Changes in Google Hotel Ads: what you need to know

Marketing 12/03/2024
a man with a suitcase is standing in front of a hotel
The first consequences of the entry into force of the regulatory framework known as the DMA (Digital Markets Act), proposed by the European Union with the aim of limiting the power of the large technological platforms, and which led to the designation of the so-called Gatekeepers (Alphabet, Amazon, Apple, ByteDance, Meta, Microsoft), are already beginning to become apparent.

Google has once again surprised us with the announcement of the discontinuation of the Google Hotel Ads metasearch engine's bidding strategies for Commission per Stay and Commission per Conversion, which must now be converted into Targeted ROAS (or Enhanced CPC) and/or Maximum Return Campaigns for Travel Targets.

This measure comes at a time when, according to data provided by the World Tourism Organisation (UNWTO), more than 88% of international tourism prior to the Pandemic had been recovered, and in which Google Hotel Ads is the most widely used metasearch engine, being used by around 75% of travellers, according to the sector's specialised media Hosteltur.

A before and after that affects hotels

Google assures that this measure responds to the changes that the sector is going to experience this year, as a consequence of the aforementioned DMA, such as the disappearance of third-party cookies. But what does it mean for the hotel sector? Two of the main bidding models that hotels have been using until now are:
  • Commission per Stay: the hotel paid the agreed commission only if the booking was made, i.e. no commission was paid if the booking was cancelled.

  • Commission per Conversion: the hotel paid the fee when the booking became effective, irrespective of whether it was subsequently cancelled.

The issue is that both bidding models require the famous third-party cookies and traveller information (a circumstance that clashes head-on with data protection and privacy guidelines) to determine, for example, when a specific customer has stayed at a hotel and to be able to correctly measure commissions. Hence its removal and the imposition of this very sensitive change, which requires close monitoring of campaign performance after migration.

As always, there are already deadlines for completing each of the phases involved in this process:

  • 30th April 2024: The current commission model will remain in use for new hotels until 30 April, after which it will no longer be available for new campaigns.

  • 31st October 2024: active campaigns of hotels that are using the models that are set to disappear will continue to be published until 31 October 2024

  • 31st July 2025: Importantly, historical data recorded for existing campaigns will continue to be available during the transition, and the reconciliation process for commissions or reservations will remain open for 9 months after discontinuation, until 31 July 2025.

So how are we going to proceed?

The model that will replace the current model will be the CPC model with ROAS targeting, and Maximum Performance. campaigns for travel targeting will also continue to gain ground. These will also coexist with the traditional CPC (Cost per Click) model which, among other things, is useful for achieving visibility in search results on Google Maps.

Therefore, the most sensible way to adapt to this new situation without generating too much friction is to try out the CPC model. Always without losing sight of 31st October, by which date the bidding model will have to be changed in all campaigns to ensure that they continue to function normally after the discontinuation.

While this may be a daunting prospect, it is at the same time an opportunity for hotels to fine-tune their advertising strategy and gradually adapt to the evolving rules of the new e-commerce game. Proactivity will be the key to thriving in the hospitality industry as it is a highly competitive sector.

What are we doing at Paraty Tech?

As always, we try to anticipate this type of situation in order to minimise its impact and avoid greater problems. That is why, for the moment, the steps we are already taking to favour a successful migration from CPA to CPC in Google Hotel Ads are as follows:

  1. Assessing performance: analysing the most important metrics to understand how the campaign is performing.

  2. Setting targets: By controlling the CPC, we set performance targets, depending on whether we are looking for more visibility, profitability or both.

  3. Test: testing with the CPC bidding model before full migration.

  4. Optimising the bidding strategy: once the migration to CPC has been completed, adjusting the bidding strategy to achieve the desired target.

  5. Measure and optimise constantly: comparing key metrics with the previous CPA model to assess the success of the migration.

With these steps and a data-driven approach, we will help our clients to effectively migrate from the CPA model to the CPC model at GHA. In any case, as always, if you need more information on how to get the most out of your CPC investment in Google Hotel Ads, please contact us.