News for the Hospitality Executive |
by Pedro Colaco December, 2012 This 8th of November, Priceline, the online
travel agency, agreed to buy Kayak, the meta-search engine, for $1.8
billion.
This deal is expected to close in the first quarter of 2013, but what
is the
strategy behind it? And how will it reflect on hotels’ approach to
digital
marketing? Google is fighting for travel search Many articles have provided opinions on why
Priceline is
getting Kayak. Most of them, mention mobile and how Kayak has built a
great
mobile strategy. Priceline’s acquisition of Kayak has also
been labeled as an
answer to Google Hotel Finder. Searches for hotels on Google are down a
whopping 70% fewer people use Google as their starting point in their
searches
for hotels. However, Google is a very powerful and popular search
engine so
Google Hotel Finder could arguably mean some serious competition as it
expands
and obtains significant market share. An interesting article
by Max Rayner on tnooz.com shows how Google is pushing organic
results in
travel below the fold, promoting advertisers and their own content from
Hotel
Finder.
A significant presence by Google on yet
another search
sector could mean anti-trust problems for the company. In 2011 the
company
already encountered problems with its purchase of ATI software and
subsequent
commission of flight search tools from it. The case against Google was
dismissed at the time, but if Google starts dominating the travel
search sector
it could mean a resurgence of such a problem. Priceline is fighting back I think that the purchase could be seen as a
strategic
maneuver to drive Google cost out of their business model and have
Priceline
and its affiliates dominating travel search. An often overlooked piece of information is
that according
to Travel Trends, Priceline is one of Google’s biggest customer’s,
having spent
$375.2 million in online advertising just in the third quarter of 2012.
Priceline may be using Kayak as a way to bypass Google and consequently
save up
to $1B annually that it spends on Google. Jeffery H. Boyd, Priceline’s chief
executive, commented that
Priceline “can be helpful with KAYAK’s plans to build a global online
travel
brand” especially in the light that Google is “rearranging”
its traffic flows towards Google products to the detriment of others.
I.e.,
game on. If Google can get into legal trouble from
anti-trust issues,
so can Priceline. It’s obvious that Google has a very colorful past
when it
comes to anti-trust, which means that people tend to be paying close
attention
to its market share and related actions, but this doesn’t mean that if
Priceline starts controlling a significant portion of the market it
can’t get
into trouble. After all, besides Kayak it owns several other companies
that
could be seen as dominating travel search, such as Booking.com. What does it mean for hotel digital
marketing? For hotels and other travel related
companies this only
further reasserts their need to have a strong multi-channel digital
marketing
strategy and not rely on one search engine or a dominant OTA like
booking.com. Hotels that have invested a great deal in
SEO would be at a
serious loss if Google lost importance when it comes to search in the
travel
sector. And those that depend on Booking.com and other Priceline
companies
could see themselves in trouble if the companies were to increase their
fees
due to their dominant position. Booking.com’s past legal troubles,
further
magnify the issue with this kind of dependence. Earlier this year,
Booking.com,
along with several others, was sued for allegedly price fixing both in
the UK
and the US. As such, it would only make sense that
companies in the
travel industry need to be able to not being dependent on a single
channel and
having enough of a digital presence that they are sought out by
potential
clients no matter on what search engine these are conducting the search. Your hotel should run a multi-channel
digital marketing
strategy to avoid being overly reliant on Priceline or Google’s travel
strategies:
Conclusion In the end, it could be anyone’s game. Just
because Google
is a giant when it comes to online searches doesn’t mean it will be
able to
dominate travel. Similarly, just because Kayak has a great presence in
the US
market doesn’t mean it will be able to have enough of an international
presence
to tackle Google. Who knows, it might even be Hipmunk and Bing travel
that end
up being the main players. Will Google take ground away from Priceline
and others in
the travel sector? Will Priceline expand even further? The most
important thing
is that hotels and travel suppliers have a diversified strategy that
enables
them to maximize direct relationships with consumers. Only this way
will they
be able to control their own destiny, no matter how the verdict falls. All resources provided courtesy of GuestCentric. For more information please visit: http://www.guestcentric.com/shortmovie/ |
Contact:
Pedro Colaco President and CEO GUESTCENTRIC www.guestcentric.com/shortmovie 196 Haviland Court Stamford CT 06903 [email protected] Phone/Cell: (203) 517-0721 |
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