Distribution Strategies

A report by Wall Street Journal has indicated that top online travel agencies “like Expedia and Orbitz complain that Google’s new flight search tool is unfairly squeezing them out of business”.

The report says the established travel intermediaries “accuse Google of abusing its power in an effort to grab itself a big piece of the $110 billion online travel market”.

Online travel agencies have been assessing the potential impact of meta-search initiatives by Google and other search engines upon which they rely for a significant amount of traffic.

Last month looking at how Google has approached the testing phase of vertical search offerings for both air and hotel, Jeffery H. Boyd, president and chief executive officer of the Priceline Group, said it’s clear that Google would like to have these platforms operate as an efficient vehicle for advertisers to get qualified leads because a customer will have seen more information on Google by the time they click on to an advertising link. Boyd added, “And if you look at the hotel product, the online travel agents are very prominently featured in the display. With respect to the flight search, that’s not the case. And I believe …that’s principally because our limitations would have been placed on Google by the airlines.”

Boyd, who made these comments during the company’s Q3 2011 results earnings call (transcript on Seekingalpha.com), further added, “However, Google has said, and it appears that they’re trying to find opportunities for online travel agents to advertise on the air platform as well.”

“Our approach, as an advertiser on Google, is to try to understand their products the best we can and participate in them as effectively as we can, and that’s how we’ve approached the hotel product in particular. A lot of people are concerned about Google’s market power, and rather there could be anything in the competitive coming out of those and a number of other companies, not including ours by the way, raised comments and criticism of the ITA transaction as part of the anti-trust approval of that transaction. But the transaction was approved,” said Boyd. He also said, “The products are out of the marketplace, and I think it’s incumbent upon our industry to try to find the best ways that we can integrate with the product and to advertise on it, and try to get the well-qualified customers that I think Google is trying to drive towards us.”

A section of the industry believes OTAs and metas can demonstrate their current market-share supremacy vs. Google, but as important is that they’ll need to leverage their customer loyalty and brand equity.

“The stronger the bond with their customers, that harder it will be for Google to conquest. Of course, Google has a strong one with its customers, but in a different part of the travel research process (more the upper funnel than the middle or bottom parts of the funnel). We’re likely to see a battle for the middle of the digital travel purchase funnel, with a very delicate balance between OTAs and meta looking to best maximise and leverage travel in from Google while not losing booking and ad revenue opportunities to Google travel,” Lincoln Merrihew, managing director, Transportation at Compete (Kantar Media) told EyeforTravel’s Ritesh Gupta in an interview this year.

“The question becomes how far down into the funnel Google can leverage its trust. The same consumer that might not trust an OTA to develop a leading search engine a la Google or Bing, might also not yet trust Google to offer a viable flight research tool,” said Merrihew.