In a surprising move, Google announced the end of its commission-based model in Hotel Ads, a change that will have significant impacts on the industry. Here’s why Google is moving away from this model and what it means for hotel advertisers:
- Streamlining Business Processes
Unlike most of Google’s ad offerings, which use a cost-per-click (CPC) model, the commission-based model for hotels required tracking actual bookings to calculate fees. By shifting to CPC, Google can streamline its advertising structures, aligning hotel ads with the rest of its products. - Privacy Regulations Complicate Tracking
With stricter privacy regulations around cookies and user tracking, it’s becoming harder to track the entire customer booking journey. For commission-based fees, precise tracking is essential to determine completed bookings. CPC sidesteps this issue, as advertisers pay for clicks rather than confirmed bookings, reducing the risk of data compliance issues. - Increased Revenue Potential for Google
Currently, Google’s commission percentage for hotels hovers around 7%, but with CPC, the costs could quickly add up. At €1 per click, for example, hotels might find their ad expenses outpacing the original commission rates—often unknowingly paying the equivalent of 15-20% in booking costs. This move enables Google to increase ad revenue without explicitly raising commissions, as CPC payments are often seen as more palatable for hotels compared to high commission rates.
How Hotels Can Navigate This Change
With Google’s commission model ending, hotels need risk-free alternatives to stay visible online with the direct channel. Guest & Co developed a tailored solution to do exactly this: the Meta Campaigns Commission-based program. In this program, hotels pay a fixed 12% commission for stayed bookings only, allowing them to capture direct bookings and maintain control over guest relationships. With prominent placement on platforms like Google Hotel Ads, Tripadvisor, and Trivago, hotels gain strong exposure while keeping costs predictable.
For hotels with high booking volumes, switching to a CPC model could be an interesting option. Guest & Co can support this transition with tailored Google Advertising Services to boost visibility and drive direct bookings. While the CPC model involves more active management and comes with additional costs, it offers flexibility and the potential for cost efficiency at higher volumes.
In today’s evolving advertising landscape, it’s more important than ever for hotels to partner with experts like Guest & Co to find the right solutions, whether through commission-based programs or CPC campaigns, to maintain visibility, drive direct bookings, and stay ahead of the competition.