Waiting for the other shoe to drop, so to speak, Hafner says he is much more concerned about how Kayak, the leading travel-metasearch player in the U.S., would navigate Google's souped-up role in facilitating hotel transactions than about the maneuverings of rivals like TripAdvisor, Fly.com, Bing Travel or Mobissimo.
"Google is by far the biggest source of travel information for consumers," Hafner says.
That point was confirmed for me last night when I drilled down a bit into what Google has been doing on the hotel front.
When I performed a Google search for Chicago hotels and then selected Hotel Allegro reviews, I accessed a link that produced:
• The property location in Google Maps;
• Overviews of the hotel and property details;
• Some 619 user reviews and ratings of Hotel Allegro from the likes of TripAdvisor, Priceline, HotelGuide and others;
• 50 photos and videos from the hotel itself and other content providers;
• 683 Web pages about the property, and
• Advertisements from Expedia, DealBase, Travelzoo and Hotelsmax.net.
The "look and feel" of this compilation is not very attractive, but that can be improved. And, with so many consumers launching their trip-planning through Google searches, you could argue that Google already is the most comprehensive "hotel website."
With speculation rampant about Google's next move in travel, Hafner believes he knows where Google is headed.
"Google doesn't care about flights," Hafner contends. "Hotels is where they'll enter."
He continues: "Hotels are a comparatively easy entry point and yield the highest margin for Google."
I blogged a couple of weeks ago about the Brave New World of Google Travel 3.0, arguing that Google may continue to build out its apps, from flight links to Google Maps, to put a heavier stamp on its travel offering, now that Bing Travel has raised its profile with its prominent integration into Microsoft's Bing search engine.
Hafner's theory on Google's evolution in travel is consistent with that line of thinking.
As it already does for products ranging from books to digital cameras, Google might display hotel price points in default displays and then advertisers could use Google Checkout to drive hotel transactions, Hafner says.
"So imagine a list of OTAs [online travel agencies] and suppliers, with Google Checkout to help facilitate conversion," Hafner says. "Pretty powerful."
And, Google already has another app, Google Base, featuring a data API, which perhaps could accommmodate hourly hotel pricing updates, Hafner says.
Some have argued that Google, with its market cap of $143 billion, doesn't worry about relatively little things such as Bing Travel.
But, I think with travel being such a large part of Google's advertising business, Bing's deft integration of Bing Travel in Google's own backyard has been an embarrassment to Google.
So, how would implementing hotel pricing -- and this could merely be Google's opening shot in travel-inventory pricing -- impact Google commercially?
"My guess is that it would be cannibalistic since many advertisers run their SEM [search engine marketing] campaigns on a same-session loss," Hafner says. "And, Google's opportunity to increase search share is relatively small (since it already owns 70 percent of queries in the U.S.) But, they'll probably need to move to this approach anyway to counter Bing etc."
In travel, as in other sectors, when Google bobs, the entire industry weaves.
There are lots of issues to sort out.
How would this impact the hotel-direct channel?
Who would be the winners and losers?
"It's an open question what role players like Kayak would have in a new ecosystem like this," Hafner says.
Google, by implementing hotel pricing (and who knows which travel segment after that), could certainly be disruptive.
Why would consumers navigate to TripAdvisor to read hotel reviews or to Kayak to compare prices, if they could do it all and get a more comprehensive look through Google?
Why go directly to a hotel website or to an online travel agency if you can get user reviews, maps and pricing on Google?
I received an inquiry from a business publication in Japan several months ago, asking me for answers when unfounded rumors were swirling that Google was going to launch "another Expedia."
Don't look for that sort of scenario. Google isn't going to become a travel agency.
Instead, there is plenty of room(s) for Google to expand its reach as a hotel kingmaker.
9 comments:
I agree with Steve's assessment that Google would start with hotels vs. flights. That's what I would do if I were them. That's what we've done at UpTake where we're ignoring flights entirely.
However...
Google has historically tackled problems on a horizontal basis, which has served them well. The progress they have made in travel is largely as a result of what they have done with Google Local and Google Maps, which can be applied all geographically based businesses. They historically have not taken a specific, verticalized approach toward travel. Of course that could change, and travel is certainly a juicy target. But I think its important to see that Google doesn't think the same way most other companies think. Steve points out that they are already monetizing their hotel results like crazy -- providing price metasearch right on those pages would only bring down their monetization rate, is my guess. Google in many ways has the luxury to focus purely on customer needs vs. monetization. And their heritage is in solving the biggest most horizontal problems.
This doesn't mean they won't benchmark their results in hotels. In fact, we think they are hand tuning some of the most popular results pages like "las vegas hotels".
The hope for companies like UpTake (and Kayak's hotels business) is that Google will keep tackling the big big issues around local search, which will allow more focused travel players to keep innovating ahead in the space. We've always seen Google as the right starting point for travel planning. But we don't think travel planning will end at Google. Plenty of traffic will still flow to UpTake, TripAdvisor, and tens of thousands of small sites.
Its not easy to keep from being trampled by the elephants, and Google is indeed the largest elephant in the space. But we've been living with that threat since the start of our business, and I don't think Bing Travel changes that in any way (even if Google cares to respond).
Thanks for this great inside
Google Universal Search is also something to watch closely. It's going stronger every minutes with the UGC trend and the Google Maps who is a very viral application.
The guys at Google, have all the data and can play a innovative game in the travel market.
With hotel, don't underestimate the direct channel. I mean not all reservation beging with a Google search or Meta-Search. Hotel industry is a multicanal channel game, Google have a good market but not all the market.
Now weave into this line of thinking their new Wave technology and there they are!
see Google Q2 2009 Earnings Call, they clearly say there they see an opportunity to have separate travel search ads.
Eric Schmidt: "So with respect to vertical search headroom, there’s plenty of such headroom, especially as our ads products get better. And so the reason we mentioned, for example, that in travel, it could come back but finance had not because that does in fact affect the revenue."
exactly, if you think about all the things to come in the next months, like waves, the chromium stuff, apps, all the api possibilities, mobile apps, etc..., it s pretty obvious, that horizontal search might not be google s focus anymore. Traditional search engines are a thing of the past.
Omri: This is what Jonathan Rosenberg, Google’s senior vice president of product management, said during the second quarter conference call: “I think it is the case on the vertical side that there is a lot of opportunity to get incremental monetization gains where you can further qualify the leads better for the advertisers. So for example, the finance area and the travel area are areas where there’s a lot of opportunity to do that, so that you end up putting more information in the ad and then incrementally getting more information from the customer so that you can further qualify whether or not the customer in the finance area is interested in a particular type of mortgage, and then you send them to an advertiser with whom they are more likely to consummate a specific transaction that that advertiser is willing to pay for. So there’s a lot of opportunity there.”
Google already has separate travel-search ads. Am I missing something here? I took his comments to mean that Google would tweak them to make them even more effective for advertisers.
I think they will add soon dates and (room)types in addition to the more options and provide partners like EasyToBook.com the option to advertise on this additional data. I don't think it will different that much from kayak's search actuality, but they will approach it later in the search, so more as additional options in the result-list.
thanks for good sharing post.
You're right,
Google is omnipotent!
I'm sure that will really change the online-travel ecosystem if Google begins displaying hotel pricing and pricing. What about all the travel agencies, tour operator, hotel search engine in the world? Which will be their future?
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