Metasearch engines (MSEs) hold the promise of helping hotels increase their share of direct bookings. For any hotel or chain to pursue a direct booking strategy, the MSE channel needs careful planning and consideration.
MSEs can be the great equalizer, enabling hotels to compete more effectively with online travel agencies. Similarly, the MSE channel also provides a level playing field and lowers the barrier to entry for new OTAs who may be sourcing inventory indirectly - typically from wholesalers.
We refer to such OTAs as uncontracted OTAs. When uncontracted OTAs compete against both a hotel’s direct rates and other contracted partners and then present cheaper rates - it can be disruptive to key partner relationships as much as to direct bookings.
Many hotels and chains that pursue a direct booking strategy will also offer programs such as "Best Rate Guarantee." These programs promise to beat any partner rates, often refunding any difference in price as well offering additional rewards. If hotels are not monitoring and managing their rate integrity, this price disparity is often most visible to guests on MSEs. Unfortunately, this can lead to increased consumer claims, directly impacting revenue and profit.
In our metasearch distribution trends report, we share our findings from the data we gathered across four major MSEs. The sample size was 8,000 hotels that we monitored during Q2 2018.
Key findings
- Hotels’ direct rates are more likely to be undercut by OTAs on MSEs when there is a lead time of more than two weeks.
- Hotels’ direct rates on MSEs are two to three times more likely to be undercut by uncontracted OTAs compared to contracted OTAs on MSEs.
- Hotels based in North America consistently outperformed in participation and rate integrity on MSEs compared to hotels based in other regions on metasearch across all categories.
- China and India were consistently the worst performing points of sale (PoS) for hotels participating in metasearch, with hotels’ direct rates being consistently undercut by all OTAs in nearly one out of two shops, on average.
Hotel participation on metasearch engines
Metasearch presents a significant opportunity for hotels to compete for direct bookings. In Q2 we found that globally, on average, only 34% of shops had a brand bid.
And, similarly, on average globally, eight different sellers, including the hotel, bid across all stay dates for all hotels we monitored on MSEs.
Key points-of-sale highlights
The United States and Great Britain PoS recorded relatively high participation on MSEs at 35% and 32%, respectively. China PoS consistently ranked lowest, with hotel bids found in less than one in 10 shops, on average, every month across Q2.
Breakdown by geographical region where hotels are based
Participation levels on metasearch engines was relatively low among hotels based in Asia Pacific, with hotel bids found in only 26% of our shops on average. Meanwhile, hotels based in North America outperformed other regions, with participation levels double that of Asia Pacific hotels, on average.
Contracted OTA performance on MSEs
We found that there was a significant variation in how the hotels’ direct rates compared to other sellers' rates when we analyzed shops with lead times less than 14 days and those with stay dates further out.
Where lead times were less than 14 days, the prices presented by at least one contracted OTA on MSE were cheaper than brand rates 14% of the time. However, for stay dates with longer lead times, this nearly doubles to 26% of the time.
For shops where the rates presented by at least one contracted OTA were cheaper than hotels’ direct rates on MSEs, we measured the price difference. On average, the contracted OTA rates were 5% cheaper when the lead time was less than 14 days, increasing to 6% when the lead time was more than 14 days.
Key points-of-sale highlights
India was the worst-performing PoS, where hotels’ direct rates were undercut most often by at least one contracted OTA. Whereas, Germany PoS was the most consistent and was relatively unaffected by the booking lead-time.
Breakdown by geographical region where hotels are based
Hotels based in North America appear to be managing their relationships with contracted OTAs significantly better, with hotel direct rates being undercut only 6% of the time. Compare this with their counterparts in Asia Pacific, who are nearly four times worse off and who were undercut by at least one contracted OTA in one in every four shops.
Uncontracted OTA performance on MSEs
Some OTAs will source hotel inventory through indirect channels, typically wholesalers, and resell them online - competing against hotel and contracted resellers on metasearch. We classify these OTAs as uncontracted OTAs.
The picture was significantly worse than contracted OTAs, highlighting one of the biggest challenges that hotels face on metasearch. For lead times of less than 14 days, on average, across all PoS, 39% of hotels’ direct rates on MSEs were undercut by uncontracted OTAs. Again, this figure nearly doubled when the stay dates were more than 14 days away, rising to 74% of hotels' direct rates being undercut by at least one uncontracted OTA.
On average, hotels direct rates were undercut by at uncontracted OTAs by 10% when lead time was less than 14 days and by 11% when a lead time was more than 14 days.
Key points-of-sale highlights
China was the worst-performing PoS, with uncontracted OTAs offering cheaper rates in more than four out of five shops. Whereas, for United States PoS, hotels’ direct rates were being undercut significantly less, especially within the 14-day lead time.
Breakdown by geographical region hotels are based
Once again, hotels in North America perform significantly better than hotels in all other regions against uncontracted OTAs on MSEs. Asia Pacific suffered the most, and European hotels also face a clear challenge on MSEs with uncontracted OTAs compared to their contracted partners.
Full report and methodology
The full report, with detailed tables with PoS highlights and regional breakdowns, including details of the research methodology, is available from Fornova here.
About the author...
Fornova's technology helps hotels monitor and manage online price integrity, visibility and rankings.