The sunsetting of Google Hotel Ads’ commission-based model, announced last year, takes effect in February 2025. And it’s a major blow to independent hotels. For years, the commission model was a lifeline for small and medium-sized hospitality businesses. It provided a cost-efficient, low-risk, and hassle-free way to market accommodations without needing deep expertise in digital advertising.
But above all, it levelled the playing field, ensuring independent hotels appeared alongside major Online Travel Agencies (OTAs) like Booking.com, Airbnb, and Expedia.
Now, that advantage is gone, and independent hotels are paying the price.
Google’s commission-based ads model was simple: hotels only paid when they secured a booking, avoiding upfront costs and complex ad management. It gave small hotels visibility without the burden of tracking Google Analytics, managing keyword bids, or hiring expensive digital agencies. For smaller hoteliers who are constantly on their feet running their properties–not digital ad campaigns–this system was a game-changer.
By removing it, Google is effectively pushing small hotels into a high-stakes, pay-per-click (PPC) system that demands technical know-how and upfront investment with no guarantee of return. Worse, the independent hotels that once held prime positions on Google Hotel Ads and Google Maps now find themselves buried beneath big-spending OTAs and major chains.
Higher costs, lower visibility for independent hotels
We have seen how the shift from a performance-based to a pay-to-play model is already hurting small and medium-sized businesses.
A year-on-year analysis of 1,000 hotels in eviivo’s ecosystem that transitioned from Google’s commission model to PPC advertising reveals the stark impact. As hotels were ranked lower, the absolute number of impressions dropped by six per cent, resulting in a drop of nine per cent of their impression share. Clicks fell by 32 per cent, resulting in a 28 per cent drop in conversion rates.
Furthermore, hotels’ share of direct bookings decreased by six per cent while OTA reliance grew by four per cent and the number of “free bookings” via Google Hotel Ads remained flat at around 0.5 per cent of total bookings.
Without guaranteed placement, hotels now need to outbid OTAs and large chains just to be seen. However few independent businesses can afford the escalating PPC costs, nor do they have the expertise to compete effectively. It’s the same song all over again: larger brands with deep pockets dominate the bidding wars, driving smaller operators further down the results page.
DMA was supposed to curb Big Tech but it’s backfiring on small businesses
Google’s decision to end its commission model wasn’t made in a vacuum. It was a response to the EU’s Digital Markets Act (DMA), enforced in March 2024, and the UK’s Digital Markets, Competition, and Consumers Act (DMCCA), introduced by the last Conservative government, effective January 2025. These laws were designed to curb the power of digital “gatekeepers” like Google, Amazon, and Booking.com by ensuring fair competition, transparent digital marketing practices and protecting consumer rights.
Yet, the outcome has been the opposite for independent hotels. By pushing them into a riskier, more expensive digital advertising model, Google has effectively strengthened the dominance of the very OTAs and travel giants the legislation aimed to rein in.
There is no dispute that OTAs provide real value. They invest billions in marketing and drive bookings for hotels, where many benefit from their promotional and loyalty program. However, their dominance also comes at a cost: higher commissions, reduced brand recognition for hotels, and fewer direct bookings.
Previously, Google’s commission model offered an alternative—allowing hotels to maintain direct relationships with guests while benefiting from visibility on Google. Now, with that option gone, small hotels are left with two bad choices: compete in a PPC bidding war they can’t afford, or accept greater OTA dependence and lose control over pricing and guest relationships.
Google’s commission model equalised the game by offering smaller hotels visibility without a massive ad budget. By eliminating it, Google has shifted its priorities, aligning more closely with advertisers who rely on high-bid PPC strategies.
A future stacked against independent hotels?
Hospitality is a middle-market industry, powered by independent operators who don’t have time to micromanage ad spend and outbid tech giants. Google’s commission-based model gave them a fighting chance. Now, with its removal, the balance has shifted decisively toward big brands.
There are still some ways hotels can boost direct bookings without overspending on Google Ads:
Websites must be easy to find and book on, with strong SEO, fast loading times, and a mobile-friendly design. With AI tools like ChatGPT and “Operator” reshaping travel search and booking, hotels must ensure their sites are AI agent-friendly.
Engaging social media and influencer partnerships attract organic traffic, using direct-booking perks like free breakfast or late checkout, driving email marketing, loyalty programs, and retargeting ads, all help capture high-intent travellers, while local partnerships can also drive valuable referrals.
For hotels, this isn’t just about tweaking marketing tactics. It’s about staying competitive in an industry where big players dominate digital real estate. Independent hotels need a fair shot at visibility, which starts with taking control of their direct booking strategy. Targeted, cost-effective digital tactics are now more important than ever to build stronger guest relationships and reduce reliance on third-party platforms. Source: Boutique Hotel News