What to expect with Google's new positioning in travel?
Launched earlier in May, Google Trips puts merges flights, hotels, packages, home-rentals, car rentals, ridesharing, cruises, and experiences search in one single, übermensch ecosystem, combining the Google Trips app, Google Flights, and Google Hotels under one landing page. And, with Google getting bigger on the travel landscape, OTAs continue diversifying the risks: Booking.com (with Q1-2019 revenue down by 3%, don't forget), especially, alluded to new possible acquisition and it is rumored to announce its new stand-alone tours & attractions program any day now. My long-view on the topic is that Google is going to cover the whole traveler's journey, while OTAs will move more and more to B2B, possibly even SaaS, landscapes. How will these changes impact hotels? What's your take?
Adjunct Professor NYU Tisch Center for Hospitality, Founder & Director at NextGuest Digital
Google has been putting together travel pieces since 2000. They have experimented with at least 100 travel initiatives so far and only a few has ever worked. I have been hearing that Google will change hotel distribution ever since the introduction of Google Hotel Finder back in 2009. 10 years now. Did Google dramatically change hotel distribution? I don't think so.
Google changed hotel search for ever and now “owns” the customer in the Dreaming and Planning Phases of the “Digital Customer Journey.” Over 50% of online hotel bookings happen as direct referrals from these two phases. But guess who owns the customer in the Booking Phase? The OTAs and hotel websites.
The main question here is: Do travel consumers perceive Google as a booking channel? Right now the answer is a resounding “No!”. You want proof? Google Hotel Ads and Book on Google have been around for 10 years now, yet contribute to less than 1%-3% of hotel bookings.
Referrals means advertising dollars, which is the core revenue stream for Google. Is Google transforming itself into an OTA? Categorically no! Getting involved in transactions (hotel bookings) is a very “dirty work”: A very expensive technology investment: building from scratch a massive OTA type of a CRS capable of handling at least 2.5 million hotels and over 6 million alternative accommodations just to match Booking.com; building and maintaining thousands of APIs, designing RMS and CRM platforms from scratch, hiring thousands of hotel savvy revenue managers, area directors and sales executives (Booking has 17,000 of those); opening expensive support and sales offices in 200 plus countries and territories around the world, and getting ready to spend $5+ billion in advertising a year to convince the traveling public that Google is a booking channel for hotels.