What to expect with Google's new positioning in travel?

A great question to pose and one that I will take a slightly different view on. Yes, it is obvious that Google is moving deeper into the travel space, but let's not forget their track record of monetizing consumer-led products and services is not exactly stellar. They will have to battle big-brother concerns as well as address the loyalty/rewards landscape, however, their 75% mobile OS penetration will help put their travel experience in nearly every pocket. 

Amazon and Alibaba however, are the larger tech titans that I frankly have my eye on. For Amazon, their one-click checkout and superior recommendation engines are ripe for quick commoditization of the brands, as well as their attribute-based buying experience, strong existing capabilities to cater to small business owners (think boutique hotels and Airbnb), leading data capabilities and voice search through Alexa, and their ready-made loyalty rewards marketplace. 

All this means Amazon has a better immediate capability to directly sell rooms and experiences. Furthermore, Amazon enjoys a better-perceived consumer position and the financial means to leverage it, whereas Alibaba owns the online shopping and significant travel services in China and beyond. Watch this space.

Following a great panel at HITEC Europe with Uli Kastner, I believe Google will become a dominant player in the hotel distribution landscape after the next big economic shift. Every economic downturn has been the catalyst for a new dominant player on the distribution space. 9/11 made Expedia, 2008 made Booking and the next one might be the catalyst for Google.

This is a very over-simplified view but looking at the way Google is growing their "stack" it seems the most likely player. Let's not forget that Google's micro-moments concept is also a way for them to get more people to pay for more ads at each one of those micro-moments since they're present every step of the way - from direct, through metasearch and to OTAs.

It is inevitable – and to the benefit of the customer – that Google will become (or is already) the go-to place for researching, planning, booking and providing real-time information throughout a trip. Customers want seamless intelligence and connected experiences, and Google is uniquely positioned to connect all the dots. We are only seeing glimpses of the full power, but I can already see a future where Google will be the virtual travel companion, automatically calling an Uber, scanning my luggage for flights, rebooking flights in cases of delays and checking me in and out of hotels while taking care of me (and translating for me) while in destination.

What will become of the OTAs? We are seeing two trends: 1) Diversification – Booking Holding now owns many non-OTA-related business, including OpenTable and the recent acquisition of FareHarbor. It will have no choice but to continue to expand outward from its legacy business to keep growing. 2) Platformization – Expedia is aggressively pushing its Expedia Partner Platform, effectively offering a technology solution to independent and small- to mid-size chains to bring them (and tie them) to its ecosystem. Both trends will accelerate in the future.

It's about time. In 2010, I sat in on some sessions at Google HQ in Mountain View discussing the progression of Google in travel and it all pointed to a complete landscape or what was called back then the entire travel channel. Now, taking a page from the PSD2 movement in Europe regarding the banks having to open up their API to allow third-party services providers, the next stop for Google will be to build a layer on top of hotel suppliers so that guest can check their folio data, guest profile and loyalty, and why not make all sorts of ancillary purchasing decisions. Google can then use the data to sell back to advertisers.  

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. 

I expect the Google Trips app will become a new tourism product that offers travelers the “total travel experience.” With Google Maps' location-based advantage, this app is very likely to become a significant threat to OTAs. Hotels too may also need to reevaluate their business relationship with Google and get actively involved in this new app.

In fact, Google is not the only company that strives to offer the “total travel experience” to travelers. Almost every operator in the tourism industry is trying to win more loyal customers with a bigger loyalty program. Some companies also found solutions through service integration and new partnerships to win “big” without tying up their investments with big assets. For example,

· The new partnership between Lyft and Hilton and the partnership between Lyft and Delta Airlines will allow travelers to earn Hilton Honor points and Delta SkyMiles for their rides.

·While the new contract between Marriott and Expedia does not seem to favor the OTA, OTAs are already ahead of hotels by getting into the short-term residential rental market a lot earlier.

