Sunday, 16 June 2019

Will online travel agencies survive Google? homepage (past trips)

Ever been playing around with all the travel confirmation documents you need for a trip? Over the past years, I've been using Tripcase. It's an app that allows you to combine your flights, hotels etc. into a single trip overview. On top of that, it lets you know if your flights has been delayed. Sounds great? It does. But it isn't. The app just doesn't have the 'smartness' needed for a good user experience. For instance, I often send Rotterdam - London City trips to Tripcase. They end up in my Tripcase app (and in my calendar, for that matter) as flights between Rotterdam and Dubbo, Australia.  Ouch.

Not to mention the number of confirmations that Tripcase just doesn't 'understand' and therefore have to be added manually to an itinerary. It's painfully difficult to find the right hotel, so I looked for an alternative. I found Google Trips. The app usually doesn't need any mails being forwarded, because obviously Google already has access to your (GMail) account. On top of that, it handles somewhat harder cases perfectly well. Sometimes I make separate bookings for my wife and I, and Google Trips adds those different bookings to the trip as two travel documents. So that's the good news.

The bad news: Google will soon stop supporting Google Trips. In a long row of legacy products left on the Google graveyard, Trips is the next victim. Google leaving the travel business? No, of course not. It's omnipresent there. For instance, take this Skift long read on the Google Maps 'super app'. See the ways Google integrates your flight and hotel bookings in their search if you're a logged in user. And consider the number of 'travel related' options that appear in Google's services, based on a simple search for 'hotel':

- Four ads for online hotel booking platforms and meta search engines (,, Trivago,
- A Google 'widget' with a search (dates filled in: from today until tomorrow, 2 persons)
- A results list for this widget showing four hotels and a maps display with prices

Google's hotel meta search engine

When you click anywhere in the widget, you stay in the Google realm. Only when I start booking an individual hotel, I get an overview of prices per online travel agency (OTAs). For the hotel I clicked on, there are four OTAs, two meta search engines (Trivago and Tripadvisor) and one hotel chain website (the direct booking channel). So Google is slowly taking over the complete booking funnel, only leaving out the final step: actually booking the hotel. Will they take the final step? Probably not, afraid of competition law kicking in.

However, you could wonder if the large OTAs (, will be able to keep up their profitability. Virtually the only way to get to the end consumer is through Google. Google has the lottery ticket that almost guarantees a prize: the consumer will either click on one of the OTAs ads on top of the page, generating ad revenue, or book a room through the Google 'meta search engine', generating commissions (and probably ad revenue on top). Only a few individuals will bother to scroll down further and click an organic search result or type the name of an OTA or aggregator directly in the browser link bar.

In an overview article on HospitalityNet an infographic showing average expenses break-up for a hotel room, the commission part is 11,4% for US hotels in 2015. My guess is that the percentage has gone up since then. It is generally assumed that commissions for OTAs are between 10 and 30%, with a more common rate being 15%. The magic 30% we know from the Apple app store and the '25%' Uber takes from its drivers (read here why it's actually more, again this is US-based). Personally, I think that 30% commission sucks the oxygen from any market at the expense of suppliers or consumers, or both.

So, back to Google for its travel plans. In this HospitalityNet article a dozen of industry experts make predictions on the Google plans in the travel vertical in the light of the service. This is interesting to read, as several of them say Google hasn't really moved fast at all and will not make a difference in the next years to come, as others state Google will disrupt the business. Some explicitly state that Google will not go into the OTA business itself, mainly because of the complexity of mastering that last part of the funnel where you can make money more easily in the earlier part.

My own argument for Google dominating the travel vertical follows this line of thought:

  • Access to personal data. Google knows my previous bookings and thus knows far more about my preferences for locations, hotels, sights etc than any OTA can ever know, even the more integrated ones such as Expedia.
  • Mastery of the larger funnel part. From searching for possible locations to searching for characteristics of specific hotels - Google not only makes money out of it by ads but also learns about where we make the actual bookings. An OTA may own all the data about the last part of the funnel, but that will not save them from being less dominant.
  • Integration. has dominated the market by focusing on accommodation only, but is this the future of travel? I don't think so. It's easier to sell a hotel room to someone while knowing more about travel behaviour (car driver or public transport), leisure or business travel behaviour etc. That's where Google comes in.
  • Google buying ITA Matrix software and powering Google flights may seem strange at first, because flights are not where you earn substantial commission these days. However, my estimate would be that an average consumer invests most time in saving money on the product that generate the lowest commissions: flights. 
  • But right after that, they will move to accommodation, which will earn the integrated supplier much more commission. And then they might move to day excursions, where commissions will be sky-high (this article suggests it's between 20 and 40% and I wouldn't be surprised if it can be as high as 50%). 
  • Therefore, the party that provides the combination of such products as seamless as possible will take the biggest part of the cake. The smaller the vendors of inventory such as accommodation and excursions will be, the higher the commission that the provider is able to take. 
  • Seamless integration also requires a seamless booking experience, and my guess is that advanced APIs will take care of that. Once Google is able to impose its standards on the booking and payment process, the visibility of OTAs will diminish.
A first look at shows a very clean, no frills interface with seemingly objective information and little if any ads. My prediction is that it will take only a few years before it will be as overwhelmingly commercial as Google search results page. 

Going back to where I started: Google will be in a much better position to get my 'travel administration' in order. Of course, I will pay the price for that, in terms of a total lack of privacy, an ever bigger lock-in in the Google ecosystem and a substantial contribution to Google's revenue and profits. May Tripcase rest in peace, and may OTAs such as find ways to survive Google. But above all: may the market, and where necessary the legislator, find ways to supply sufficient oxygen to all those poor hotel owners and tour guides.

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