15 Comments

Summary:

Where Google goes, people follow. Bruno Perez of Revpar Guru weighs in on Google’s excursion into the travel industry with Google Hotel Finder, seeing the move as a logical part of the company’s strategy to challenge established markets such as Facebook and Groupon.

Airplane

Where Google goes, people follow. So consider Google’s excursion into the travel industry. The move seems a logical part of the company’s strategy to challenge established markets; the recent launch of Google+ to take on the social media behemoth Facebook, Google Offers encroaching on Groupon’s territory — the track record is definitely there.

And then there is Google Hotel Finder, essentially a sophisticated, fully functional online travel agency. The only thing it needs to become a full-scale online travel agency (OTA) is to add a “book-it” button (for now the site leaves final bookings up to the likes of Kayak, Priceline, and Expedia et al).

Book-it buttons aside, Google has been on a “gobble” in recent years. Its new Hotel Finder joins an expanding list of travel-focused services like Google Flights and Google Plus, along with a host of other acquisitions — most recently foodie favorite Zagat for $25 million — to make the search engine (and the anything and everything portal to the web), a formidable player in the online travel industry.

In 2010 in the US alone, the hotel industry generated roughly $120 billion, so I really don’t see Google’s foray as simply an experiment. Google is out to generate some serious profits: OTAs are sophisticated search engines and that is precisely what Google does best.

With 91 percent of web users already relying on Google to perform basic searches, they will likely remain loyal to the Google brand when it comes time to search for hotels, comfortable with using their new services. Considering that level of customer dedication, the most immediate impact on the travel industry would likely be a clamoring by hotels to get noticed by Hotel Finder’s digital spotlight. Using its signature map function allows users to gain an organic, close-up sense of a given hotel’s neighborhood. It also boasts an easy price-comparison to historical averages, both for a specific hotel along with others chosen on a so-called “shortlist.” This is something that’s never been done before.

Google’s gobble is also likely to aid the continued popularity, not to mention profitability, of the entire online hotel-finding and travel industry. In other words, another nail in the proverbial coffin for traditional travel agents (though writing off traditional travel agents may prove premature, as some online travel web users have reverted back to travel agents for their bookings). Even if Google were to remain on the OTA sidelines, Hotel Finder’s web presence will ultimately drive traffic to other OTA sites. Either way, it’s potentially a win-win.

While it’s hard to measure the economic impact of a new hotel search site, the amount of online bookings, (buttressed by sites like Google Hotel) has surged in recent years. The year 2007 marked a watershed moment when for the first time more than half (51 percent) of US travelers booked their travel plans online, according to a 2008 Hotelmarketing.com study. And by the end of last year, more than 45 percent of all hotel bookings were completed online. Moreover, eMarketer and Jupiter, two Internet research firms, predict that 2011 will see online booking revenue to the tune of $125 to 146 billion.

All of this data leads me to the question – will Google Hotel Finder ultimately challenge OTAs directly – especially if there’s so much to gain?

Of course, I cannot say definitively, but I do believe that Google has the potential and capacity to take on the travel industry and become a full-service OTA. It has the infrastructure, it has the desire to control – or at least lead, and it certainly has the desire for revenues. As OTA earnings continue to swell and more travelers rely on them, the earning potential for Google is massive. It has been and continues to be shuttering a series of failed attempts to gain entry into certain spaces, but travel is almost a sure bet.

Regardless of its intentions, Google and its related products have effectively become online institutions. When it comes to the world of web-based hotel hunting, Google has already gone.

Consumers — and hotels — are following their lead.

Bruno Perez is vice president and co-founder of Revpar Guru, which provides a real-time, automated solution to help hotels maximize their revPAR, or revenue per available room. 

Image courtesy of Flickr user Freakland.

  1. So does this mean Google will destroy all information-based businesses and there will be nothing left for entrepreneurs to come up with? Should we all just crawl under the covers and let Google rule the world (knowing they have lobbyists now in D.C. to buy off the government and have Obama and Congress look the other way, no need for the FTC or DOJ to investigate)? Boy oh boy, who would want to even be alive if Google will own everything and anything, its worse than a Microsoft dominated world.

