Google’s response to Digital Markets Act causes 20% drop in organic traffic for hotels – WiT

According to new data from D-EDGE Hospitality Solutions, the Digital Markets Act (DMA) had promised to level the playing field for hotels in the digital marketplace, but its initial effects suggest otherwise. 

The DMA is a recent legislation by the European Commission designed to limit the power of online gatekeepers like Google, Apple, Facebook, and Amazon. It aims to promote fair competition and provide consumers with more choices. For the hotel industry, the DMA was expected to increase transparency, improve rankings and visibility, and reduce dependency on Online Travel Agencies (OTAs).

D-EDGE recently published a few insights that highlight how Google’s response to the DMA regulations in January has significantly altered hotel search result pages, revealing some concerning trends.

In response to the DMA, Google introduced several changes to hotel search result pages in January:

• Organic results visibility: Organic results are pushed further down the page, reducing their visibility.
  
• New “Places” bloc: This new section provides more space to OTAs and Metasearch platforms.
  
• Stay dates and Google Maps: Users must click through to Google Hotels pages to change stay dates and cannot click Google Maps in the Knowledge Panel for a larger view.
  
• Guest reviews: Google now includes guest reviews from various sources along with Google reviews.

Impact on hotel performance 

D-EDGE’s data analysis from January 1, 2024, to April 28, 2024, compared to the same period in the previous year, shows several key trends:

1. Decline in organic traffic and revenue:
   • Organic traffic to hotel websites dropped by 20%.
   • Revenue from Free Booking Links fell by 32%, with a 41% drop in clicks.
   • The share of direct revenue from organic and unpaid traffic decreased from 66% to 57%.
     
2. Increased dependence on paid traffic:
   • The share of direct revenue from Google paid campaigns rose from 34% to 43%.
   • Google Ads (Search Marketing) now account for 39% of clicks.
     
3. Rising distribution costs:
   • Direct distribution costs increased by 18%, with average direct distribution costs rising from 3.3% to 3.9% of revenue. However, these costs remain significantly lower than indirect costs.
     
4. Shift in channel distribution mix:
   • Direct booking revenue share fell by 4.3% to an average of 28.1%.
   • OTA revenue market share grew to 62.7%.
   • Revenue from other indirect sources (mostly Hotelbeds) increased to 9.1%.

Despite an 11% increase in total digital revenue during this period, these shifts indicate higher costs and lower visibility for hotels.

The exact reasons for these changes remain unclear. D-EDGE says it is uncertain whether they are a direct result of DMA regulations or part of Google’s testing process. The current impact also seems to favor gatekeepers, not hotels or consumers. The increased visibility for OTAs and higher ad revenue for Google have come at the expense of hotel visibility and organic traffic.

Recommendations for hoteliers

• Monitor Data Closely: Track changes in website traffic, booking revenue, distribution mix, and acquisition costs.
• Increase Digital Marketing Spend: Invest more in paid advertising, especially on hotel names for brand protection, to enhance search visibility and drive qualified traffic.
• Partner with a Digital Marketing Agency: Collaborate with experts who can analyze your property’s performance and adapt your SEO and marketing strategies accordingly.

D-EDGE also adds that the DMA has recently added Booking.com to its list of gatekeepers. Given Booking.com’s dominance in Europe, its compliance with DMA regulations could also bring significant changes to hotel distribution. 

Hoteliers should stay prepared for further adjustments in the digital marketplace.