Hotel Industry going nuts

The big players are swinging their.....

[Crush]

I read an article on the plane the other week the economists advised hotels to put more into online advertising. Now I see what they meant. Continental hotels are paying 5 bucks a click, also hotels.com, expedia and travelocity are pumping it up. It will end in tears as I saw this cycle happen about a year or 2 ago when expedia were bidding miles above just to get known. I think it is more about branding than having good ROI. This is a loss leader.

[Umpyman]

Yep, we're an independent in the travel industry, and are constantly struggling with Expedia's deep pockets. They of course are consistently #1 on strong terms for us, so we're always playing catch up. Not complaining here, since our service level and pricing is far better, but sometimes it's hard to compete with the big guys' name recognition. Keeps us on our toes - always have to be more creative!

[Receptional]

I would go away from the US PPC supply lines... Expedia have much lower bid limits outside the US.

For example www.uk.overture.com and www.espotting.com

You are hotels... your visitors shouldn't be from your own country anyway!

[gibbon]

[businessweek.com ]

The article above may help - maybe the suppliers are beginning to wean out the middlemen as alluded to in the article.

[Adam_C]

I would go away from the US PPC supply lines... Expedia have much lower bid limits outside the US.
For example www.uk.overture.com and www.espotting.com

I'm running hotel PPC campaigns in European and Asian markets. Certainly in Europe this bids are climbing. I've seen a far amount of agressive strategies afoot as well.

[colinirwin]

If Continental Hotels say they are prepared to pay $5/click, why not jam them and make them pay it while you pay 1 cent more than the guy behind you?

Col

[Adam_C]

we're an independent in the travel industry, and are constantly struggling with Expedia's deep pockets. They of course are consistently #1 on strong terms for us, so we're always playing catch up.

Expedia seem to have pockets so deep that there are different rules for them. Several keywords I'm watching in Germany on Espotting have Expedia at no.s 1, 2 and 3, with bids far higher than the average top spots.

I didn't think this was allowed.

[shorebreak]

I'd argue with one point - ROI for the large travel players' PPC campaigns is actually very good. The difference between them and most other companies is that they're actually tracking keyword-level ROI and doing their best to manage their portfolio with that knowledge.

[eWhisper]

As has been mentioned in PPC forums before, they may be taking a loss on each individual click for the long run of getting a life time customer. The value of a life time customer is very underrated in the PPC industry that tracks individual conversions, and not the people who come back directly to you without the aid of a PPC the next time.

[dougs]

In the past 2 weeks I have met with 2 of the major global travel companies and they both admitted to spending huge amounts on PPC now and that there are 3 major players competing for the top word in the industry. They know the roi is useless but don't care as the branding is very cheap incomparison to other forms of advertising.

Doug

[1milehgh80210]

I dont think 'branding' applies so much in an industry of middlemen (hotel and airfare consolidators)
Give me a choice of the same flight or hotel room from different vendors, & price wins out.
OT, which US airlines have made a profit the last few years?
Not the ones with the most 'branding', OR advertising.

[shorebreak]

Dougs, I disagree. I think when you're spending millions of dollars per month on paid search, you know your ROI is positive or you wouldn't continue it for the reasons the previous posted stated, namely that branding for middlemen is not what they're trying to do (at least in paid search).

What I find most interesting about this is that so many people assume that the big travel players are losing money by spending so much on the highest-trafficed travel terms. They have tens, sometimes hundreds of thousands of keywords and if they can get great ROI on those, that'll more than cover how much they have to spend to be top 3 on 'discount hotels', 'cheap airfare', etc.

[Crush]

The average hotel booking is 2.6 days. You sprend 5 dollars a click, not everyone will buy. Maybe 20% if you are lucky. You get 10 % commission from 2.6 nights. Maybe 20 $. At best that is break even. It is about branding. I use hotels.com now and am a life long customer who just types it in. From the small guys point of view he cannot understand but these guys are in for the long haul

[SlyOldDog]

Sorry brother, I disagree

The Intercontinental charges an average of 200 dollars a night. At 2.6 nights that's 520 euro. According to your rational of 20% bookings, it costs them 25$ to make a 520 euro booking.

That's hardly breakeven...