NB: This is a guest article by Pedro Colaco, president and CEO of GuestCentric.
A month after the deal of the year was announced, hoteliers and marketers are digesting how Priceline's proposal to buy Kayak for $1.8 billion will impact on their digital strategy?
The ramifications of the deal are (or have the potential to be) huge.
Google is fighting for travel search
Many articles have provided opinions on why Priceline is getting hold of Kayak. Most of them mention mobile and how Kayak has built a great mobile strategy. Fine.
Priceline’s acquisition of Kayak has also been labelled in some quarters as an answer to Google Hotel Finder. Searches for hotels on Google are down a whopping 70% - in short: fewer people use Google as their starting point in their searches for hotels.
However, Google, as we know, is a very powerful and remains an immensely popular search engine, so Hotel Finder could arguably mean some serious competition as it expands and looks for significant market share.
An interesting article on Tnooz by Max Rayner last week showed Google is pushing organic results in travel below the fold, promoting advertisers and their own content from Hotel Finder.
A significant presence by Google on yet another search sector could mean anti-trust problems for the company. In 2010 the company already encountered problems with its purchase of ITA Software and subsequent commission of flight search tools from it.
The objections against Google was largely dismissed at the time, but if Google starts dominating the travel search sector it could mean a resurgence of such a problem.
Priceline is fighting back
I think that the purchase could be seen as a strategic manoeuvre to drive Google cost out of the business model and have Priceline and its affiliates dominating travel search.
An often overlooked piece of information is that Priceline is one of Google’s biggest customer’s, having spent $375.2 million in online advertising just in the third quarter of 2012. Priceline may be using Kayak as a way to bypass Google and consequently save up to $1 billion annually that it spends on Google.
Jeff Boyd, Priceline’s chief executive, commented at the time of the acquisition that the new owner "can be helpful with Kayak's plans to build a global online travel brand", especially in the light that Google is “rearranging” its traffic flows towards Google products to the detriment of others. In other words: game on.
If Google can get into legal trouble from anti-trust issues, so can Priceline. It’s obvious that Google has a very colorful past when it comes to anti-trust, which means that people tend to be paying close attention to its market share and related actions, but this doesn’t mean that if Priceline starts controlling a significant portion of the market it can’t also get into trouble.
After all, besides Kayak it owns several other companies that could be seen as dominating travel search, such as Booking.com.
What does it mean for hotel digital marketing?
For hotels and other travel related companies this only further reasserts their need to have a strong multi-channel digital marketing strategy and not rely on one search engine or a dominant OTA like Booking.com.
Hotels that have invested a great deal in SEO would be at a serious loss if Google lost importance when it comes to search in the travel sector. And those that depend on Booking.com and other Priceline companies could see themselves in trouble if the companies were to increase their fees due to their dominant position.
Booking.com’s past legal troubles, further magnify the issue with this kind of dependence. Earlier this year, Booking.com, along with several others, was cited for allegedly price fixing both in the UK and the US.
As such, it would only make sense that companies in the travel industry need to be able to not being dependent on a single channel and having enough of a digital presence that they are sought out by potential clients no matter on what search engine these are conducting the search.
Your hotel should run a multi-channel digital marketing strategy to avoid being overly reliant on Priceline or Google’s travel strategies:
1. Multiple sources for online reservations
Reservations should come from more than one source, so as not to be dependent on just one channel. In addition, you should give priority to direct reservations, i.e. the ones that come from your hotel website.
2. Great hotel website
A hotel website will be part of the client’s perception of your hotel. Make sure your website reflects the experience and values of your brand and property, it’s easy to navigate, it prominently displays your pictures and engages visitors to book;
3. Ability to run promotions online
In a dynamic marketplace, it is critical to be able to react to changes in demand and run special offers. Make sure your digital marketing software enables you to run promotions on multiple channels like your hotel website, hotel booking engine, mobile or social networks.
4. Mobile optimized reservations engine
Hotel searches on mobile are up 411% in 2012 and reservations by mobile devices have been on a steady rise. Your hotel reservations engine needs to be mobile optimized if you want to ride this trend;
5. Social media presence
A nice looking Facebook and Google+ page, maybe even a twitter feed, can go a long way in having a social media presence. More importantly it is a strategy to diversify your communication channels to consumers.
Conclusion
In the end, it could be anyone’s game. Just because Google is a giant when it comes to online searches doesn’t mean it will be able to dominate travel.
Similarly, just because Kayak has a great presence in the US market doesn’t mean it will be able to have enough of an international presence to tackle Google. Who knows, it might even be Hipmunk and Bing Travel that end up being the main players (Ed: Really?)
Will Google take ground away from Priceline and others in the travel sector? Will Priceline expand even further?
The most important thing is that hotels and travel suppliers have a diversified strategy that enables them to maximize direct relationships with consumers. Only this way will they be able to control their own destiny, no matter how the verdict falls.
[Ed] UPDATE:
Colaco has supplied an additional chart for the article above:
[Ed] UPDATE 2:
Interestingly, in an email, Google says searches within the hotels and accommodations category are growing slower than other categories, but searches for hotels are actually on the rise overall according to its internal data.
NB: This is a guest article by Pedro Colaco, president and CEO of GuestCentric.
NB2:Hotel pool laptop image via Shutterstock.