As more and more travel bookings are made online, this fuels significant profits for leading online booking agents and intermediaries, whilst placing strain on hotels to control their distribution costs.
When Google entered the meta-search arena in 2011, this signalled an increased focus on the consumer search layer of the sales and marketing funnel.
Meta-search is described by some as a “battle for eyeballs,” so both large hotel chains and independents now have an opportunity to shift more bookings direct, rather than online search being dominated by big budget online travel agents.
In an attempt to understand the opportunities, dynamics and complexities of meta-search we sat down with Mike Ford, Co-founder and CEO of SiteMinder and Erik Munoz, Executive Director Strategic Sales and Global Partnerships.
What is hotel meta-search and how does SiteMinder help hoteliers take advantage of the increasing number of options?
MF: A meta-search engine is a search tool that sends user requests to several other search engines and aggregates the results into a single list. SiteMinder has invested in a robust platform to provide connectivity to the leading meta-search channels to help to drive down the overall cost of distribution.
EM: Hotel meta-search is both a huge opportunity and a challenge for hotel sales & marketing teams. Most hotel organisations have very segregated online marketing and online distribution teams, however hotel meta-search essentially merges the digital marketing and distribution functions of an organisation, forcing these teams to work in harmony. SiteMinder provides a single platform to manage the connectivity from PMS or CRS, and the booking fulfilment piece at the direct hotel website.
How will meta-search change the travel industry?
MF: No one really knows exactly what the ROI will be for one meta-search channel versus another and whether the ROI can be applied (or sustained) across global hotel markets and for all types of hotel businesses. From a strategic perspective, SiteMinder offers a best-in-class platform to manage hotel online distribution in a cost-effective manner, so we approach meta-search in the same spirit. We enable more independent hotels and groups to connect and profit from meta-search than anyone else, based on user-friendly design, robust technology and a market-leading commercial model.
EM: The travel industry is booming and there will always be a first-mover advantage for early adopters who recognise an opportunity and capitalise on it. Meta-search isn’t really a new opportunity, big chains have always had the opportunity to participate (and profit) by investing in meta-search ad spend to drive bookings direct to their brand.com website. But now independent hotels have the opportunity to “join the party” and this is a game changer. Essentially, SiteMinder opens up a world of meta-search opportunities for regional hotel groups and independents, without the huge cost of a “big chain” CRS or a cost-prohibitive commercial model to limit participation.
What do you believe will happen to online travel agencies (OTAs) with the growth of meta-search sites?
MF: OTAs are a vital part of the supply chain and have been largely responsible for the huge growth in online travel bookings across both mature and emerging markets. We maintain outstanding relationships with our OTA partners as our technology enables them to sell more inventory than anyone else through our dynamic pooled inventory distribution design. That said, we have already seen Priceline and Expedia invest in meta-search channels; Trivago and Kayak respectively. Kayak was a pioneer in the meta-search space and have a loyal brand following. We expect some consolidation in the OTA space, however we continue to be impressed with niche OTA suppliers servicing “the long tail” in distribution and SiteMinder is a great enabler of success for those suppliers.
EM: Meta-search is not only an opportunity for hotels, but also for OTAs. There are different meta-search ad-spend models in play, but both hotels and OTAs can invest in a cost-per-click to drive bookings to their respective websites. The profitability of any CPC ad spend campaign will simply come down to conversion. Whoever has the best ability to convert clicks to bookings will have greater capacity to outperform the other, whether that is hotel versus hotel, or hotel versus OTA.
How will meta-search affect hotel revenue?
MF: Again, we believe it’s too early to make any predictions on the relative impact on revenue or profits of one meta-search supplier versus the entire field of meta-search options. From a technology perspective, we have built a successful business based on service and lowering the cost of distribution, so we expect SiteMinder hotel clients to be in a stronger position than most to tap into meta-search channel opportunities.
EM: In isolation, I don’t believe there is a correlation between meta-search participation and increased hotel revenue, however there is a strong opportunity to lower the cost of distribution. From a total revenue management perspective, driving increased profits will be a derivative of driving better revenue and keeping operating costs low. With the right mix of integrated technology, a cost-effective commercial model and a consistent ability to convert more direct business, hotels around the world will have a huge opportunity to lower their cost of acquiring direct business.
Where do you see the industry in the next 5 years?
MF: Ask me about the industry in the next 5 months is an easier question than 5 years. SiteMinder is only 7 years old, so if you consider what we have achieved in that short space of time, we expect continued growth in the total value of online booking transactions. We expect to bring our popular technology and commercial offering to more and more hotels around the world in the next 12-18 months. More online business for our hotels, at the best commercial offering, life doesn’t need to get more complicated than that, right?
EM: I will have a stab at a 5-year prediction for the online travel industry, as foolhardy as that is. Within 5 years, we will see a more complete hotel search and booking experience from major OTAs, meta-search suppliers, Google, Apple, TripAdvisor and Facebook. The move towards greater personalisation in the digital world, means those businesses who have the ability to harness their loyal brand users (the community), will be able to use analytics and insights from the way their users interact in those “walled communities”, to make it easier than ever before to search and book online. It’s a bit Orwellian however, if “Big Brother” knows what I want and when I want it and how I want to transact, then that will be both scary and a huge step forward in the evolution of our offline and digital lives.