News for the Hospitality Executive
on the Google/ITA Effect
April 27, 2011
On April 8, 2011, The Department of Justice approved Google’s acquisition of ITA, a leading airline data collector and software development company. Of course, no one really knows for sure to what extent Google will enter into the travel industry, but we do have a general example of what they’re aiming to do from Google Senior Vice President Jeff Huber:
How cool would it be if you could type "flights to somewhere sunny for under $500 in May" into Google and get not just a set of links but also flight times, fares and a link to sites where you can actually buy tickets quickly and easily? Well that's exactly why we announced our intention to buy ITA Software.
With this in mind, let’s look at ways in which this deal could possibly affect travelers, online travel agencies (OTAs) and hotels.
According to the forthcoming PhoCusWright Consumer Travel Report, Third Edition, most leisure travelers’ plans are not flexible enough to warrant the deals that a Google text-processing search, like the example given by Mr. Huber, will most likely produce. Such travelers are content with the more specific options available today through OTAs and proprietary airline booking sites—they have set dates and times for travel and they are comfortable inputting their data into these sites to generate their best pricing options. Where Google will shine for travelers is in last-minute trips that allow for a bit more flexibility in arrival and departure times.
The OTAs are a huge source of revenue for Google. To give you an idea of how huge a revenue source, in June 2010, Expedia was Google’s number three advertiser, spending $3.59 million. For that month, Hotels.com spent $3.30 million. It is doubtful that Google is looking to undercut such advertising revenue; however, what other options would OTAs have if Google does go full-scale? Even if Google looks to start stealing OTA market share, OTAs have relatively few options to reach customers without using the worldwide leader in search engines. Since I have no information on what, if any, partnerships will exist between Google and OTAs, I’m going to declare that the “jury is still out” on this topic. That being said, I have a feeling that this will be a good, but expensive partnership opportunity for the leading (read: deep-pocketed) OTAs.
Honestly, I see no downside yet for hotels, as the more pricing options potential guests have for getting to a hotel’s front desk, the better. The only issue to watch will be how much share hotels from traditionally cheaper airfare destinations will steal from those in areas with traditionally higher airfare. Given the type of travel that will be most frequently sourced using the Google/ITA “platform” (the spur-of-the-moment trip), the mass market capabilities of a Google search for travel deals that link directly into airline booking engines will be a benefit to traditionally cheaper airfare destinations.
But with that being said, it’s all speculation, as we truly have no idea how extensive Google’s entry into the travel industry will be. Nonetheless, I think there will be some dramatic shifts in the travel industry for travelers, OTAs, and hotels with the new Google/ITA platform’s launch. Whether good or bad, it will depend on which side of the deal your standing.
What are your thoughts on the merger? Do you agree or disagree? I’d love to hear your thoughts and opinions; contact me at any time at firstname.lastname@example.org.
About the Author:
Jennifer Rodrigues, Visibility Development Manager with ThinkInk and TravelInk’d, is a seasoned public relations professional with a passion for the hospitality industry, which is expressed in her role at ThinkInk’s travel division, TravelInk’d. At TravelInk’d, she is responsible for developing cost-effective and creative public relations and marketing strategies for clients in the travel and tourism, airline, lodging, cruise and meeting/event sectors. For more information on TravelInk’d, please visit www.travelinkd.com or contact Jennifer at email@example.com. For more news about PR and marketing in the travel industry, follow TravelInk’d on Twitter @TravelInkd and visit the TravelInk’d Facebook Fan Page.
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