Independent Hotels Face Challenges Amid Google’s Shift From Commission-Based Hotel Ads

• The discontinuation of Google’s commission-based hotel ad model is poised to disproportionately impact independent hotels, pushing them towards a more technical and costly pay-per-click system.
• The shift from a performance-based to a pay-to-play model has decreased visibility and direct bookings for small and medium-sized hotels while increasing their reliance on Online Travel Agencies.

The hotel industry is experiencing significant shifts as Google discontinues its commission-based hotel ad model, set to take effect in February 2025. The move is seen as a significant blow to independent hotels, as the commission model had been a cost-effective, low-risk marketing tool for these businesses, allowing them to compete with larger Online Travel Agencies (OTAs) like Booking.com, Airbnb, and Expedia.

The commission-based model required hotels to pay only when they secured a booking, which provided small hotels with visibility without the burden of managing complex ad campaigns. However, with its discontinuation, Google is pushing these hotels towards a pay-per-click (PPC) system, which demands technical expertise and upfront investment without guaranteeing returns.

The shift towards a pay-to-play model has already negatively impacted independent hotels. A year-on-year analysis of 1,000 hotels in eviivo’s ecosystem revealed a six percent drop in impressions and a 32 percent decrease in clicks, resulting in a 28 percent drop in conversion rates. Furthermore, hotels’ share of direct bookings decreased by six percent, while their reliance on OTAs increased by four percent.

The decision to end the commission model was a response to the EU’s Digital Markets Act (DMA) and the UK’s Digital Markets, Competition, and Consumers Act (DMCCA), introduced to curb the power of digital “gatekeepers” like Google, Amazon, and Booking.com. However, the result has been detrimental to independent hotels, pushing them towards more expensive and riskier advertising models.

Despite the challenges, independent hotels can still boost direct bookings without overspending on Google Ads. Critical steps include ensuring their websites are easy to find and book on and mobile-friendly. Engaging in social media, forming partnerships with influencers, offering direct-booking perks, and driving email marketing and loyalty programs can also drive high-intent travelers to their sites.

In an industry where big players dominate, independent hotels must take control of their direct booking strategy and employ targeted cost-effective digital tactics. This approach will help them build stronger guest relationships and reduce reliance on third-party platforms.

Discover more at Boutique Hotel News.