What’s new in metasearch?

It’s been almost a year since TripAdvisor has launched its instant booking facility. With Google Hotel Finder and Skyscanner following suit with similar booking forms, there is a definite shift in meta-landscape. As the lines between the hotel meta-search channels and online travel agencies get blurred, we look into the factors affecting this disruption.
When Kayak started offering booking on its website a few years back, questions were raised on the viability of the move. Come to year 2015, offering booking facility has become a trend. While Kayak and Hipmunk have partnered with OTAs to allow booking directly without leaving the site, Google and TripAdvisor are doing that in partnership with hotels. For independent and small properties struggling to keep up with mega budget metasearch marketing with bigger brands and OTAs, the direct booking facility allows them a fair chance to compete at a lower price. Since hotels pay only when a booking is made, they pay a commission, effectively making it a cost per acquisition.

From Price Comparison to Product Comparison
Metaseach began with the intention to give traveler a chance to compare prices. Traffic to metasearch sites has been increasing with over 36% of online travellers using these sites to get the best deal.  A PhoCusWright report shows that modern travellers checks close to 22 sites to ensure they get the best price for their accommodation needs. The report also shows that 54% of Chinese, 36% of American and 35% of British travelers use meta-search engines to compare rates. However, with OTAs starting to display competitor pricing, it was imperative for metasearch channels to reinvent. Sites like TripAdvisor and Google now provide results based on customer preference over lower price. For years OTAs and metasearch channels have been trying to make hotels believe that price is the single biggest influencer.  The recent focus brings the spotlight to back to the product. Clearly price has taken a backseat over product with a customized selection to an individual taste, based on their earlier search preferences. And as we all know, travel decision is more often based on some sort of magic mix of destination, timing, and social components (who you’re traveling with or to see).

It’s all about mobile monetization

Google has reported that search for hotels through mobile has grown over 49% between January – June, 2015, making it the most searched item across travel spectrum.  By next year, mobile devices will account for 27% of U.S. online bookings, up from just 10% in 2013, PhoCusWright predicted in a report released last year. The report also forecasted that mobile will account for 20% of online bookings in both Asia-Pacific and Europe next year.

With mobile booking rapidly growing in US, Europe and APAC, this makes sense to metasearch channels to offer booking capabilities, which allows users to book a hotel room while staying on the user-shell, thereby also taking them further down the booking funnel. This will result in encouraging more people to book on (from hotel seekers to hotel bookers), and therefore improve conversion rates and lift smartphone monetization levels.

Top trends in Chinese travel industry

When it comes to travel, the China story never disappoints. Even as the recent fluctuations make business and economists jittery, online travel shows no signs of slowing down. In 2015, the country overtook USA to become the biggest source of international travel spending.

In an infographic released last year, we had identified changing behavioural pattern of Chinese travelers.  The increase in disposable income and rise of middle class has influenced the purchasing behaviour and travel decisions of young, educated and technologically skilled Chinese travelers. The rapidly growing middle class has evolved from value obsessed shopping destinations to  holiday experiences, with cost, safety, culture, vacation length and visa availability the top five factors influencing destination choice. With the economic confidence and matured preferences, there is a clear shift towards long-haul travel, higher-cost accommodations and upscale shopping.

Chinese Travellers

According to a recent report, Chinese travellers made over 67.5 million trips in 2014. With this figure expected to cross 97 million by 2023, there is little doubt why China is being considered as the biggest catalyst of global travel business growth. According to a Bank of America – Merrill Lynch report, 174 million Chinese tourists are estimated to spend $264 billion by 2019 compared to just 10 million tourists in 2000.

In this post, we try to identify key trends shaping the Chinese online travel boom.

Rise of independent travellers

Young, educated, affluent and tech-savvy – the Chinese Millennials, aged between 18-35, have emerged as one of the influencing segments. There are about 300 million of them, who earn more than their elders and their spending power looks set to increase further as their incomes rise over time. Highly aspirational, seeking brand name destinations for their vacations, Chinese Millennial Travellers (CMT) typically take four trips outside their country per year, twice as many as their other Asian peers.

Macau, Hong Kong and South Korea being the most popular destinations, CMTs are likely to spend avg. EUR1200 – more than double the average spend on domestic trips. They are also the most mobile savvy traveller, with 57% using their smartphone four to five times a day.

Travel goes online: Growth of mobile travel

Internet penetration in China is largely mobile driven, with over 89% of 640 million internet users accessing the web through mobile devices, the highest in world. Clearly, digital media and e-commerce have moved into the mainstream of Chinese Internet users’ lives with them spending about 1 billion hours online each day, more than double the daily total in the United States. A whopping 89% of travellers use smartphones to access websites and 45% of business travellers use mobile for travel arrangements. According to the latest Chinese International Travel Monitor (CITM) 2015 by Hotels.com®, half of all Chinese international travelers now use apps on their smartphones to plan and book trips, up from just 17 percent the year prior.

Chinese Millennial Traveller

Online review it matters

When it comes to booking decisions, Chinese travellers trust online reviews more than friends or families. The volume of reviews posted is growing at a staggering rate, and peer recommendations influence not only where travellers go, but also where they shop for travel products.  60% use online travel information sources compared to 37% who use offline sources. Another study by GfK and ForwardKeys highlights that around 52% travellers visit metasearch and online travel agent websites to get information about their preferred destination and accommodation.  The Internet is the primary source of travel planning with 95% of Chinese travelers beginning their search at Baidu, the 800lbs Gorilla of China Search. Popular Chinese travel blogs and social media sites like QZone, Weibo and WeChathave been playing an influencing role helping travellers seeking more ‘exotic’ holiday experiences.

