Over the past couple of months, TripAdvisor has been participating in Google's hotel metasearch program. For selected hotels, consumers are seeing TripAdvisor as a place to book.
Clicking on the TripAdvisor "Book" button often takes a consumer a specific instant booking page ("Book on TripAdvisor!"), where the brand collects payment on behalf of the hotel.
In this circumstance, TripAdvisor is, in essence, acting as an online travel agency, or OTA —though the company might dispute that label. So when it wears its OTA hat, so to speak, it makes sense that the brand would test competing with other OTAs on Google for consumer attention.
To appear in the hotel metasearch listings, TripAdvisor pays Google, with the cost varying by type of auction bidding strategy, via the Hotel Price Ads product.
In Tnooz's random sample of searches, TripAdvisor is typically not appearing in top positions in Google's metasearch results, which implies that it has been bidding conservatively.
A TripAdvisor spokesperson told us:
"As we’re an online marketplace, we continue to explore new marketing channels to make consumers aware that they can plan and book their trips on our site and to generate traffic to our site."
Meta metasearch?
In a twist, sometimes the TripAdvisor "Book Now" button on Google sends consumers off to a TripAdvisor page that is not for an instant booking on behalf of the hotel. The pages aggregate offers from OTAs and suppliers.
In these cases, TripAdvisor is wearing its metasearch hat. This practice opens up a possible grey area.
How can Google be sure that TripAdvisor won't do arbitrage to get a customer via its platform and then pass along that customer to an OTA it receives a higher payment from than it has to pay Google?
Not that I'm suggesting TripAdvisor would do that.
But if the industry is getting closer to meta metasearch, there are new dynamics to learn.
Google's auction is structured so that if you bid a certain amount, and your bid wins, you only pay roughly a cent more than the second-highest bidder.
TripAdvisor's auction for participation in its metasearch is more static. If you bid, say, $2, and your bid is accepted, you pay $2.
Even when a TripAdvisor listing on Google deep-links to a page where the biggest yellow button is for instant booking ("Book on TripAdvisor!"), that button has scattered around it a few links for other aggregators and suppliers,. That isn't the case with Google's traditional OTA partners.
There is a difference between intention and capability. I see no intention by TripAdvisor to do arbitrage. But it helps to better understand the evolving dynamics of the industry to understand possible capabilities.
So why is Google risking this? Well, it might not mind the risk of arbitrage right now.
Booking volume in its hotel metasearch is still low, relative to TripAdvisor's. (That's true despite Google's metasearch channel having approximately doubled in volume in the past year, according to the Nicholas Ward, CEO of Koddi, a company that helps enterprise-level advertiser master the Google and TripAdvisor metasearch products.)
Google may welcome TripAdvisor's participation in its auctions as a chance to learn about market behavior. More activity means better information.
Let's say TripAdvisor wins a lot of auctions and moves a lot of volume for a particular hotel chain.
Google will see that data. It could, if it wanted, talk to a hotel group and say, "We're generating a lot of bookings for your properties but they're not going through your direct listing in the marketplace." It could help hotels negotiate a harder line with TripAdvisor.
Not that I'm suggesting Google would do that.
But if the industry is getting closer to meta metasearch, there are new dynamics to learn.
Some hoteliers may not be happy to have TripAdvisor betting against them in Google's metasearch — particularly hotel owners advertising on Google for direct bookings and also advertising on TripAdvisor under its instant booking program.
One issue is what impact TripAdvisor's added presence in the Google auction might have. As a rule, the more competitive an auction gets, the higher the cost-per-click for the same amount of traffic will be for all players, including the hotel itself.
What's more, a hotel may wonder if it is seeing its share of bookings move from a lower-cost channel (possibly Google, depending on the auction dynamics) to a more expensive channel (possibly TripAdvisor, depending on its commissions and fees).
Other hoteliers may see things differently, though. They may feel they now have two prongs of attack for gaining bookings at a significantly lower average acquisition cost than through the traditional OTA channels. They may view the increased competition for OTAs as a positive trend.
The Kayak factor
In yet another twist, TripAdvisor has also been testing participation in Kayak's metasearch, too.
In Tnooz's random sampling, TripAdvisor has tended to be placing low in the position order of companies jostling for attention on each Kayak listing -- suggesting that the company is bidding conservatively, merely to test results.
If that's not complicated enough, Kayak itself has been sporadically been buying Hotel Price Ads and appearing in Google metasearch results.
To avoid the risk of meta metasearch, the links have only been to Kayak's own assisted booking option, in which it, in effect, acts as an OTA by directly collecting payment on behalf of a hotel -- at least in every random sampling Tnooz has done.
Over recent months, Kayak's bidding has tended to go in waves, sometimes bidding aggressively and in high volume and sometimes bidding conservatively or hardly at all, says Ward.
Trivago, too
We also spotted TripAdvisor appearing in the listings of Trivago, the Expedia-backed German hotel metasearch platform.
Again, the arbitrage issue comes up.
In one test search for the Boston area, Trivago returned results for The Westin Copley Place. When we clicked on the TripAdvisor listing, it took us to a webpage saying that the booking, if the consumer clicked through, would be handled by Priceline Group-owned OTA Agoda, rather than an instant booking run by itself on behalf of the hotel.
The consumer was invited to click to fill out their payment details while remaining within the TripAdvisor user interface, though Agoda was getting a cut of the sale.
In this case hotel might never know about the Google/Agoda/TripAdvisor booking path.
For any given reservation, there is no audit trail on where a consumer first clicked, says Robert Cole, owner of the RockCheetah hotel marketing strategy and travel technology consultancy.
The hotel only knows who was the last company to touch the transaction and take the payment. A hotel would struggle to discern the ultimate source of the booking.
What should hotels make of all this?
Of all the moves mentioned above, TripAdvisor's experiment with Google's metasearch may be the most telling about industry trends.
Cole said:
"Broadly speaking, hotels should expect to see more of this sort of thing. As rate parity weakens, we'll see more channels be willing to take haircuts to offer more competitive pricing to gain share."
The process is an echo of, or variation on, the hand-offs and repackaging that have taken place for years among travel website affiliates and wholesalers, Cole said.
"But today it's getting even more complicated. There are B2C2B2B2B2B trails forming."
NB: Thanks to Jacopo Rita for the tip!