I’m pleased to introduce guest author Sam Engel, from BrandVerity. BrandVerity provides services that detect online brand and trademark abuse for a variety of industries including hospitality. Sam spoke recently to members of our Hospitality, Travel and Tourism team at our monthly meeting. We’re grateful that Sam has offered to now share his experience and knowledge with our readers. Welcome, Sam, and thank you for today’s post. – Greg
The Challenges that Hotel Brands Face in Paid Search
When you type the name of a hotel brand into a search engine, you’ll probably encounter a large number of text ads placed by online travel agencies (OTAs). Bidding and placing ads on variations of hotel brand names is a very common practice and has even led some in the hospitality industry to refer to it as a “war” between OTAs and hotels. Typically, those who support this viewpoint seem to frame it as a simple issue of direct bookings versus OTA bookings. While it’s certainly valuable for hotel brands to start thinking about it in those terms, there are some areas that this particular line of questioning still leaves uncovered. For example, why does the travel industry’s paid search landscape look like this in the first place? Furthermore, what other implications does this have for hotel brands?
In this post, I’d like to highlight some of the reasons that paid search is such a challenge for hotel brands—including the root causes that have led to the paid search struggle we have today, the broader implications of this struggle, and an idea for alleviating some of the industry’s conflict. Let’s start by exploring one of the reasons that we’ve arrived at this contentious relationship between hotels and OTAs:
1) It’s Easy for OTA Ads to Outnumber Your Brand’s Ads
In general, a hotel brand can only run a single paid search ad on a given search engine results page (SERP). This is because search engines have restrictions on “double-serving.” The engines’ rules prevent a single advertiser from having more than one ad appear on the SERP. This is typically enforced on the domain level. For example, only one ad leading to hilton.com would be allowed to appear—even if two separate AdWords accounts were trying to place two different ads for hilton.com.
While this restriction limits the brand’s prominence in paid search results, it enables OTAs to start to overwhelm the paid results. Individually, all the OTAs still have to follow the same rule. None of them can appear more than once. But in aggregate, they can really start to challenge the brand. Let’s say that five different OTAs are bidding on the same keyword as the brand. That leaves the brand significantly outnumbered with little recourse for pushing OTAs out of those spots. At BrandVerity, we’ve actually found this to be quite common in practice, too. In our recent report on hotels' branded keywords, we found an average of nearly two OTA ads per branded SERP on Google and almost 5 per branded SERP on Bing.
2) The Search Engines Won’t Be the Middle Man
In the past, the search engines provided a pretty significant set of protections for trademark owners. In fact, they originally prevented any advertising on branded keywords.
That all changed long ago in the U.S. Today, anyone can bid on branded keywords. Furthermore, trademarked terms are up for grabs (and can be used by anyone in ad copy) unless a brand specifically opts out. When it comes to OTAs or other partners using trademarked terms, the engines distance themselves even further. Google and Bing are both very intentional about avoiding trademark disputes here. They each have language describing how “resellers” can use a brand’s trademark in their ad copy. This essentially places all the burden on the trademark owner to enforce their agreements with their partners. Brands can’t lean on Google or Bing for help—they have to go directly to the OTAs.
3) Hotels’ Contracts Can Quickly Become Outdated
One of the major reasons that OTAs initially had so much leeway in paid search is because it wasn’t in their agreements. It’s hard to write restrictions on something that doesn’t exist yet. So once Google AdWords came along, the OTAs had free reign to use the platform as they saw fit. Unfortunately for hotel brands, there wasn’t much recourse until the time came to renegotiate their contracts.
So, why does this still matter today? Haven’t nearly all hotel chains gotten past this and adjusted their OTA agreements accordingly? That may be true, but it’s important to remember that things can still change—just as they did when paid search first exploded onto the scene. Google is always experimenting with new ad formats, targeting options, and reporting tools. Not only is AdWords continually evolving, but there are all sorts of new marketing platforms being developed. To use another Google product as an example, the Google Hotel Finder made its debut only a few years ago. How many hotels have contracts with OTAs governing that channel?
