ad spend management and optimization. It is part of a new digital advertising trend in the industry: convergence of hotel online distribution and hotel online marketing. This convergence requires hoteliers to have access to a sophisticated advertising middleware.

The HeBS Digital CPC Gateway is one such advertising middleware available to hoteliers today. Google’s availability and pricing feed is less than five percent of the complexity of this new “hybrid” advertising model. The most complex part is the advertising middleware needed to manage ad spend and budget on a daily and monthly and on a per property basis; real-time CPC bid management; campaign monitoring and ongoing optimizations; reporting and billing on property level.

In addition to Google HPA, this new CPC ad format is being used by Kayak.com, the new TripAdvisor Meta Search, Trivago, etc.

Google HPA was originally tested with and available only to OTAs, giving them an unfair advantage over the hotels. Later many major hotel brands joined the program, though, due to technology deficiencies and lack of sophisticated advertising middleware, the major brands are being outsmarted by the OTAs. In over 60%-70% of cases their ads are not being shown on the pricing menus (HeBS Digital Research).

Hotel price ads are served primarily at the local content and search level, where the hotel property business profile resides (Google+ Local, Google Maps, etc.). According to top Google executives, “the HPA was conceptualized for independent hotels and for property-level marketing efforts;” however, independent hotels have been largely excluded from the Google HPA program until now.

The Good News:  Google HPA is Now Available to Any Independent Hotel, Resort, and Casino

For the past 18 months, HeBS Digital has worked with Google’s engineers to develop the CPC Gateway, designed to level the playing field between OTAs and hoteliers. The proprietary CPC Gateway connects hoteliers’ inventory and pricing to Google’s system, enabling any hotel or group of hotels to become part of the Google HPA program at an affordable monthly rate. Participation in the Google HPA program brings in much-needed incremental revenue through the direct online channel and shifts bookings from the OTAs to the hotel website.

How does it work? Properties set up a monthly ad budget of as low as $250 per month and pay a click fee (CPC) for any direct lead. The bids vary from as low as $.20 to as high as $5 based on the competition in the hotel’s destination.  To date, we have observed an average CPC of $1-$2.

Once an advertiser is selected from the drop-down pricing menu, the user is directed to the hotel’s booking engine/CRS to complete the booking. HeBS Digital’s marketing team uses the proprietary CPC Gateway to manage the property’s daily and monthly budget and to optimize the property bids and campaigns in real-time.

4Hoteliers Image Library

Each pricing ad menu contains four spots organized by rate, lowest to highest. As long as two advertisers are offering the same price, bidding can increase their position. However, a lower price would typically be displayed above a higher rate, providing additional incentive for hotels to always operate in strict rate parity with the OTAs.

For example, if two advertisers have the same rate of $100/night, their position will be determined by the higher bid. If one advertiser is offering a rate of $90/night and the other is offering $100/night, the advertiser offering $90 will be listed above the other advertiser.

Case Study: Is the Google HPA Program a Viable Revenue-Generating Ad Format?

Our experience over the past 18 months clearly indicates that the Google HPA program is a must-have for any independent hotel, resort or casino as part of the property’s comprehensive multi-channel digital marketing efforts to shift share from the OTAs to the hotel website.

In the case study below, we have reviewed the results for a number of 4- and 5-star properties that have been part of the Google HPA program. These hotel clients, located across the country, were among the first to take advantage of this new CPC ad format and increase their presence throughout the Google network. Here is a snapshot of the Google HPA cost, revenue and return-on-ad-spend (ROAS):

4Hoteliers Image Library

True ROAS takes into account the savings the property enjoyed by not having to pay commission to the OTAs. Remember, any direct booking for your hotel via the Google HPA program is one less booking from the OTAs.

Across the HeBS Digital hotel portfolio, participating hotels typically generate an average ROAS of 900% to 1200%. In addition, our analysis shows that participation in the Google HPA program generates on average 3 times more conversions than a traditional lead from Google paid search (AdWords).

Conclusion

Luckily for independent hotels, resorts and casinos, smaller and mid-size hotel brands, there are new digital technology solutions that allow hoteliers to participate in a suite of important revenue-generating programs such as the Google HPA program.

In our view, Google’s HPA program is a must-have digital marketing initiative for any property that provides incremental revenue at a very acceptable ROAS. Hoteliers should budget for this new marketing opportunity to generate direct bookings and protect their hotel’s presence on Google from being hijacked by the OTAs.

Partner with our digital technology and marketing firm to see how you can get started with the Google HPA program. HeBS Digital goes above and beyond to deliver ROI on every dollar and focuses on new initiatives such as Google HPA that generate incremental revenue and shifts market share from the OTAs to the hotel website.

About the Authors and HeBS Digital

4Hoteliers Image LibrarySue Wiker and Sara O’Brien are managers at HeBS Digital, the hospitality industry’s leading full-service digital technology and marketing firm based in New York City.

HeBS Digital has pioneered many of the best practices in hotel digital technology and marketing, and direct online channel best practices and strategies. The firm has won over 250 prestigious industry awards for its digital marketing and website design services, including numerous Adrian Awards, Davey Awards, W3 Awards, WebAwards, Magellan Awards, Summit International Awards, Interactive Media Awards, IAC Awards, etc.

A diverse client portfolio of top-tier major hotel brands, luxury and boutique hotel brands, resorts and casinos, hotel management companies, franchisees and independents, and CVBs are benefiting from HeBS Digital’s direct online channel strategy and digital marketing expertise. Contact HeBS Digital’s consultants at (212) 752-8186 or success@hebsdigital.com.

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