Google shakes up hotel ads

With the commission-based model gone, small hotels face higher costs, lower visibility, and greater dependence on OTAs

Google's decision to end its commission-based model for hotel ads in February 2025 is a significant setback for independent hotels. This shift forces small and mid-sized hospitality businesses into a pay-per-click (PPC) system that is more expensive, riskier, and requires digital advertising expertise that they often lack. The change is driven by compliance with new digital market regulations, but has inadvertently strengthened the dominance of large online travel agencies (OTAs) and large hotel chains.

Key takeaways

• End of a level playing field: The commission model allowed small hotels to compete with OTAs like Booking.com and Expedia without upfront costs. Its elimination puts independent hotels at a disadvantage;
• Higher costs, lower visibility: Hotels must now bid for ad placements, resulting in higher marketing costs. Data from 1,000 hotels shows a decrease in impressions (-6%), clicks (-32%) and conversion rates (-28%);
• Increased reliance on OTAs: With less visibility, direct bookings have decreased (-6%) while reliance on OTAs has increased (+4%), increasing commission fees and reducing hotel control over pricing and guest relationships;
• Impact of new regulations: Google's move is in line with compliance with the EU's Digital Markets Act (DMA) and the UK's DMCCA, but instead of promoting fair competition, it has benefited larger digital players at the expense of small hotels;
• Adapting to the new landscape: Independent hotels must now focus on strengthening their direct booking strategies - optimizing SEO, leveraging social media and influencers, and offering incentives to book direct.

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