How Google Influences Hotel Bookings
A One-of-a-Kind Analysis of Google Hotels' Impact on Online Bookings
Google Hotels has emerged as a pivotal force in reshaping hotel booking distribution, challenging the dominance of traditional Online Travel Agencies (OTAs) such as Booking and Expedia. By leveraging advanced AI tools and custom Python scripts to examine over 5,000 U.S. hotel listings, Skift Research offers insights that challenge the status quo and reveal Google's strategic influence in enhancing direct bookings.
Here's why you need to read on: Our findings uncover crucial trends that could redefine OTAs' and hoteliers' strategic approach to online travel marketing.
This peek into our comprehensive analysis barely scratches the surface of what is happening with the online hotel booking landscape on Google. The full report in the Skift Research series – including expansions to European data in Part II and a brand-new Part III launching today – goes deeper into these dynamics.
Purchase the full report for $295 or subscribe to Skift Research for access to all three parts.
Premise: The Rising Influence of Google in Hotel Bookings
Since entering the travel space, Google Hotels has largely outcompeted other metasearch engines such as Tripadvisor, Trivago, and Kayak and has rapidly become a key disruptor of the online distribution landscape. Skift Research shows how Google's approach is democratizing market access and advancing a competitive landscape that significantly benefits direct hotels bookings and allows smaller players to hold their own against the legacy OTAs.
The Strategic Implications for Hoteliers and OTAs
The strategic implications of Google's evolving role in hotel booking distribution represent a pivotal shift for hoteliers and OTAs, signaling a move towards a more competitive and fragmented market. For hoteliers, the introduction of organic listings by Google offers a golden opportunity to enhance direct bookings, enabling them to bypass the hefty commissions traditionally associated with OTAs and foster direct relationships with their customers. This shift to direct can boost the bottom line and allow for a more personalized guest experience. Conversely, for OTAs, mainly Booking and Expedia, the shift to direct poses a significant challenge to their global duopoly. They now face increased competition from a re-fragmented landscape, namely from a long tail of smaller OTAs and direct hotels. Google's changes underscore the necessity for hoteliers and OTAs to adapt to a rapidly changing digital landscape, where visibility and competitive pricing are paramount, and the traditional barriers to market entry for smaller entities are being dismantled.
Key Insights
Insight 1: The Dominance of OTAs in Sponsored Listings
Booking.com and Expedia dominate Google Hotels' sponsored listings, appearing in 80-85% of sponsored U.S. hotel listings, while the direct sites feature only 40% of the time. This dominance underscores a strategic push, particularly by Booking.com, to capture greater market share in the U.S., indicating a highly competitive environment for prominent ad placements.
Insight 2: Democratization Through Organic Listings
Google's introduction of organic listings has significantly leveled the playing field, enabling smaller OTAs and direct sites to compete directly with giants like Booking and Expedia. Whilst the largest OTAs dominate the paid sponsored listings, in the free organic results, there is no one commanding player, with Expedia.com and Booking.com as likely to appear as the official direct site and smaller OTAs such as cheaptickets.com and bluepillow.com.
Insight 3: Google's Preference for Direct Booking Sites
The direct site features much more often in Google’s free organic auction (appearing in more than 80% of organic listings) as compared to the paid sponsored results (where it appears in less than 40% of listings). Further analysis shows that Google Hotels actively prioritizes the direct site in the organic results, with the official site likely to appear top of the organic list every-single-time it features – even when it is not the cheapest option. This goes to show how Google is playing an increasingly important role in the dis-intermediation and disruption of the legacy OTAs by aiding the shift to direct bookings.
The Takeaway
The analysis shows Google Hotels' instrumental role in disrupting traditional hotel distribution dynamics, emphasizing the increasing importance of organic listings and direct hotel bookings. This evolution presents both challenges and opportunities for stakeholders in the travel industry, signaling a new era of competition and consumer choice. Stay tuned for the next insight, which will compare the distribution landscape in the U.S. versus Europe in this deep dive series into Google Hotels.
This is a small taste of our report "A Deep Dive into Google Travel Part I: U.S. Hotel Distribution", with further expansions to European data in Part II and a brand-new Part III launching today. Purchase the report for $295.
Take Your Industry Knowledge to the Next Level
This report is part of a three-part series on Google Hotels. To get access to all three plus our entire historical library of reports, subscribe to Skift Research. Skift Research provides proprietary research, analysis, and premium data tools for travel industry leaders to help them better understand their industry and the outside forces driving change.
Suggestions for further analysis of this rich dataset? Get in touch with author Pranavi Agarwal.
Companies mentioned in this report: Google Booking Holdings (NASDAQ: BKNG) Expedia Group Bluepillow S.p.A Tripadvisor KAYAK trivago