Where Google (s GOOG) 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.