·Marriott recently entered the short-term residential rental market as a means to compete head-to-head with Airbnb and OTAs.

·Airbnb acquired HotelTonight.com in March as the company marches its way to become a true travel enterprise.

Overall, when the big players in the market are trying to offer travelers more comprehensive travel experience within one platform, if not the “total travel experience” like what Google Trips app would offer yet, it is probably safe to predict more mergers and acquisitions can be observed in the market, or at least more new partnerships will be announced soon. Would you agree? 

Google wants to deliver the best search experience to their audience, and they take this mantra pretty seriously. Travel search remains a complicated and fragmented pain. There they see a business opportunity selling paid ultra-targeted advertising. For travel brands, it is indeed challenging to buy Google advertising being secure of their Roi. It's difficult to budget the cost of an advertisement that turns out to be an established distribution cost. Google can fill this gap with predictive Ai and with more accessible ways to buy "clicks that sell", mainly with a commission model deal, predictive ROAS and things that make think that they want to be a travel intermediator because they get a slide of the sale.

I don't' think they want to be an OTA. They want to take the best part of the OTA business, the trading of Cost of Sales, leaving the rest (supply, operations, support, frauds,...) to others. As an Integration Partner of Google Hotel Price Ads, I could see this carefully, and it's visible in their API documentation: the commission model is a simplification of their prediction of the cost of the clicks that generate a sale. OTAs should concentrate more on user-centric personalization and inspiration to retain their audience: so they would need less advertising to generate sales. User behavior prediction via AI is the key. 

As more roads in online travel lead to Google products and charge a toll for access, hoteliers have little choice but to optimize their presence and pay to play. At the same time, they should ease their dependency on Google. This doesn't mean shifting resources to other intermediaries like Facebook, OTAs and metasearch. It means finding more ways to connect directly with travelers through content marketing, CRM and social media, but also through offline activities like guest loyalty and recognition programs, print and broadcast advertising, PR and events. 

Google is redifining the game for OTAs and Meta, as well as OTAs and Meta redifined the search game for Google more 10-15 years ago and it took quite a while to make visible changes. Now OTAs are forced to rethink their own product and add value for their customers, taking control of the entire customer journey, because Google already owns it. I never believed in the power of all-in-one solution, even if it's a google product. There will always be a better product for a specific purpose elsewhere. As well as a brand which come first to the consumer's mind. For independent hotels it's time to plan advertising at scale to stay ahead of the game (or at least to catch up).

At a superficial look, the moves Google made into the travel space over the last couple of years seem random and unfocused. With the launch of the /travel website, however, all these activities assumed a new meaning, leading the company to its current (dominant) position. Google's Director of travel product management, recently stated that the company is "evolving the way" that "hotel search works". And it is succeeding: we used to have different, specific channels for each phase of the guest' journey but now, when you look at the funnel, Google is omnipresent.

Google -eventually- turned into a competitor not only for OTAs, but for review sites, metasearch engines and everything in between. How will traditional (obsolete?) travel platforms deal with it? Very likely by cutting Google's investments and by diversifying their products, moving more and more to a B2B model.

After spending over $10B in advertising last year, in fact, both Booking and Expedia highlighted the need for marketing rationalization, with more budget to be allocated in branding (i.e.: the "Be a Booker" TV commercial) rather than on search. Booking.com's AppStore and the close-to-be-renewed Expedia Travel Ads platform, moreover, are representative examples of the B2B shift, and it won't be unlikely that these companies will -at some point- offer monthly memberships to hoteliers, becoming the Netflixes and Spotifies of travel, with Google overviewing the whole funnel.

Google's corporate mission is “to organize the world's information and make it universally accessible and useful.” – that's unchanged since Google's start in 1998. When you consider that mission it is no surprise that Google has improved the fractured nature of travel booking by consolidating and making it easier to research, book and manage your travel all in one area. More broadly, Google's evolution is in two areas: providing answers to questions that mean you don't need to visit websites anymore (think mobile voice search and Google My Business) and a pay-to-play model that increasingly minimizes the chances of a website visit that hasn't been paid for through a Google media product.

