What’s the Game Plan for Your Hotel: CPC or CPA?

It’s a crowded market out there, isn’t it? With accommodations of all shapes and sizes vying for travelers’ attention and their bookings, a savvy digital marketing approach in your back pocket is key to helping you stay afloat and thrive in the industry.

Since cost plays a key role in any business decision, we’re going to look at the two common pricing models—CPC and CPA—and explore how one could be a good fit for your direct booking initiatives based on the type of hotel you run.  So, let’s jump in!

Balance your distribution

 

The importance of direct bookings is key to your business. When you increase them for your property, you create a healthier balance between direct and indirect distribution channels. Why is this mix essential? The more travelers book directly with you, the less you rely on third-party bookings. As a result, you lower your distribution costs, too.

To succeed with a balanced mix, there’s one important factor hoteliers can’t afford to overlook.

According to a report by Kalibri Labs, “the success of the book-direct effort—and all future campaigns to drive direct bookings—will hinge on how well hotels can cater to the guest experience.”

That sentiment goes deeper than offering Egyptian cotton sheets with a high thread count. The guest experience starts online, and yours needs to be woven perfectly into the touch points where travelers will interact with your property. trivago is in fact one of those primary touch points.

Since travelers want the hotel-search process to be as smooth and convenient as possible, they’ll turn to a hotel metasearch like trivago to compare hundreds of hotel deals advertised on a wide range of booking sites to find their ideal hotel online. In fact, nearly 75% of travelers use hotel metasearch to do just that.

That means trivago is the marketing channel for your property, and trivago Business Studio your marketing platform to promote your website rates on your profile with Rate Connect.


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Know your campaign choices

 

Seasonality, industry trends, traveler segments (and their booking behavior) can easily impact your digital marketing initiatives. That’s why it’s important to have flexibility and options while running and managing digital marketing campaigns.

For example, Rate Connect comes with three campaign types: pay-per-click, pay-per-booking, and pay-per-stay (their availability depends on the setup with connectivity providers).

When you opt for pay-per-click, which follows the CPC model, you set a monthly budget that’s right for you and only pay for travelers’ clicks on your website rates. Those may amount to the budget you allocate, or they may be less.

With pay-per-booking, which works on the CPA model, you choose one of the available commission rates and pay that fixed rate on the value of each direct booking you receive.

The pay-per-stay campaign type is a CPA model, too, and the commission you select is charged on guests’ direct booking only after they’ve completed their stay.*

Since every property is unique, it’s understandable that hoteliers want a campaign type that harmonizes with their needs and goals, budgets and expenses. To get a sense of why a property may go with one campaign type over the other, let’s take a look at the selling point each one offers.

 

Enjoy a hands-on approach with CPC

 

One feature that makes pay-per-click appealing is the active role hoteliers can take to influence the visibility of their website rates in trivago search results. The way to do that is by using the available bidding goals unique to this Rate Connect campaign type.

For example, let’s say your goal is to increase occupancy on weekends. You could spend a bit more of your monthly Rate Connect budget to take your visibility to a higher level for more clicks and traffic to your website. When occupancy and visibility aren’t an issue, you could then lower your bidding to a moderate level.

If you have a medium-sized hotel or a small independent chain, you may find the pay-per-click campaign to be right up your alley.

Although this one is often regarded as being on the pricey side, it’s possible to have a low CPC. Here’s how:

First, by targeting the right travelers in high-value markets on trivago, along with showing a full and engaging profile to them, you can experience a higher click-through rate (CTR) to your website.

Next, an optimized website—fully responsive to mobile devices, too—is essential as well as a good booking engine to ensure that your future guests can book directly with ease.

When you factor all of that in, you can increase your booking conversion rate and, as a result, steadily decrease the cost per booking with each direct booking you generate.

 

How to calculate your CPC:

 

Total monthly spend

÷

Number of clicks on promoted website rates

 

So, what if you own a small hotel with the essential tech already installed (think PMS and a booking engine)? Let’s look at how the CPA model could be a good fit. After all, there’s a place for you in the digital marketing world, too.


Promote your official direct rates to boost bookings.

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Take a low-to-zero risk route with CPA

 

The attractive aspect of CPA is two-fold: You can promote your website rates with low to no financial risk, all the while being active in digital marketing without feeling overwhelmed by the logistics of it.

A hotel that experiences a relatively low cancellation rate and longer lengths of stay may find that pay-per-booking works for them.

When a hotel has an above-average cancellation rate and generally sees lengths of stay of one to two nights, then pay-per-stay could be the preferred choice.

As the travel industry works its way out of the pandemic, a pay-per-stay campaign can appear even more attractive. This risk-free approach enables hoteliers to strive towards capturing travelers’ direct bookings and, at the same time, minimize costs.

Whether you go with pay-per-booking or pay-per-stay, you can choose one of the available commission rates to influence the visibility of your website rates on trivago. The higher the commission, the more visible they are in search results.

Although it takes some time to become familiar with the ins and outs of digital marketing, it does offer something for everyone, whether you want to get your hands dirty or just dabble in it. Either way, when you proactively set your sights on generating direct bookings via trivago with your Rate Connect campaign, you’ll be on the right track towards benefiting your bottom line in the long run.

 

*trivago won’t charge a commission on a canceled booking, unless the hotel keeps part or all of its booking value.


Featured image by: Andrea Piacquado on Pexels

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