Why a recent Google update has the hotel industry up in arms

There has been a lot of controversy around Google’s many updates – such as Google’s Hotel Finder — that have significantly impacted the travel and hospitality industry over the past two years. Hotels are crying out against the latest Google Hotel Finder while travel agents seem to be enjoying the spotlight that their businesses are receiving.

Comparison sites thrive

If we look back a few years one can remember a time when shopping comparison sites used to thrive due to the prime spots that they held on Google’s natural search engine results pages (SERPs). For many years these comparison sites were receiving top rankings for their customer’s (ecommerce and online retailers) products on their websites. Ecommerce sites provide feeds of their online catalogues to the shopping comparison sites who would in return charge the online retailer a cost-per-click for the referral traffic that they sent their way.

Many online stores became frustrated that their very own products were outranking them on Google’s SERPs via the comparison sites, while their own online stores were not featuring prominently at all on the SERPs. As frustrated as the online retailers were, they felt that they had no choice but to continue to share their products with the comparison sites and pay the price for traffic otherwise they stood the chance of losing the visitor to one of their competitors.

Comparison sites dive
With the launch of Google Shopping and Google Panda updates in February 2011, many (not all) comparison sites were hit badly due to duplicate and poor content penalties. Comparison sites that were hit saw a dramatic drop in their search traffic overnight. Some comparison sites reported a loss of up to 80% of their organic (natural) Google visitors directly impacting on their revenue models and ultimately costing them their businesses.

On the flip side, many ecommerce sites hosting the original product catalogues were starting to see an increase in their rankings on Google and as a result, started to receive more natural traffic directly from Google without having to pay a middle-man for the referral fee.

What does this have to do with the travel industry?

At the end of last year Google announced that its new product, Hotel Finder went global. Google’s Hotel Finder is a search tool designed to make it easier for people to compare hotels for their trips with features such as location filters (and drawing shapes on maps), dates, price and both user and hotel ratings. Simply put, Hotel Finder is a travel comparison platform where Google decides which hotels or travel agents will rank highest for local hotel related search queries. When searching for a hotel, users are given results matching their criteria and filters selected. When clicking on a specific hotel listing the centre window displays the hotel’s information together with a big red booking button.

One would assume that by clicking on the booking button that the user will be taken directly to the online booking form on the hotel’s official website. This is however not always the case. Google often sends the user to the booking form on a travel booking site such as Booking.com, Priceline, Expedia or Travelocity instead of to the main hotel website.

Example: By selecting the ‘One & Only Cape Town’ the user is given the booking link to Booking.com and not the hotel itself.

How does Google decide who should rank highest on Hotel Finder?
Hotels that have been enjoying top rankings on Google’s organic results have started to see a huge decline in their traffic coming from Google since the launch of Hotel Finder. Travel aggregators who used to rank well are also seeing an impact on their revenue (much like the shopping comparison sites did after the launch of Google Shopping and the many subsequent Panda updates).

As Google attempts to move towards a consolidation of the online travel industry, it makes use of a number of different sources to determine who should rank highest for a hotel related search query. One of the more prominent sources of its data comes from the Google Places local business listings. Google has published on its website that it uses information from the Google Places listings in order to create a description of the hotel, however it uses other data sources (such as images from hotel websites, Google+ Local and data received form its many partners) in order to rank and display information on Hotel Finder.

One of the other major ranking factors on Hotel Finder is the ratings that Google has gathered both from the hotels directly as well as user reviews posted across the Google+ and Google Places. By offering customers exceptional service, hotels stand a chance of increasing the number of reviews on Google Places, thereby increasing their chances of ranking higher for hotel related search queries on Google.

Google also seems to use data from popular online travel booking sites such as Tripadvisor, Booking.com and Expedia to aid in finding information about the hotel. In many instances Google is presently ranking these travel sites higher than the hotels themselves; however until hotels start to embrace the significance of having user-friendly navigation and booking forms, quality images, excellent reviews, and a detailed Google Places listing — it would make sense for hotels to considering partner with these high-ranking travel sites now whilst Google is still in the process of gathering data. The ratings received on these sites today could have a huge impact on the future online survival of hotels in the future.

Can Hotels pay their way to the top of Google’s Hotel Finder rankings?

While Google always strives to give the user the most relevant results in response to a search query it is also in the business of making money. I am not suggesting that you can pay Google somehow to get better rankings in the organic (natural) SERPs, Hotels will soon be able to make use Google’s Promoted Hotels tool. Just like Google AdWords, where you can bid on a keyword to come up in the sponsored listings, Promoted Hotels works in much the same way.

It allows advertisers (both hotels and online travel booking agents) to bid on particular properties in order to see them featured on the top of the search results on Hotel Finder. These advertisers will be featured in the top two to four spots in the shaded area in the search results for a particular property, with the winning bid listed as the only available booking channel.

Promoted Hotels is part of Google’s new Hotel Price Ads Program which has been undergoing an extensive experimental phase. Hotel Price Ads will allow hotels to bid on sponsored listings that appear on Google Hotel Finder, as well as on Google+ Local and Google Maps. While in beta, Google only partnered with major online travel agents and hotel chains in order to test the system. As with Google AdWords ads, Promoted Hotels will be chosen based on a combination of bid price and quality score.

Promoted Hotels has been the cause of much debate and controversy amongst hotels and travel booking agents. While many online travel booking agents have extensive budgets to bid with for top rankings, smaller hotels with lesser budgets are complaining that they will be unable to compete with their booking agents for top rankings of their own properties thereby forcing them to pay the middleman for online referrals.

While Google Hotel Finder has already been activated on a global scale it seems unclear whether the same can be said for Hotel Price Ads as hotels wait to find out when and how they can start to list their properties on Prompted Hotels. We will continue to monitor developments on the topic.