Metasearch Pricing Models Explained

As metasearch continues to expand into one of your most important channels for direct revenue, it’s important to understand your choices in terms of pricing models. 

At Metadesk, we talk to hoteliers every day and have encountered a wide variety of various pricing models for metasearch advertising. Here’s a handy breakdown of pricing models you might consider, or in some cases, be stuck with. 

A Media Placement Fee

We mostly see this pricing model offered by booking engine providers, and if you’re like most hoteliers, your metasearch presence is facilitated by your booking engine. 

Most booking engines charge you a percentage of what you allocate as your metasearch media budget, usually between 10% - 15% applied to a media budget ranging from $1,000 - $3,000 per month.

Booking engine providers love this because it’s a low labor source of revenue - they simply need to maintain a tech connection that publishes a live feed of your rates and availability to metasearch channels and collect a tidy fee.

If the percentage you pay in media fees + your metasearch advertising budget is lower than your OTA commissions, this model can be a win. But a problem we see more and more is that OTA’s are spending huge amounts of advertising dollars to dominate metasearch. And if your booking engine doesn’t allow for any media strategy whatsoever, you’re at a huge disadvantage.

Best for:

This pricing model works well for advantaged hotels that tend to fill up based on their location or surplus demand in their market.

One main drawback is if you want to use metasearch for more, like targeting need dates or a certain type of traveler, forget it. Your booking engine isn’t capable of incorporating any type of strategic targeting on your behalf. 

Flat Fee + Media Budget

The second-most common pricing model we see at Metadesk in the industry is a flat fee + media budget. We commonly see a range of advertising budgets of around $1,000 - $1,500 with the management fee ranging from $400 - $75 on the low end ($75!!).

At first glance, this seems like a great deal for hoteliers, especially with macro-economic factors like rising marketing costs and operational overhead.

But what we find is that for a management fee so low, the metasearch provider must work hard to limit their labor cost; the aim is to avoid providing support, and typically nobody is actively managing your advertising campaigns.

Instead, these providers try to manage your strategy with algorithmic and programmatic functions alone, which can be problematic without oversight provided by humans. One common problem we see is your rate strategy being compromised by automated price-matching to meet or beat the unscrupulous practice of big OTA undercutting your rates in auction.

In regards to budget, the issue here is two-fold: Many properties would prefer not to pony up even that small amount of cash each month if it can be avoided, and on top of that, the budget can oftentimes be too small to really compete with big OTA.

Best for:A flat fee + media budget is best for small to mid-sized hotels, with mid-range annualized ADR, in low to non-competitive markets.

Pay-Per-Stay Commission Model

A performance-based model that charges a commission for only stays that take place, this model works well for hoteliers that need more from metasearch and who have decided to prioritize ways to increase direct bookings.

Hoteliers like this model because it aligns their interests with that of their metasearch partner. They’re only billed for stays that take place; typically cancellations, and even reservations created by your loyalty members, are excluded from billing.

Another big advantage of this model is the fact that the 3rd party provider assumes all of the financial risk and funds your advertising budget.

It also means that, in theory, your budget is uncapped and only limited by the travel demand in your market. Your metasearch partner will keep spending as long as they’re generating reservations. This means that instead of your cash flow that determines your advertising budget, which can be arbitrary and restrictive, it’s market demand.

Best for:

This pricing model works well for properties in a competitive market that need to utilize metasearch as a strategic advertising channel to help address need periods (like mid-week vs weekend, on vs off-season, etc.) and target individual travel segments.

One huge plus is that properties using this model don’t have to come out of pocket for their metasearch advertising budget.  

Organic Only Flat Fee

If you’ve never heard of this pricing model, it’s because we just invented it 😎 And as we write this piece, this model isn’t available anywhere else.

Despite a flat fee + media budget model being very low cost in nature, some hotels simply don’t have enough inventory to make the math make sense. They may struggle to see a return on even a low budget amount of $1,000 per month, and giving away a percentage of the channel is not a great idea when your total monthly profit is low figures.

That’s why we’ve developed a low-cost way for hoteliers to display an organic listing only. And with a strategic rate strategy (sSuch as a loyalty or member rate channeled to meta) your official site will still be there at the moment of booking, alongside OTA channels with a higher rate.

Best for:

Small hotels, or those with a low ADR, where traditional metasearch pricing models just don’t work.

We hope you found this breakdown useful and informative. At Metadesk, we offer a range of metasearch products to best serve your unique needs.

Please reach out if you’d like to discuss your metasearch advertising strategy and which model might work best for your property’s unique needs.

The Importance Of Hotel Metasearch

Hotel metasearch engines work as aggregators, pulling data from various sources to create a list of available room rates for a potential guest to choose from. They improve the booking experience for your guests, making it easier to reserve rooms and compare rates.

On the surface, hotel metasearch may seem like yet another distribution channel, but it's vital to any successful hotel marketing strategy. Metasearch can improve the guest experience, help you beat online travel agencies (OTAs) to recapture direct bookings, and effectively target "bottom of the funnel" guests. You should consider using hotel metasearch to take advantage of a significant marketing opportunity.

Improved Guest Experience

Gone are the days of browsing multiple websites for rates before booking a hotel room. Hotel metasearch engines will do the work of research and organization for your guests, removing the hard part of making a reservation. The guest experience starts long before they set foot on your property, and the ease of booking through a metasearch engine will create a positive association between you and your guests. 

This easy booking process can also increase the chances of a guest visiting at all. Because so many hotels already use metasearch, manual rate shopping needs to be updated. If guests can not easily find your official rates on a metasearch engine, they may be discouraged from booking. And if your competition is the one skipping metasearch, that same discouragement could lead a potential guest to your hotel instead.

Beating Online Travel Agencies

OTAs have been using hotel metasearch for years and will continue to do so for many more to come. If you want to maintain a competitive edge, it’s vital that you throw your hat into the ring as well.  

OTAs have large marketing budgets that can easily outshine your own marketing efforts, so you need to do everything you can to beat them out and capture direct bookings. If you're absent on hotel metasearch, this is an automatic win for the OTAs. Guests can't book direct if there's no direct listing available!

If you are present on hotel metasearch, your official rates can easily win out. Since hotel metasearch engines display booking options side-by-side, it's effortless for guests to compare. If your official rates are equal to or lower than those of OTAs, guests are more likely to book direct. And more direct bookings means more money in your own pocket.

Hotel metasearch engines can even update automatically with discounted rates, and this is a great way to stand out above OTAs. “Book Direct” offers and other exclusive packages will be reflected in the hotel metasearch feed, lowering your rates and making a direct booking even more appealing. 

Targeting “Bottom Of The Funnel” Guests

Hotel metasearch is about as “bottom of the funnel” as you can get. This is the final step between your guest and their reservation, and it shouldn’t be overlooked. 

If you’re not nailing the bottom of the funnel, you’re sacrificing the effectiveness of all your other marketing efforts. Even if you convince a guest to stay with you over your competition, that stay loses some of its value if the final booking goes to an OTA. You work hard with your marketing, so you should maintain a strong presence to the final moments. OTAs will use metasearch with or without you, so don’t skip out on your opportunity to compete. 

Getting Started With Hotel Metasearch

To get the most out of hotel metasearch, you need to connect with a metasearch partner. They can ensure your official rates are displayed in the lists created by hotel metasearch engines, allowing you to stay competitive on these channels. 

If you’re ready to get started with hotel metasearch, check out our post on metasearch basics or contact Metadesk.