Let’s assume that your contract specifies every single restriction down to a tee. That agreement is severely limited if you can’t identify violations and take action to remediate them. Unfortunately, paid search doesn't lend itself to a quick ad-hoc review. It doesn't offer the transparency of a billboard or a magazine ad. There are many variables affecting what you see when you try to investigate. The terms you search for, location you search from, time of day, and many other factors will impact what ads you see on the page. This can make it very difficult to be fully exhaustive in any compliance efforts.
4) Even with an Airtight Contract, Agreements Can Be Hard to Enforce
To further complicate the issue, many OTAs also have affiliate programs. Typically, they will have many affiliates in their program (often thousands). These affiliates are rewarded for the sales they refer to the OTA. This adds a layer of separation, and can make it very difficult to uphold your agreements. For example, let’s say an OTA’s affiliate is responsible for a violation of your agreement with the OTA. Will the OTA even be aware that the affiliate is responsible? If so, will they be able to rein in the rogue affiliate?
5) Will Increased Transparency Create More Trust?
One of the common grievances from hotel brands is that the OTAs are a bit of a black box. You know what bookings they generate for you, but you don’t have much insight about the pathway that the customer took to make that booking. This makes it very difficult to determine what credit belongs where—so it’s understandable that hotel brands might be slightly skeptical of their OTA partners. Which OTA bookings are truly incremental? In other words, which bookings did OTAs contribute that the brand would not have booked otherwise?
There are many variables involved in answering this question, and it may not be something that brands can fully answer. OTAs provide a lot of positives: access to a larger set of potential customers, websites that convert incredibly well, plus perks and guarantees that encourage undecided visitors to make bookings. There’s even the OTA billboard effect to consider, which may increase a hotel’s direct bookings outside of the OTA channel. But should all of these value-adds be bundled with the permission to bid on hotels’ brand terms? Should hotels be forced to buy the all-inclusive package?
It generally doesn't make sense to order up an OTA’s services à la carte. One cannot simply ask for a booking here and a booking there, or to be featured on the OTA’s site with the caveat that customer ratings be excluded. OTA sites are a package deal. This may, in part, explain why OTAs have historically resisted making concessions with their paid search efforts. If paid search is just another part of the package, then why remove it?
Paid search is its own separate channel, and doesn’t have to be bundled. Unlike OTA sites, which are under direct OTA control and will most likely always be somewhat of a black box for hotels, paid search is a channel where brands can gain more visibility. Tools such as the AdWords Auction Insights report are helping improve transparency, showing more of what’s happening under the hood. This is a good sign, because ultimately hotel brands and OTAs both stand to gain from it. Brands get the reassurance that OTAs’ interests are truly aligned with their own, and OTAs can reinforce the value they provide to brands. Furthermore, by increasing both sides’ mutual trust, the partnerships can be strengthened over time. Transparency may not solve all the issues, but hopefully we’ll see this trend continue—not just in paid search, but in other channels as well.
Today’s blog post was contributed by Garvey Schubert Barer’s D.C. attorney and China Practice Chair, Richard Gluck, based on original research by GSB’s Yi Zhang. His extensive knowledge of international business and collaboration between the U.S. and China is a great resource to the firm. We’re grateful to have him as a new author to the Duff on Hospitality blog. – Greg
We have all seen the growth of Chinese investment in the U.S. hotel industry, but this is only the tip of the Chinese investment iceberg in acquiring U.S. management expertise and technology to fuel the growth of the hospitality and hotel industry in China itself.
With the robust growth of its national economy and an emerging tourism industry, China’s hotel sector has experienced rapid development in recent years. Economic growth in China has led to a significant increase in domestic travel for business and pleasure. In 2013, with 2.3 million hotel rooms, China’s total income from the national tourism industry was over $305 billion, an increase of approximately 20% against the previous year. However, only 15% of Chinese hotels have a brand affiliation; the market is highly fragmented and has vast product discrepancies.
