In recent months, TripAdvisor and Google have continued to experiment with how they display hotels in their metasearch services for consumers. Their design changes prompt users to pay even more special attention to the first three or four results.
The trend may make the bidding war for placement in those top results even more important -- and expensive -- than before.
TripAdvisor has been testing a new user interface that casts a spotlight on the top three results. When a user searches for a hotel, he or she is prompted to choose from only three options, one of which is the company's own Book with TripAdvisor channel.
A recent Tnooz hotel search led to this pop-up window that blocked out all other search results and highlighted two online travel agency offers for the hotel next to, in a much bigger presentation, a Book with TripAdvisor option. Other metasearch results are greyed out. In this example, the direct hotel booking would be fulfilled by Jetsetter, a subsidiary that TripAdvisor owns.
Google officially said today that it is doing more to prompt users to book hotels directly from its search results. It is adding amenities information to many US listings, and it's making booking within the Google interface (without having to leave to another site) common across desktop, mobile, and tablet devices.
What's interesting is how simplified the search options often are as a result. Take a look at these screenshots. This Hilton Daytona Beach Resort Oceanwalk Village was in a recent search only bookable via Google in two channels: Hilton's own direct site, and Booking.com
Compare that with a search for Daytona hotels on TripAdvisor which turns up the same hotel. This time around, in classic A/B split-testing style, TripAdvisor doesn't have the blacked out background but a similar interface reducing your options to four main choices.
The most inviting choice, design-wise, is once again TripAdvisor's direct option (getting about 50% more screen real estate than the OTA channels get, not to mention a lower rate than the competitors:
More aggressively, this Hilton Garden Inn listing via Google search defaults users, at first, to only two booking channels, one of which is direct with the chain.
What's aggressive is that in the side-by-side comparison, booking direct with the hotel looks much more appealing. The hotel includes a clear call-to-action to the user that booking direct -- at the same rate! -- includes free wifi, while booking via Orbitz, the online travel agency competitor in this case, doesn't offer as a perk.
Meanwhile, the Ocean Edge Resort & Golf Club search result simplifies things still further. The only way to book is direct through the hotel, via Google's new direct-booking service, as this screenshot shows.
It seems odd to call "metasearch" a service that only offers one booking channel, doesn't it?
One has to admit that the lack of options in individual Google hotel search results has until now been more related to hoteliers' and OTAs' lack of interest in advertising via the channel. Expedia, Booking.com, Skyscanner, Momondo, Hipmunk, and other household name channels are driving more hotel bookings to hoteliers than either TripAdvisor or Google are.
Yet that dynamic may change. Google said today that it will make it easier for hotels to place commission-based bookings via its site. Hotels prefer a commission-based model to the the cost-per-click model it had been using. That may drive more hotels to participate.
(Another relevant factor: Hotels continue to be frustrated in trying to appear high in organic search results, as an alternative effort to paid placement. In the fourth quarter of 2014, the average hotel brand lost an estimated 31,653 clicks per month to intermediaries bidding on their trademarks.)
Meanwhile, TripAdvisor has recently added a few key hotel chains to its program, including Marriott, which may boost the industry's momentum for participating in its metasearch and Instant Booking programs.
Even after Google and TripAdvisor add more inventory, it is likely that their user interfaces will continue to default to offering only a few booking options.
If TripAdvisor and Google begin to train consumers -- especially on mobile, with its limited screen real estate -- to focus solely on the first few search results, the impact on shopping behavior across channels could be large. The trend may be compounded by mobile-first services like HotelTonight and Olset, which already default to only a handful of recommendations first.
For a segment of impatient consumers, metasearch may increasingly be a winner-take-all market for the top few search positions -- perhaps even more so than before.
But don't go counting out the giants of online travel.
For instance Expedia is digging in with its market lead in the US. It says it is improving its efficiencies of technological and marketing scale to offset how competition may drive commission rates and margins lower. It also seems unafraid that consumers may shift to meta-search channels in even greater numbers, leading to higher than expected advertising expense.
According to an analyst report last month by Kevin Kopelman of US investment firm Cowen:
"Expedia still in the early-mid stages of driving its conversion-led flywheel. The acceleration of Expedia’s business over the past several quarters has its roots in a broad technology upgrade that has allowed the company to roll out website/app changes much more rapidly.
This drives higher conversion rates, which in turn allows Expedia to bid more aggressively in variable marketing channels to attract new customers, and ultimately invest more in customer loyalty and hotel supply.
While this process is several years in the making, we note Expedia still has only ~60% as many hotel properties on its platform as Booking.com (~35% including Vacation Rental).
In addition, loyalty program members are growing at such a rate (faster than the overall biz) that Expedia EBITDA has not yet fully benefitted, due to upfront accounting for loyalty expense accruals."
And there's nothing to stop Expedia and its competitors from copying the top-three results model to their own benefit on their own platforms. Kopelman is not alone in being optimistic. Today he raised the price target on Expedia Inc's stock to $150 a share, above the company's current $125 a share.
EARLIER: Google expands direct commission-based bookings via hotel search, expands instant booking, too