A petition has been launched to stop large booking sites bidding on the hotels on name in search engines.
Some hotel owners are getting fed up of being monopolised by large booking sites such as booking.com and expedia.com who take a large profit share (up to 25% commission) on bookings. They’ve decided to do something about it and call for action. They want search engines to stop letting booking sites like booking.com bid on hotel names and brands. They have referred to the process of biding on hotel names ‘highjacking’ so they are not taking this issue lightly! They have created a petition for there to be a new law stopping large online travel agencies (OTAs) on bidding on hotel names with a specific agreement.
The petition, which closed on Friday with just over 3,000 signatures, says: “As a small B&B I cannot compete with the billions that OTAs spend on web searches and am deprived of direct clients by this practice and forced to pay high commmisions (15% to 25%) which ultimately of necessity are passed to consumers. The clause hidden in small print allowing OTAs to use our names negates our own websites and internet presence and it cannot be fair to use someone’s own name to divert customers. Such bidding should be by express mutual agreement only. A lot of good B&Bs will go under.”
But will this work? In short, unfortunately for these business owners, probably not. Despite the fact that the petition will need a lot more signatures to be notice is will also be unfavourable with search engine giants. Whilst, in theory, it is a good idea and would help a lot of small businesses (because this sort of thing doesn’t just happen in the hotel world), it would be nearly impossible to police. Also, search engines are likely to be reluctant to find a solution for this as they get lots of money from advertisers bidding on their competitors brand names.
How does bidding in search engine advertising work?
Paid search engines results are the results that come up on Google, Bing etc. that are marked with ‘ad’ and this means that somebody has paid for it to be there. The way that search engines decide which ad to show depends on a variety of factors include: the relevancy of the ad and the keywords, the quality of the landing page, and how much each bidder is willing to pay. There is an algorithm that determines which ads to show and when. If, for example, somebody googled ‘Artist Residence hotel Brighton’ and booking.com and the hotel itself had bid on the keyword ‘Artist Residence hotel’, then Google’s algorithm would determine which ad was shown first depending on these various factors. Or, if only the OTA’s had bid, they might come above the organic results of the hotel. See example below. So, unfortunately for the hotels, on occasion they are the first result and are therefore able to take a lot of direct business away through their search engine marketing. Hotels can, of course, decide not to partner with OTAs, but this can damage their businesses in other ways. And, this doesn’t stop the OTAs bidding on the hotel names anyway and directing potential customers towards other hotels of their site.
So, what about bidding on brands in general?
The problem is that everybody is doing it. Microsoft advertising bids on ‘Google Ads’ virtually all the time (which, by the way, must cost them a fortune!). And, brands themselves bid on their own brand names in order to stay above the competition. So, the issue is pretty widespread and one that might be very difficult to police and challenge. Obviously, for the hotel industry, the problem is less about competition and more about commission diminishing their profit margins.
Should bidding rules change?
On the one hand, the way that this sort of bidding strategy on search engines is affecting small businesses is unacceptable and if we can do something to change this, we should. However, search engines run off of people paying for advertising so will they be likely to want to police this? The ‘problem’ with the likes of Google is that they have a monopoly over businesses wanting to reach their consumers. Google Ads (and other search engine advertising) are such a valuable advertising channel because it allows people to reach their consumers at the exact right moment, meaning that the ROI is often very high.
We might begin to see more challenges like this in the future as advertising on Google gets more and more expensive and there is more and more of a movement towards supporting small, local businesses.