    Share
  2. Travel Realist Saturday, October 1, 2011

    This post is too funny.

    Nice hyperbole in the headline though, to suck the readers in.

    Looks like Revpar Guru’s trying to score brownie points for a possible exit / sale to Big G. Good luck with that.

    Google to become an OTA… ain’t gonna happen! Any other credible hypotheses?

    Share
  3. It makes no sense to access/reserve a hotel using an on-line site when you can get much lower prices when you go to the hotel in person.

    Share
  4. James Bennett Sunday, October 2, 2011

    Open Letter to Om Malik:

    I’ve been a fan and avid reader of GigaOm for a couple years now. I have reasonable expertise in both travel and technology having been in the industry for almost 10 years now.

    I am pleading with you to more thoroughly vet your guest writers. The scenario offered by Mr. Perez in this article is far fetched, to say the least. Anybody, with even a fraction of credible industry insight, could not possibly come to the conclusions he does in this article.

    Google is presently under tremendous regulatory scrutiny by numerous agencies both here and in Europe. Does he honestly believe this proposed plan wouldn’t be squashed by the feds before the ink even had a chance to dry? Not to mention that the OTA business model is considerably less profitable than their current ad models and would cannibalize approximately 10% of their current revenue source.

    However, if Google wanted to lose tremendous market share in their dominant search monopoly and destroy much of the goodwill that still remains for the company, it would follow Mr. Perez’s plan down to the letter. As Danny H. describes, it would be even “worse than a Microsoft dominated world.”

    I have come to expect more from GigaOm, please do not lower the standards of a great tech editorial and information source!

    Your audience will respect you far more for it.

    Share
  5. Budget Nugget Sunday, October 2, 2011

    By 2020, 30% of all goods and services world-wide will be offered and used through network marketing companies..

    Share
  6. It is amazing that there are still clueless idiots who act like established market leaders are EVER scared of Google. When the reality is, Google has NEVER taken down an established marker leader to become number 1 in the business. Not ONCE. The closest you could say would be Yahoo, but Yahoo was already on its way down well before Google took hold. Other htan that, ALL of Google’s services are nothing but distant third or worse…most of hte time very bit players in the market.

    I bet the idiots at GigaOM were saying “Bye Bye Paypal! Google is set to release Google Checkout!”

    Travel agents are not scared. Just like Ebay was not afraid of Checkout OR YouTube was not afraid of Google Video. Or Facebook was not afraid of Buzz, Wave OR Google+. Or cable operators not afraid of Google TV.

    Google has had FAR more huge failures than successes. Yet idiots who want to suck Sergey’s cock still think that everything Google touches turns to gold and that EVERYONE is as pathetic as they are who also want to suck Sergey’s cock and think “Ooooh! Google! It MUST be good!” But he reality is over 3 out of every 4 people on the internet have NEVER used a service with Google’s name on it other than google.com. Never.

    Seriously, Bruno…swallow Sergey’s semen on your on your own time. And realize this kind of stupidity and fanboyism is why you don’t have areal job at writing.

    Share
  7. I don’t give s h i t about entrepreneurs who suck my blood for a ticket who i can pay less money for it. If and I said IF google give a cheapest ticket go for it. I’m a consumer I’d like to have a cheap ticket with free commission or even less then 3% I will say go for it google and kick their a s s e s.
    But if google try to be evil like others entrepreneurs who think only about profit so i will tell go to h e l l !

    Share
    1. @babou

      Are you under the impression that Google doesn’t “think only about profit” too? If so, you might want to look a little closer at the facts on that one.

      Google is like any other business in their desire to maximize their profits, except that they have a much larger profile with even more to lose than smaller businesses.

      If Google uses their dominant position in the search business to direct traffic to their potential OTA business, as this article (foolishly) speculates on, they will eventually have a monopoly in travel as well. That would certainly not be in the best interest of travel businesses or consumers. You could think of them as the “OPEC” of the travel industry… and we all know how that has worked out for American consumers.

