The Opportunity Cost of Hotel Metasearch

As you read this, you're likely content with your hotel marketing and distribution strategy. But just under the surface, a battle rages for your customer, and many hoteliers are unaware.

They look at their media mix, replete with reasonable allocations to paid search, social media, display, SEO, and metasearch, and feel like they have covered their proverbial bases. Missing in that analysis is the amount of potential business they are ceding to OTA's or, worse yet, their competitors.  

For too long, the hospitality industry has managed marketing with an emphasis on the expense side of the ledger. Marketing's purpose is to capture business that drives new and incremental bookings.

The absence of marketing at key points in a traveler's booking journey due to budget restrictions should be recognized for what it is—opportunity cost.  

Opportunity wasted, revenue squandered. The revenue side of the ledger suffers quietly and without sufficient attention.  

Defining the opportunity for hotel metasearch

Hotel metasearch channels like Google Hotel Ads and Tripadvisor capture customers as they move down the travel booking funnel.

Hotel metasearch becomes particularly relevant when travelers have determined their destination market, have developed a consideration set, and are beginning to develop price expectations. Your marketing and distribution alarms should be firing - this is the most critical time for your property to be present in the booking journey.  

Simply put, hotel metasearch sites offer the most immediate access to customers as they are about to choose between your direct website and your competitor: an OTA.  

It's no wonder that hoteliers report that hotel metasearch advertising produces some of the most impressive returns of any channel. So much so that OTAs have devoted huge chunks of their budgets to these channels.  

Yet, our collective response as an industry is to tragically underfund hotel metasearch. The most common approach is to sign up with a hospitality metasearch provider that offers an inexpensive technology connection fee and then allocate a small amount of dollars (3-figure amounts) to the campaigns. We manage the expense side of the ledger and check the metasearch box.

Calculating the opportunity cost of hotel metasearch

The most common internal justification for an underfunded hotel metasearch marketing campaign goes something like this: 

We spent $500 on our technology connection and $700 on media, which resulted in $13,000 in room revenue. An 11 to 1 return on investment. Success!

Missing from that analysis is the cost of missed opportunity.

By capping media investment at $700, a hotel artificially limits its demand capture. They cap their revenue originating through metasearch at approximately $13,000. 

Imagine a scenario in which there is $100,000 worth of demand available to the hotel in a particular month. With arbitrarily defined budgets, the property is allowing $87,000 worth of business to arbitrage to OTA's or competitors. Under this light and taking into account the revenue side of the ledger, the property is not managing its strategy in a shrewd or calculated way. They are letting 87% of the revenue walk out the door.  

Missing at the point of conversion because of a limited budget is the real opportunity cost in hotel metasearch.

Maximizing revenue by minimizing opportunity costs

Metadesk offers a flexible and innovative hotel metasearch model. The platform places and pays for media on a property's behalf in exchange for a commission that is meaningfully smaller than an OTA. Better yet, as hotel metasearch production improves, the commission rate plummets.  

Metadesk covers the cost of media - and is not constrained by artificial budget limits. Opportunity maximized.

Because Metadesk is incentivized by direct bookings with hotel metasearch management, it is always willing to keep spending. The innovative audience targeting embedded in the platform, coupled with real-time analytics, allows our trained hospitality media pros to identify the full spectrum of demand for a property and ensure that the hotel website is ever-present in the battle to capture customers.  

Take the above example to demonstrate the difference:

The opportunity cost for the traditional model in this example is a whopping $80,200 per month!  

In many cases, that is the difference between winning and losing, between premium market share and living at the bottom of the STR report rankings. Under this light, we see the power of maximizing the metasearch channel with an ever-present approach.

Hoteliers have always faced limitations when managing the expense side of the ledger. It's a function of our industry and inertia. The promise of metasearch is that it offers us a chance to flip tradition on its head and run a truly revenue-focused approach. 

At this moment in time, few have gravitated towards uncapped metasearch marketing. Metadesk offers the opportunity to stand apart from the competition and generate real gains in market share.