January 23, 2014

Metasearch OTA channels - the who, what, why and how


In recent years, new online channels have been created with the intention of lowering hotels' distribution costs, without negatively effecting occupancy. One that has seen a great deal of success recently is the metasearch channels. Mike Ford, CEO of SiteMinder, illustrates the opportunities that metasearch channels present for hoteliers.

Online travel agencies (OTAs) are a vital part of the supply chain and have been largely responsible for the rapid growth in online travel bookings across both mature and emerging markets. While the online channel has been a beneficial one for hotels, it has also placed a strain on budgets due to increased distribution costs (caused by high OTA commissions).

In recent years, new online channels have been created with the intention of lowering hotels' distribution costs, without negatively effecting occupancy. Some have been successful (others not so successful), but one that has seen a great deal of success recently is the metasearch channels.

In an attempt to illustrate the opportunities that metasearch channels present for hoteliers, we spoke with Mike Ford, CEO of SiteMinder:

What are metasearch OTAs?

MF: Metasearch OTAs aggregate room rates from multiple online channels and display them to the consumer in a single list – making it faster and easier for consumers to find and compare hotels and pricing options.

Which are the most popular metasearch channels?

MF: Some of the popular sites include Google Hotel Finder, Trivago (Priceline) and Kayak (Expedia). Earlier this year, TripAdvisor also introduced a metasearch engine and more recently, TripConnect, the company's new advertising bidding tool. TripConnect enables hotels to place bids in TripAdvisor auctions to help drive direct bookings to their own website.

In your opinion, why are metasearch OTAs a business imperative for hoteliers?

MF: There will always be a first-mover advantage for early adopters of new sales and distribution technologies. At the end of the day, whoever has the best ability to convert clicks to bookings – no matter the type of property, the number of rooms, geographical location, star rating or amenities offered - will be most profitable. As such, hotels that understand the importance of metasearch and that take action today to capitalize on it will stand out from the competition in the exact place where consumers are looking for and booking hotel rooms – online.

In your opinion, what is the most important benefit offered by TripConnect (over other metasearch OTAs)?

MF: Although metasearch was able to increase hotels' online visibility and bookings, distribution costs remained too high for most properties to maintain over the long term. As such, it was mostly larger chains that participated (and profited) by investing in metasearch to drive bookings direct to their website. TripConnect combines the efficiency of metasearch with the cost effectiveness of the direct channel, enabling small hotel groups and independents (who may not have the large marketing budgets of the big chains) to take advantage of the opportunities presented by metasearch channels.

Do you have any tips for hoteliers on how best to implement metasearch channels?

MF: Metasearch OTAs present both a huge opportunity and a challenge for a property's sales and marketing teams. Unlike traditional OTA channels, metasearch channels merge the digital marketing and distribution activities of a property, requiring these teams to work in harmony to achieve the best possible results.

Advanced distribution technology can go a long way to facilitate the transition to TripConnect (or other metasearch OTAs). Metasearch channel management requires best-in-class distribution connectivity using a single platform to manage the connectivity from PMS or CRS, the digital marketing "bid management" and booking fulfilment at the hotel's website.

Any final words?

MF: With the right mix of integrated technology, a cost-effective commercial model and a consistent ability to convert more direct business using metasearch channels (like TripConnect), hotels will experience a decrease in distribution costs and an increase in total revenues, yielding a higher profit margin for online transactions.

Related Link: SiteMinder