China has identified tourism as a core growth engine, and many provincial government authorities plan to promote tourism by encouraging direct investment in real estate and the tourism industry. Chinese government development policy controls the investment priorities within China. According to the government’s current (12th) Five-Year Plan period (2010-2015), fostering China’s tourism industry is a strategic pillar for the country’s efforts to establish a satisfactory modern service industry. The authorities in charge of tourism at all levels, including the national tourism industry, have been directed by the government to “optimize the development environment in an all-around manner, vigorously expand the development opportunities, and accelerate the transformation of the industry.”
This rather general statement of government policy can have far reaching consequences. Consider these numbers: By 2015, China’s domestic tourism population should reach 3.3 billion, the number of inbound overnight tourists should reach 66.3 million, and the number of outbound overnight tourists should reach 83.75 million. The annual increase of the number of direct employees in the tourism industry should reach 700,000 while the total direct employment in the tourism industry should reach 15 million by 2015. According to the China National Tourism Administration, about 200,000 additional accommodation properties are expected to be built by 2015. Formats such as time-shares and vacation rentals are also being considered as ways to help sell existing properties.
China is still a developing country. This accounts for enormous growth and accelerating growth in the hotel and hospitality sector. But sustaining that growth and ensuring quality requires China to obtain management and technology know-how from more developed economies. China’s domestic market could benefit from the knowledge, skills, and experience that are brought back from overseas investments. Thus, as both the Chinese central government and local governments develop their plans, they are focusing on differentiation, internationalization, high-end brands, and major impact. They are welcoming foreign investment by experienced operators, and providing incentives for major hospitality players such as land-price discounts, cash or tax incentives, and priority approval processes.
Many of the investments made by Chinese companies in the U.S. hotel industry are designed to follow Chinese government policy that encourages “going out” by Chinese companies to “bring back” management expertise and best practices from world class operators outside of China to leapfrog the development process.
China’s mid-market is likely to be the most exciting space over the next few years. The mid-segment is currently under-represented from a brand and investment-grade product perspective. But with rising incomes and a wealthier travelling middle class, dramatic growth is expected. For example, March 13th’s Wall Street Journal reported on how Dalian, a northern Chinese port city on the Yellow Sea with a population of about 5.9 million, demands historic 17th- and 18th-century French architectural elements, including French carved stone details such as niches, balconies, and keystones, along with slate roofs.
Roughly 170 Chinese cities have more than one million residents, but only four cities – Shanghai, Beijing, Guangzhou and Shenzhen – are considered “first-tier” in terms of size and per capita GDP. To be considered in the second tier, a city should have a population of at least three million and a minimum GDP equivalent to USD 2,000 per capita. By this definition, more than 60 Chinese cities are qualified as second tier. According to figures from the U.S. Commercial Service, 14 of China’s second-tier cities account for 54 percent of the total imports from the U.S. The hotel market potential in these cities vast and growing.
Are you someone who seeks to work with Chinese investors in the U.S. hotel industry, or looking to find investment opportunities in China? Let us know your thoughts and we would be happy to answer any questions. Please contact me or Greg Duff.
As you may know, discrimination based on gender identity is unlawful in several states and many cities. This includes both the State of Washington and the City of Seattle. The Equal Employment Opportunity Commission (EEOC) has also taken the position that gender identity is protected under Title VII’s prohibition against discrimination based on sex.
While the antidiscrimination laws that protect transgendered individuals are not new, the subject of gender identity may be new to your managers. This post is intended to provide a very basic understanding of transgender issues to get employers off on the right foot for appropriately, sensitively, and lawfully handling gender expression issues in the workplace.
Defining Basic Terms
Broadly speaking, “gender expression” refers to the way people manifest masculinity or femininity. This can be through clothing, hair, makeup, overall appearance, speech, or other behavior or form of personal presentation. “Gender identity” refers to a person’s innate sense of being male or female. When someone is “transgender,” it essentially means their gender expression or identity is not consistent with societal expectations of someone with the same assigned sex at birth. “Sexual orientation” is a person’s physical and/or emotional attraction to the same or the opposite gender. Although sexual orientation and gender identity are often discussed together, they are not the same: a person’s gender identity has nothing to with their sexual preference, just the same as it has nothing to do with their age, race, or ethnicity.
