It's no secret that, in the last 10 years, several companies have become specialised in the OTA (online travel agencies) segment and often operate as tour operators.
On several occasions, I’ve noticed that agritourism companies and boutique hotels are simply too dependent on OTAs.
If at first OTAs were always considered as allies and just another booking channel, over time, in several cases, commissions and new policies started worsening the relationship – and most of all the revenue.
Yes, it is true, there is a part of the market that searches and books directly from the OTAs' mobile apps. It's also true that there is another part of the market that searches on Google.
Let's take a look at a real example:
If a user from London searches Google for "Boutique hotel South France" for their next holiday, this niche market search has about 300 searches per month, or 10 per day, in the UK alone.
The level of competition for Google Ads is low to medium, so it's quite easy to position:
The average conversion rate for Google Hotel Ads is 4.10%.
If we take our earlier example, let's say the average cost per night of the boutique hotel is €250 and the visitor stays for 7 days (€1750).
The classic OTA commission is 20% (it could be a little less, or it could reach up to almost 30%), which is €350 for this booking.
With customised bidding strategies on Google Ads, we could get around 100 visits from this search for less than €200.
And since we know that the overall conversion rate is 4%, with €200 we would have 4 bookings. Not to mention the remarketing, upselling and cross-selling conversion campaigns that could be done on the boutique hotel's website.
Real Biriwuanga case study:
We were contacted by a boutique hotel with 92% dependence on OTAs.
In the first year, their reliance on OTAs dropped to 55%, and in the second year to 38%. The customer is now at 75% direct bookings and 25% OTAs.
Screenshot of bookings after 2 months of campaigns:
With bookings from all over Europe:
And a higher top of page rate from Booking.com, Airbnb, Tripadvisor and Hotels.com:
Average cost per conversion: €18
Campaign ROI: 5455%.
Have you ever wondered why Boooking.com runs Google Ads campaigns for almost every hotel that works with them?
Because they generate conversions.
OTAs have to be a supplementary conversion channel, not the main one. Generating direct bookings is not only more beneficial, it also gives us the possibility to work with remarketing, have the email addresses of potential customers and new customers, and to do upselling and/or cross-selling.
On to the next conversion with Google Ads for Agritourism and Boutique Hotels!
Dean.