Hotels Try But Can’t Compete with OTAs in Paid Search Advertising
In recent years hotels have made a concerted effort to entice consumers to book rooms directly through their own booking system, including offering special perks and discounts, rather through third party online platforms that charge a commission fee. However, judging by paid search advertising performance, that goal may be going largely unrealized.
With consumers in the midst of booking spring travel plans, Kantar analyzed 1,627 hotel-related keywords on U.S. Google desktop and mobile search, including ‘las vegas hotels’, ‘san diego hotels’, ‘nyc hotels’, ‘nashville hotels’ and ‘new orleans hotels’, and found that online travel agencies are dominating.
In desktop search, 7 of the top 10 most clicked advertisers were online travel agencies, which together captured nearly 75% of all clicks on the 1,627 hotel keywords during the period we studied, January 1-February 11. Hotels.com led in the rankings, garnering 19.3% of all clicks on the keyword group, followed by fellow OTAs Expedia (16.7% click share), Kayak.com (13.6% click share), Booking.com (11.9% click share) and Trivago (9.8% click share).
In mobile search, 8 of the top 10 most clicked advertisers were online travel agencies, collectively accounting for more than 68% of all clicks on the 1,627 keywords. Booking.com led in mobile clicks with a 19.8% click share, followed by Expedia (16.9% click share), Hotels.com (13.3% click share) and Trivago (6.1% click share).
Only two hotel brands ranked in the top 10 for desktop and mobile paid search clicks during the period. Marriott ranked fifth in mobile clicks with a 4.4% click share and tenth in desktop clicks with a 1% click share, while MGM Resorts ranked eighth in desktop clicks with 1.4% click share. Hotel competitor Airbnb ranked sixth in both desktop and mobile search clicks, with a 2.7% desktop click share and 3.9% mobile click share.
To entice clicks, Marriott’s ad copy let searchers know they will receive a better deal by booking through them than through a third party site, specifically promoting "Best Rates at Official Site" via "Marriott’s Best Rate Guarantee", in addition to perks such as "Free Wi-Fi for Members". MGM Resorts included similar language, and in some ads spelled it out even more, saying "Must Book With Hotel For This Offer."
For comparison, Kantar data shows Marriott’s national TV ads during the period avoided such direct language and instead mostly concentrated on building its Marriott Bonvoy loyalty program brand, which its commercials say operates by "the Golden Rule" and "treats others like we’d like to be treated".
MGM Resorts on the other hand was focused on promoting its casino business, running ads during the period featuring celebrities and regular people arguing about sports with a promotion for new customers to get up to a "$500 Risk-Free Bet" at an MGM Resort property.
Whatever the messaging the hotels are using in their TV advertising, they may be getting drown out by online travel agencies, who are significantly outspending the hotel brands on television according to Kantar data.
Looking at the parent company level, Kantar found Expedia, Inc., owner of Trivago, Expedia, Hotels.com and VRBO among other brands, spent $41.8 million on TV ads from January 1 through February 11. Booking Holdings, Inc., which owns Booking.com and Kayak, spent more than $22 million. In contrast, Hilton Worldwide Holdings spent $13.8 million on television commercials during the period, followed closely by Comcast Corp, which spent $13.6 million to promote its Universal Hotels & Resorts. As for the paid search leaders, Marriott spent $12.4 million on TV commercials across its brands during the period, while MGM Resorts spent around $950,000.