February 29th, 2016 by Shawn Kerr
Expedia has announced the roll-out of a new “bid for placement” system for its hotel listings that was quietly tested through December and is now seeing limited use on their hotel bookings. This new Expedia Accelerator feature will be of interest to any lodging business participating in or considering participation in the Online Travel Agency (OTA). In this article, I will explore both what is known about and the speculation that surrounds Accelerator and what it may mean for B&B inns, boutique hotels, dude & guest ranches and other distinctive lodging providers.
How Expedia Accelerator Works
Expedia has not released a whole lot of information about Accelerator, but has gone on record as saying that participating hotels are able to bid on various top result slots to increase rank position on their location(s). A spokesperson for Expedia has stated that the bidding system is compensation-based, meaning a cost-per-sale, rather than a cost-per-click for a listing view. It also give hoteliers the ability to turn Accelerator on and off throughout the day, so that they can optimize their campaign based on the average highest volume of sales during the day.
Why Expedia Is Moving to a “Bid for Placement” System
Expedia CFO Mark Okerstrom said in an interview with Skift:
“We are also offering the opportunity for hotels to augment that quality nature of their listing with incremental economics to help give them a little bit of a boost. It is a program we call Accelerator. And so we just transitioned the model to one of much more of a marketplace. So I think we will leave it to the various hotel companies to dictate for themselves how they use our marketplace and we would encourage them to do it in a way that maximizes what’s best for them.”
[source: Expedia Overturns Hotel Business Model With Introduction of Bidding for Listings]
Another obvious reason for this transition is that it creates a new source of revenue for Expedia. Just like Cost-Per-Click (CPC) and other advertising, Expedia Accelerator creates another way for hotels to put more money into gaining visibility in the search results at the OTA.
Reactions to Expedia Accelerator
Criticisms about this move have been swift, sometimes vehement and, often, cogent.
Maryam Cope, Vice President of the American Hotel & Lodging Association, said,
“This program will severely jeopardize consumer choice in the hotel booking process. Clearly this is a pay to play program that fixes results consumers see so they are none the wiser. Biased or misleading search results from these sites or via Web searches can be highly problematic, particularly on those booking websites that purport to be ‘helping’ consumers comparison-shop based off of less than objective information…AH&LA cautions consumers to be skeptical of rankings offered through online travel company websites that don’t offer proper disclosures about criteria used, which might not be objective, or of extra fees and services that might not be immediately apparent”
[source: Expedia’s Hotel-Bidding Program Misleads Consumers Says Hotel Group]
Also at issue is the fact that, so far, there’s been no clear identification of these paid listing positions, unlike those of CPC programs such as AdWords.
Technology, travel and news journalist Phil Butler likens Expedia Accelerator to a carnival act, where the OTA is touting their new bidding system as a way to get ahead, but the real aim is to eat into the already slim profit margins of the lodging industry.
“Let’s face it, with enough money I can create a ‘trend’, anybody can buy innovation, and the science is just physics. So we arrive at Accelerator, another Expedia endeavor to solve a real world problem – a corporate dilemma that grips our world – growth in a zero growth circus.”
[source: Expedia Accelerator: Step Right Up, You Hotelier Fools]
The Future of Expedia Accelerator
If this new system is a success for Expedia is a success then you can expect that its reach will grow, first to a wider scope among hotels, including boutique operations, and then outward to other lodging types, including the Bed & Breakfast market. This will add another level of marketing consideration for innkeepers. If bookings via Expedia start to fall and/or your local competitors are making gains in placement via Accelerator then it will become important to look at ways to either fill the revenue gap elsewhere or test the program to see if it offers an acceptable level of profit by participating – don’t forget to consider your time, as well as your costs, for participation.
B&B innkeepers, boutique hoteliers, and dude ranches who are either on, or are considering a listing, with Expedia are welcome to leave their comments.