May 2017, London
Dear Google, lend the travel industry your ears, please
While Google is busy moving up the trip-planning funnel and perfecting the customer experience, there are questions the industry wants answering. Pamela Whitby has been listening in
‘How do you get from Paris to Berlin?’ ‘What is the cheapest flight to New York?’ ‘Rustic holidays, Brazil’, ‘Best boutique hotel deals in Corsica’.
You name the travel query, and somebody will have 'googled' it, but does the search giant always deliver the answer the customer wants? Not always, but with products like Google Flights, Google Hotel Finder and Google Trips it is certainly working on it. No surprise there! According to World Travel and Tourism Council (WTTC), the travel & tourism industry’s contribution to the global economy stood at around $7.2trn in 2015 – and it’s accelerating.
Google already has a big stake in this pie with an estimated $12.2bn of its 2016 advertising revenues coming from heavyweights Priceline, Expedia, TripAdvisor and Airbnb. Until not that long ago these relationships were considered win-win, arguably even for the consumer, but with Google’s recent moves up the trip planning funnel, the travel industry has started to feel, at best, a little uneasy – as we heard at the San Francisco Summit earlier this week (see the Day 2 event round up).
EyeforTravel attempted to secure an interview with Google VP of Engineering Oliver Heckmann, who seems to have been made the spokesperson for this multibillion-dollar vertical, to put some of the industry’s concerns to him. But it seems he is too busy developing new Google products; one of the latest, a new package tours product for Europe, a segment that already has some well-established players such as Thomas Cook, TUI, Kuoni etc. [On this score, worth noting is that Google has recruited Robin Frewer who was head of strategy for several years at TUI!]
So, while Google may be committed to answering travel consumer queries as accurately as possible, it seems rather less willing to talk straight with its travel industry partners. And, as EyeforTravel has discovered there are some questions they want answering. Here we’ve narrowed it down to five.
1. Who are the commercial brains behind Google’s travel strategy and will we ever see them in a chair on the industry conference trail?
Take EyeforTravel Europe 2017, which kicks off in London next week. There you’ll see plenty of C-level executives sharing their thoughts and ideas. From chief executives like Priceline’s Glen Fogel, Rome2Rio’s Rod Cuthbert, Momondo’s Hugo Burge and Eurail’s Brenda van Leeuwen to chief commercial officers, Lennert de Jong from CitizenM Hotels and eDreams ODIGEO’s Gerrit Goedkoop and chief information officers like Roland Schütz from Deutsche Lufthansa, and more.
It’s true that Google has got better at sending company representatives to industry forums. But these have tended to be heads of travel, the people responsible for selling advertising in particular geographies, or sometimes more high-profile executives in the form of Heckmann, who in 2006 was named the most promising researcher in computer science and applied mathematics by the ERCIM, the European Research Consortium for Informatics and Mathematics.Now it may be that Heckmann is one of those rare and desirable folk with scientific and commercial savvy, but is he really the guy at the top driving Google’s travel strategy? The industry would like to know.
2. Google has said often enough that it has no plans to become an online travel agent (OTA), but is it planning to be a force-to-be reckoned with travel intermediary?
Because let’s face it, with facilitated bookings on the likes of Kayak, TripAdvisor and Skyscanner, the lines between OTAs and metasearch are starting to look very blurred. And, it’s also fair to say that the transactions now possible on Google Flights – say booking a Lufthansa flight via Google – look an awful lot like the facilitated bookings that you can do on these so-called metas. The way the industry sees it is this: if consumers decide to book a flight or hotel via Google then that means they aren’t booking these on a Kayak or a Skyscanner. This makes the search giant a direct competitor. Worrying for the latter right...or are we missing something?
3. Is Google really playing fair?
Depending on which side of the travel industry fence you’re on, determines how you see this relationship. On the supply side, hoteliers seem to be pretty happy with the deal, viewing Google Hotel Finder as a way to drive more direct bookings, and reduce their dependence on the big bad OTAs. But some believe it is just a matter of time before Google hikes its fees, and hotels are harking back to the ‘good old days of the OTA duopoly’.
On the other hand, airlines, which have always had a better handle on the cost-of- distribution, are feeling the heat. Bobby Healy, CTO of tech firm CarTrawler puts it like this: “There is not an airline CEO or CTO out there that isn’t sh**ting their pants about what Google could do to them”. Already, it’s clear that Google wants to eat into the secondary market by surfacing Google Flights in organic search; the idea being to keep the user within Google’s world and take them directly to the flight they want. All that’s missing now is access to airline inventory, the missing piece in Google’s push to move up the flight trip-planning funnel.
They are a search engine and advertising partner, and they do a great job of that, but they shouldn’t try to be a travel intermediary at the same time
From an intermediary perspective, the Google headache goes something like this. These are firms that have spent billions investing in technology, marketing & advertising and smart people to build highly successful businesses. And in doing so, have enabled Google to win enormous traffic and ad revenues in its travel business. Until recently that was a 'win-win model', but one day the intermediaries woke up to find that this search engine has become a direct competitor and is surfacing its results at the top of the page. Yet, Google didn’t have to go through that same process of building brand and all that, it just sat back and watched what its biggest customers did and thought, ‘sure, maybe we can do a better job’. As one intermediary put it: “They are a search engine and advertising partner, and they do a great job of that, but they shouldn’t try to be a travel intermediary at the same time”. Now, that’s just not cricket!
4. Google folk are universally a very smart bunch so the travel industry doesn’t doubt that it will continue to aggressively drive innovation. But what about broader industry innovation?
Many argue that Google results appearing right at the top of the page will have a "potentially chilling" effect on innovation. If you are start up, in say tours and activities, then there is absolutely no way now of competing with the Google Trips, Google Buckets lists and so on. If you search for things to do in Paris, it will be Google that delivers because they own the geography. Would a company like Viator, which was acquired by TripAdvisor in 2014 for $200m, have a chance to emerge in today’s environment? Never, says Rod Cuthbert, one of Viator’s founders and now CEO of multimodal metasearch Rome2Rio. And that is deeply worrying for innovation.
5. Calm down, you say, you are overreacting; all Google wants to do is improve the customer experience. So, if this is the case, then what new models could emerge?
It may well be that Google is thinking through ways to work with intermediaries that allows them to participate in new models, as they have with hotels. One hope is that the ‘Google Results’ that currently appear at the top of the page, end up being a blended result that has direct supply from hotels, airlines and so on, as well as from OTAs and metasearch engines. With travel intermediaries strong brand clout, along with the push to become more consumer focused, this model could continue to be a win-win for all. One C-level executive said he remained “hopeful but sceptical”.
Now the industry waits to see how quickly regulators react to keep Google on a tighter leash. We're watching.
To hear more about what the industry is thinking about Google don’t miss our Day 2 Round Up of this week’s San Francisco event. Or why not join us next week in London for the recently re-launched EyeforTravel Europe 2017