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Over the past couple of months, TripAdvisor has been participating in Google’s hotel metasearch program.
Clicking on the TripAdvisor “Book” button (often) takes a consumer a specific instant booking page (“Book on TripAdvisor!”), where the brand collects payment on behalf of the hotel.
In this circumstance, TripAdvisor is, in essence, acting as an OTA —though the company might dispute that label. So when it wears its OTA hat, so to speak, it makes sense that the brand would test competing with other OTAs on Google for consumer attention.
TripAdvisor is typically not appearing in top positions in Google’s metasearch results, which implies that it has been bidding conservatively.
Anyway this practice opens up a possible grey area.
How can Google be sure that TripAdvisor won’t do arbitrage to get a customer via its platform and then pass along that customer to an OTA it receives a higher payment from than it has to pay Google?
Google’s auction is structured so that if you bid a certain amount, and your bid wins, you only pay roughly a cent more than the second-highest bidder.
TripAdvisor’s auction for participation in its metasearch is more static. If you bid, say, $2, and your bid is accepted, you pay $2.
Booking volume in Google metasearch is still low, relative to TripAdvisor’s, despite Google’s metasearch channel having approximately doubled in volume in the past year.
Some hoteliers may not be happy to have TripAdvisor betting against them in Google’s metasearch: one issue is what impact TripAdvisor’s added presence in the Google auction might have. As a rule, the more competitive an auction gets, the higher the cost-per-click for the same amount of traffic will be for all players, including the hotel itself.
Other hoteliers may see things differently, though. They may feel they now have two prongs of attack for gaining bookings at a significantly lower average acquisition cost than through the traditional OTA channels.
TripAdvisor’s experiment with Google’s metasearch may be the most telling about industry trends and hotels should expect to see more of this sort of thing. As rate parity weakens, we’ll see more channels be willing to take haircuts to offer more competitive pricing to gain share.
TripAdvisor has also been testing participation in Kayak and Trivago.