Google expands pay-per-stay hotel ad product to quell risk aversion

As hotels look for ways to capture new bookings while minimizing expenses, Google is offering a new ad pricing product that provides low-risk visibility in its Google Hotel Ads platform.

Since April, Google has made its “pay-per-stay” (formerly Google Hotel Ads Commission Program) available to all Google Hotel Ads partners globally, expanding from a small pilot that had operated for a few years.

Hotel partners choosing this option only pay Google for their ad after the guest stay has occurred. If a traveler books and then cancels, the commission is not due.

“What became clear as the COVID crisis unfolded was that cancellations especially were a major factor. Helping share risk with our partners and helping our partners manage cancellation risk - that motivated us to prioritize and scale up this program and accelerate it,” says Michael Trauttmansdorff, Google’s group product manager for travel ads.

“Google will succeed if our partners are successful and if our users are served well by the product that we offer. Ultimately if we can manage that risk, we think it is a reasonable step to take.”

Trauttmansdorff says a large number of its hotel partners, of all sizes and in regions around the world, have begun using the pay-per-stay option as a way to participate in Google marketing while managing the uncertainty that still exists in most regions about consumer travel patterns.

In the near future, Google will also roll out a more prominent way for hotels to share their cancellation options.

“We see really heightened interest in from travelers is around understanding the flexibility and terms attached to booking a particular rate,” Trauttmansdorff says.

“What we are prioritizing and rolling out in coming weeks is a much more consistent display of what the cancellation policy is for any given rate and filtering capabilities so travelers who really prioritize flexibility and refundability can identify which hotels, which prices really satisfy their needs.”

Pablo Delgado, CEO of hotel direct sales consultancy Mirai, says the new pay-per-stay option gives “the industry what it wanted and did not find in any other meta: an easy, convenient and risk-free way of being in a fast-growing metas such as Hotel Ads.” 

In a blog post, Delgado says the new commission pricing option, in tandem with Google’s Property Promotion Ads format that makes hotels visible to users at the top of the funnel – when searching simply by destination or concept  - “change the rules of the game” for hotel marketing.

“The chance to run campaigns to attract ‘new demand’ with a commissionable model, be it per stay or per conversion, is nothing short of revolutionary,” Delgado says, offering the following reasons:

• It guarantees a certain profit, which had been impossible so far because of the reign of the cost-per-click model (CPC).
• It is good for your cash flow (using the Commission per Stay) model, a crucial point for many hotels, especially seasonal ones.
• It solves traditional budgeting problems that arose from the use of CPC campaigns. The more you sell with a guaranteed profit, the better.
• It is a perfect match for hotels’ commission-per-stay philosophy, so you do not need permission from your sales manager or finance manager to kick off campaigns. For most hotels, a commission is a commercialization expense and a CPC is a marketing expense (this idea is wrong, but it happens quite often).

While Google has expanded the pay-per-stay option globally in direct response to the impact of COVID-19, Trauttmansdorff says he expects it to remain “a standard part of our hotel ads product for the foreseeable future.”