As millions of Chinese nationals make their first international leisure trip, it is time for hoteliers to overcome the language barrier. A country where 89% people are using mobile devices and 57% bookings are coming from online medium, hotels need to have a clear digital strategy engaging Chinese travellers to drive greater footfall, encourage longer stays, and provide opportunities for unique experiences.

Christine Toh is Director of Sales-APAC at eRevMax.  She can be reached at christinet@erevmax.com
Image Credit:Alamy

All you need to know about Amazon Destinations

As speculated, Amazon has announced its plan to expand its travel site, Amazon Destinations to new markets in North America. It now covers 35 cities in six metropolitan regions – namely the Southeast (Atlanta), Northern California (San Francisco), Texas and the Gulf Coast (Houston) etc. The site’s tagline, which says “Hit the Road, Book local getaways” make its intentions clear to be a place to book short trips.
Amzon Destination Home

I did a quick search on the site for 6 nights in October. Here’s what the result shows:
Amzon Destination Location

Clearly it’s not a last-minute deal site, neither a full-service OTA with flight search.

The new service is still a part of Amazon Local – the daily deal website which offers flash deals and discounts in the region. In fact, Amazon Local has been offering highly discounted deals on hotels for some time now. Skift, which has been extensively covering the development, has noted – what distinguishes the Amazon Destinations from its earlier avatar is that the new version gives hotels an opportunity to sell their published rates on an ongoing basis. When I checked the website of the top listed property, the published rate is in parity with what’s being shown in Amazon Destinations. Customers can also compare prices on different dates through Amazon Calendar to get the best deal.

Amazon destination

In sync with Amazon business model, which owns its user generated content, Amazon Destinations is letting customers post their reviews. Just like the e-commerce model, the hotel does not pay for listing, but shares a part of the payment as commission.
So is this just another channel for hotels to sell their inventories? Amazon has denied any ambition to become a serious player in the travel business. The launch of Amazon Destinations was a low key affair without any media announcement. Compared to Expedia, Priceline, TripAdvisor and Google, Amazon is a small player. However, given its heavy user traffic and extensive knowledge of customer purchasing behavior and preferences, it has all the advantages it takes to scale up quickly.

The World Travel & Tourism Council reports that Americans spent $458 billion in travel and tourism in 2014. According to a report by TechCrunch, 40% of all U.S. domestic leisure trips are short-term getaways of 1-3 nights, and many of these trips are to nearby, drivable destinations. That’s a sizable market, which Amazon is aiming at. At a time when two of the world’s biggest brands are turning serious with hotel bookings, the travel industry has to take note.

Jan Murza is Director of Sales- Americas at eRevMax.  He can be reached at janm@erevmax.com

Google adds Instant Booking feature: How it will affect hotel industry?

If 2014 was the year when TripAdvisor moved to direct booking, 2015 is marked to be the year when Google got really serious about hotel bookings. The search engine giant has recently added instant booking feature which allows a user to book a property while staying within its user shell. Typically of Google, the feature is available with Hotel Finder, Map and Google +.

This is how it works. As you search availability for a property in Google, you will be able to see a generic white button showing a person lying on a bed in brown color with the hotel name. There isn’t any special logo suggesting the instant booking functionality.  Instead, when you click on the button, you will be prompted to book within the interface.  Until now, Google has been redirecting user to the advertiser’s website for booking.  If this sounds pretty familiar to TripAdvisor’s instant booking, then you are absolutely on track.

Google Hotel Finder

From its launch in 2011, Google has been trying to become a key player in the travel space with acquisitions like ITA Software whose technology was behind other major flight search channels like Kayak and Orbitz, and Zagat – a restaurant review application. Google Hotel Finder has been showing ratings based on Google Local. However, in spite of the search engine giant’s absolute dominance over the web space, Google’s travel interest has not really taken over the market.

How does it work?

So far Google has been using the CPC model (cost-per-click) much like the AdSense. It’s the same model followed by most meta-search channels, where hotels bid via cost-per-click for the top positions, and pay when users click on that link. With the new functionality, where the user can book on the Google user shell, the hotels will pay a commission. Since Google has completed technology integration with Sabre, for now hotels using Sabre’s SynXis Central Reservation system can take part in the programme. According to a press statement issued by Sabre, hotel customers participating in the new commission-based model only pay a commission on confirmed bookings for their property.

Is Google turning into an OTA?

Not really. Expedia and Priceline contribute to about 4% of Google’s advertising revenue. For Google, turning into a full-fledged online travel agency would mean sacrificing bigger revenue. For the moment, that looks really unlikely. 

It’s not surprising that Google has tested this in mobile first and then on desktop. According to a Google blog post, more Google searches take place on mobile devices than on computers in 10 countries including the US and Japan. However, monetization from the search is still limited as ad spend continues to trail time spent on smartphones. But as the company pushes more for Google Wallet and Android Pay, direct booking, which allows users to book a hotel room while staying on the Google page will reduce the abandonment rate commonly seen when consumers have to switch sites to complete a transaction. With the worldwide growth of mobile booking, this is Google’s attempt to improve monetization of its mobile platform.

Google Hotel Finder_Old

According to Euromonitor International report, mobile travel booking totaled $96 billion in 2014, and is expected to account for 25% of the total global online travel sales by 2019. Google’s operating system, Android; today has a market share of over 80%. With one smart move, Google has now become an intermediary (money collecting) to a popular travel search site. With the full roll out, I would expect more hotels to come on board, followed by smaller OTAs. It’s an interesting consumer dynamic which gives Google a chance to fulfill its long standing ambition to become the central hub of travel industry. Whether it will succeed or not, only time will tell.

Image Credit: Google Hotel Finder