      Everybody would be at the mercy of Google’s obligation to maximize profits. Google becoming an OTA would be THE MOST ANTI-COMPETITIVE event in the history of travel. Of course, they would use their monopoly to extract as much revenue out of every business, and consumer, that they can. It’s just their corporate nature.

      You could think of Google as a toll bridge. If you want to enter, or cross the bridge, to the Internet you must first pay Google a toll.

      Google has been savvy by convincing consumers that they receive all these wonderful things from Google for free. In actuality, the goods and services that we all buy end up being more expensive because the businesses we buy things from have to pay Google a marketing “tariff” to be apart of the e-commerce game. Indirectly, that ends up being a hidden tax that all consumers must pay when buying most things these days.

      Travel is HUGE business, it is the largest industry in the world. The last thing the world wants, or would allow, is Google getting their greedy little hands on even more of the travel pie.

      Google, stick to search and a couple things that compliment that core business. STOP TRYING TO TAKE OVER THE WORLD BECAUSE YOU THINK YOU SHOULD, OR CAN. IT TURNS YOU INTO SOMETHING THAT YOU PROCLAIM YOU DO NOT WANT TO BE… DISGUSTINGLY “EVIL”!!!

      Isn’t a company that’s worth $200 BILLION and built in just a dozen years enough? Think it’s time for Larry and Sergey to retire to a beach somewhere and build a software program that counts your money… enough already!

      It’s all getting a bit sickening.

      Share
  8. To all who posted an intelligent response to my article, thank you. My intention was set out to highlight what Google is doing in the online travel space through its acquisitions. Did I say that Google is going to become an OTA? or did I question Google’s capacity to – big difference. Google will continue making travel-related acquisitions because the revenue potential is just too great. To ignore what Google is doing in the travel search space is foolish regardless of their prior failures. “Conversation breaks up the monopoly of not talking.” I am glad I could strike up such strong emotions in all of you which are symptoms of a good discussion. Thank you all for participating and thinking deeply into this subject.
    “There is no conversation more boring than the one where everybody agrees.”
    Bruno Perez

    Share
  9. To all who posted an intelligent response to my article, thank you. My intention was set out to highlight what Google is doing in the online travel space through its acquisitions. Did I say that Google is going to become an OTA? or did I question Google’s capacity to – big difference. Google will continue making travel-related acquisitions because the revenue potential is just too great. To ignore what Google is doing in the travel search space is foolish regardless of their prior failures. “Conversation breaks up the monopoly of not talking.” I am glad I could strike up such strong emotions in all of you which are symptoms of a good discussion. Thank you all for participating and thinking deeply into this subject.

    “There is no conversation more boring than the one where everybody agrees.”

    Share
    1. I think Google are a real threat to the ota’s, the biggest hurdle for them is connecting their Google places listings with the many different booking engines located the hotel web sites.

      Share
    2. Bruno,

      The way I see it, nobody agrees with you.

      You might want to stick to selling hotel software and give up the travel industry editorial writing gig. Nobody’s buying what you’re selling here.

      My colleague just sent me a link to a similar article about your hypothesis at Tnooz http://www.tnooz.com/2011/09/23/news/some-rumors-die-hard-will-google-become-an-online-travel-agency-video/. It looks like nobody was impressed with your opinion there either. And that’s a travel tech only blog.

      Word of advice: You might want to quit while you’re ahead.

      What’s you’re agenda anyway? Why so persistent to sell this stuff? Very weird.

      Share
  10. GigaOMG, What a Dumb Title Tuesday, October 4, 2011

    “Bon Voyage, Travel Agents…”

    Did I mistakingly land on Mashable or TechCrunch?

    Stupid title, especially considering today’s job climate with so many people out of work and having financial hardships. I didn’t bother to read the article, but did read a few of the comments and would agree that you should screen your guest writers more closely, or MORE PREFERABLY, not have them at all. I’ve noticed that the articles I actually read and get good information from are from your permanent staff.

    This article title took away some of your site’s credibility to me. The credibility that you’ve gained over the past 6 months after I stopped reading Mashable and TechCrunch.

    Share

Comments have been disabled for this post