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Recently we released our latest Skift Trends Report, “Travel Metasearch: What’s Coming Next,” which takes an inside look at the hottest sector in travel and how it really works.
It is the most definitive state-of-the-market report on this big-growth sector in travel. Below is a short extract, and you can get the full report for more in-depth understanding and strategies.
In interviews with top travel metasearch officials, financial analysts and hoteliers, as well as an examination of financial reports, the following picture emerges about the economics of travel metasearch.
The CPC (cost per click) model dominates travel metasearch as hotels, airlines and car rental companies pay the metasearch companies when a consumer clicks on their rates or links, and navigates to the online travel agency, hotel or car-rental advertisers’ sites. CPC rates typically range from $0.75 to $2 or more in core metasearch results, although they vary by site, aver- age daily rates, location, dates, and a wide variety of other factors.
Many metasearch players typically also offer pop-under ads, which open in individual windows, as an alternative way to begin a search outside the metasearch framework, but the user experience is sub-par and the leads generated are much less qualified because users are just beginning their searches. CPC rates for pop-under ads typically range from $0.25 to $0.50.
The lousy user experience and the proliferation of mobile are two key reasons that TripAdvisor transitioned in the Summer of 2013 from reliance on pop-unders to hotel metasearch in the form of its new Hotel Price Comparison feature.
TripAdvisor has struggled with its new emphasis on metasearch because its CPC rates on metasearch haven’t compensated for the greater click volume that the pop-unders brought, albeit with lower CPC prices.
Hotel and car-rental metasearch is highly monetized while flight metasearch monetization is considerably less the norm. The CPC rates that travel metasearch players get for hotels are generally two to ten times higher than they get for flights. If you are trying to figure out why Skyscanner is broadening its product to include hotels in a much bigger way than it has in the past, then look no further.
Airlines can participate in travel metasearch for free or at lower costs because for some travel metasearch companies, such as Kayak, they still, in some respects, drive the show. In Kayak’s 11th amended IPO registration statement, issued before its financials became more opaque as part of Priceline, the company stated that airline queries accounted for 86% of its desktop and mobile searches during the first quarter of 2012, but represented only 24% of distribution revenue.
Above is a short extract, get the full report for more in-depth understanding and strategies in travel metasearch.