Search behaviors have drastically changed over the last few months due to the current pandemic. But, if on the one hand, this crisis has brought the travel industry to its knees, on the other hand, it has created new opportunities, immediately seized by Google. We already know how “Big G” approached the world of hospitality by introducing Google Hotel Ads, which let you bid for ads that are displayed when a traveler searches for a hotel on Google Search or Google Maps. Ads appear in a hotel booking module that can show photos of the hotel, amenities, prices, and a link to book the hotel. It is certainly a good way to attract potential travelers to the hotel website but OTAs have mainly used it, gaining lots of visibility compared to hotels.
“What became clear as the COVID crisis unfolded was that cancellations especially were a major factor. Helping our partners manage cancellation risk motivated us to prioritize and scale up the “Pay-per Stay” program and accelerate it,” says Michael Trauttmansdorff, Google’s group product manager for travel ads. Since April 2020, Google has made its “Pay-per-Stay” program available to all Google Hotel Ads partners globally. By choosing this option Hotel partners only pay Google for their ad after the guest stay has actually occurred. If a traveler books and then cancels, the commission is not due.
How “Pay-per-Stay” bidding strategy works
The partner sets a commission rate using the bidding strategy at the campaign level (approximately 12%, much lower compared to the 18-20% commission normally paid to OTAs). Then, Google’s bidding algorithm calculates a maximum CPC bid to achieve an average commission equal to the hotel partner’s target. To be eligible for the commissions (per stay) bidding option you must complete your billing profile in Google Ads and Hotel Center. You’ll also need to set up conversion tracking with transaction-specific value and, most important, submit a reconciliation report at regular intervals.
Benefits of the “Pay-per-Stay” program
With the “Pay-per Stay” program “Big G” has promptly responded to the discontent of many hotels towards the rigidity of OTAs during the crisis and has given hotel partners another option to increase direct bookings. Also, it guarantees a certain profit which was impossible so far with the cost-per-click model (CPC).
In the next few weeks, Google will be rolling out a new filter called “Free Cancellation” for users searching for hotels. It will highlight which hotel rates are refundable when searchers are looking to book. All these new features will help hotels navigate the current crisis.