So what's the impact for hotels? Firstly its website traffic you won't get today that you might have got 12 months ago; guests searching for hotels don't need to visit 4-5 websites and spend hours researching when all information, pricing and booking options are presented at the first search. Secondly, marketing budgets; any effective marketing requires you to find your audience, and that audience is increasingly funneled towards search results that require ad budgets to participate. So as 2020 budget season approaches all hotels should plan to be in this Google Travel space, I can't think of a single exception to that, it is simply that important.

While Google may be positioning itself more prominently throughout the customer journey, it will NEVER enter into direct competition with the OTAs. Why would it when it can make massive profits simply by referring traffic rather than deal with the messy challenge of facilitating travel transactions? 

OTAs and suppliers are increasingly having to deal with this new reality and adjust their business model to cope. Already companies like Airbnb charge higher transaction fees on business sourced through paid search marketing. As increased volumes of business flow through Google's superior user interface, others will be forced to follow, or alternatively invest in building a brand and customer loyalty to get future customers to book directly. 

Either way the future looks expensive!

Ever since Google acquired ITA software back in 2010, industry pundits have been pondering about Google's true intentions with the travel vertical. Google has been moving rather slowly with incremental steps that are certainly significant - think of Googlt Flights or Google Hotel Search - but haven't been necessarily embraced with a vast majority of online travelers. Yet.

In the past two years alone, we have seen a change with search results, making Google an even more important player than it already was. Just look at how the Knowledge Graph turns up results, suggesting hotel review scores not only stemming from Google Reviews, TripAdvisor and OTAs, but also giving a "location" score, and categorizing them by traveler type (solo, couple, family, business).

Rates are also much more prominent than ever, with Google Hotel Ads now taking hold and becoming prevalent. It's no wonder Mark Okerstrom, CEO of Expedia Group, mentioned his fiercest competitors weren't Booking or Ctrip, but rather Google - and to a lesser extent, Amazon.

The real question remains: will Google go all-in and sell directly to consumers? Expedia and Priceline groups together represent an estimated 5% of worldwide ad revenues for Google, so there is a lot at stakes here.

Hotels should therefore continue to actively manage their presence on Google My Business and Hotels Ads, and keep a close eye on how things unfold.

Google's recent move should not be a surprise for any tourism professionals. Google has continuously optimized its travel-related products. The question was never if but how will Google further disrupt the travel ecosystem.

Google simply understands travelers better. Google flight let travelers filter by the three major airline alliance programs because most travelers do not care which airline they fly with but want to ensure they can collect miles. Google flights also allow travelers to select stop-over airports, while most airlines' algorithms cannot. The combination of customer driven and customer centric mentalities will out beat most travel players.

For hoteliers, the recent change in Google Travel is another gatekeeper demanding compensation in exchange for access to customers. Google already has comprehensive hotel profiles comparable to most hotel websites, and these hotel profiles are easily accessible on Google search results and Google maps. The implication is that the traffic to brand.com may decrease. Furthermore, customers reluctant to share credit card information may adopt Google Pay to settle the payment. Before customers arrive at the hotel, they may use Google Questions & Answers to communicate with hoteliers, travelers, and local guides. After customers' stay, they may share their reviews and photos on Google platforms. The conclusion is that Google travels along with travelers throughout the journey.

What's next for hoteliers? Definitely, hoteliers need to constantly monitor Google's move. Hotel brands should help their franchisees to understand the Google ecosystem, and optimize hotel performance by working with Google. Yet, only focusing on Google or OTAs is not enough. Hotel brands and marketing professionals need to work on demand generation, or at the top of the marketing funnel. Why do people travel? What attracts travelers to this destination? What value propositions could best serve the travel personas? These levels of marketing intelligence and local insights are something Google can't address. At least, not yet.