Unlike the broader, umbrella term transgender (sometimes shortened to “trans”), “transsexual” specifically means someone who strongly feels that they do not embody the sex they were assigned at birth and has changed, or is in the process of changing, their sex to correspond to their sense of gender identity. These individuals often pursue medical options, such as surgery or medication, in order to align their physical characteristics with the gender with which they identify. When a person undergoes a process of medically, legally, and socially changing gender, this is known as a “transition.” A transition may or may not involve a “gender reassignment” (also known as “gender confirmation”) surgery.
One thing many people do not realize is that not every transgendered person necessarily identifies as the opposite sex or has any desire to change his or her body. In fact, a transgendered person may not identify as any gender at all but actually prefer to avoid restrictive notions of male or female altogether.
Tips for Being an Ally to Your Transgendered Employee
- Use respectful language. It can be difficult to know the proper terminology to use when talking to or about a transgendered employee. A lot of terms are out there in the media, but not all of them are considered respectful. Avoid stigmatizing words like tranny, transvestite, hermaphrodite, and sex-change surgery.
- Learn and use the proper pronoun. You should always call a trans person by his or her preferred name and chosen pronoun. If you don’t know their preference, it’s okay to respectfully ask the employee which pronoun they prefer, or how you should refer to them. If you do screw up a name or pronoun, just apologize and move on; making a fuss about it will likely be perceived as awkward or offensive. Along the same lines, ensure that an employee who recently disclosed that they are transgender is provided an updated name tag, uniform, business cards, etc. and that they are entered into internal and external systems with their preferred name and gender.
- Do not ask them if they have had gender reassignment surgery. This is a very private subject and should be treated the same way you would treat any employee’s medical issue. The same goes for hormone replacement therapy or any other medical treatment. Just because someone is transgendered, it doesn’t mean they want to talk to their boss or coworkers about their body.
- Keep it confidential. Be aware that a trans person’s name or gender on their driver’s license or other state or federal documents may be incongruent with their appearance or preferred name and pronoun (for example, when a person named “Steven” on legal identification presents as female). If this occurs, do not confront or “out” the transgendered employee. It may be necessary to note the trans employee’s legal name in formal employment documentation, but there is no requirement to use that same name in the workplace environment - think of how often people go by nicknames or middle names rather than their given first name. An employee’s status as transgendered should only be shared with those with a clear need to know, unless the trans employee prefers otherwise.
- Give the employee safe and private spaces. A question that always comes up with regard to transgendered employees is which bathroom they should use. Simply put, the transgendered individual should be permitted to use the restroom of the gender with which they identify. This is true regardless of whether they have had gender reassignment surgery. If another employee objects, that person should be reminded that this valued employee has the same right to use the restroom as all other employees. As for locker rooms, the trans employee should be provided a private area to change (either within the regular public locker room or in a separate area) or be given a separate changing schedule.
As an employer, you are responsible to ensure that both your managers and your other employees are treating transgendered employees respectfully. As with most things, the tone you set at the top will make a big difference in how the rest of your employees behave. (It’s also something that judges and juries give a lot of weight to when considering whether a company is responsible for an alleged hostile work environment against a transgender employee). That said, teaching respect and sensitivity to your employees is not necessarily easy or simple. If you have a transitioning employee, you may want to schedule a transgender awareness and sensitivity training to educate employees about trans issues and teach them how to respectfully interact with their transgendered colleague.
Greg Duff, Editor
Greg Duff founded and chairs GSB’s national Hospitality, Travel & Tourism group. His practice largely focuses on operations-oriented matters faced by hospitality industry members, including sales and marketing, distribution and e-commerce, procurement and technology. Greg also serves as counsel and legal advisor to many of the hospitality industry’s associations and trade groups, including AH&LA, HFTP and HSMAI.