IN-DEPTH: OTAs and meta-search sites can demonstrate their current market-share supremacy vs. Google, but as important 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, says Lincoln Merrihew, MD, Transportation at Compete (Kantar Media).

Published: 16 Sep 2011

IN-DEPTH: OTAs and meta-search sites can demonstrate their current market-share supremacy vs. Google, but as important 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, says Lincoln Merrihew, MD, Transportation at Compete (Kantar Media).

By Ritesh Gupta

Consumers expect flight information to be readily available at their fingertips, enabling them to actively weigh value and convenience.

As pointed by Compete in April this year, consumers have demonstrated a willingness to expend both more time and more effort into the shopping process before pressing the “book now” button. In one of its analysis, Compete also pointed out that as consumers aggressively seek accurate, up-to-date, and comprehensive flight information, meta-search and lead generator sites are seeing dramatic year-over-year jumps in traffic.

At the same time the meta-search category on the whole has been anxiously waiting for Google’s foray into this domain over the past few months. The same happened this week as Google unveiled its new Flights Search offering, a product that combines ITA’s expertise with Google’s technology. Meta-search sites are wary of how Google can shake the category. It is being acknowledged that if Google is successful in its new offering, then meta-search companies could lose traffic to their websites and mobile applications, which could have a material adverse effect on their business.

Another way of looking at the situation would be to assess how the whole category can fight it out and refresh itself to enhance the customer experience. There is a uniformity of general search patterns that has long irked those in the industry who want to make search more flexible, intuitive and personalised.

As Hopper, a startup founded by a team of former Expedia employees, recently acknowledged in an interview with EyeforTravel, the web revolutionised travel when it allowed consumers to book their own trips. But the tools stopped evolving over a decade ago. Planning a trip online is actually very cumbersome and time-consuming. One of the reasons why online trip planning is so broken actually has to do with structure of the industry and the technology it uses. The whole travel industry operates on request/response data systems that only give answers to very specific questions. Hopper believes that there is recognition that online travel needs an upgrade, and that it has to start with the core data technologies.

Assessing the situation, Lincoln Merrihew, Managing Director, Transportation at Compete (Kantar Media) says OTAs and metas 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,” Merrihew told EyeforTravel’s Ritesh Gupta in an interview.

Merrihew spoke about the flight meta-search category, the new offering from Google and its impact on the travel sites, and relevant issues. Excerpts:

How do you assess the launch of Google’s Flight Search offering from the meta-search category’s perspective? As witnessed over the past few months, there have been efforts to make search more flexible, intuitive and personalised etc. How do you see the development in this context?

Lincoln Merrihew:

Visually, not a bad effort in that the UI is consistent with Google’s overall clean look and the flight path map is a nice touch. The challenge that Google faces is that consumers have very high expectations of Google in general (see chart below) so by definition Google has a self-imposed high bar to succeed with travel researchers (i.e., unlikely they’ll be cut much slack).

Going forward, Google will need the balance the desire to be visually streamlined with the need to emulate the functionality and UIs of other successful online travel sites. In terms of flexibility, one of the key features of OTAs is the ability to book a flight with outbound and return on different airlines. I tried that on Google flight and could not get that to happen.

If the tussle for traffic isn’t counted and if we just consider the battle in terms of offering users a superior experience, isn’t it time for travel meta-search engines to showcase their supremacy and stand out for what they can offer?

Lincoln Merrihew:

Yes, OTAs and metas can demonstrate their current market-share supremacy vs. Google, but as important 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.

The question becomes how far down into the funnel Google can leverage its trust. For discussion: 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.

How do you think this development is going to impact travel meta search engines?

Lincoln Merrihew:

Good competition always improves the breed, so the winner in the long run will be travellers. But along the way there will be digital casualties, meaning whatever share Google captures will come from somewhere (i.e., the additional of Google will not in and of itself grow air travel). And no meta-search site has been surprised by Google’s foray into flight—all the signs were pretty obvious. The biggest question is how quickly will Google offerings evolve; they have the financial horsepower to make quick and large changes and enhancements, and their potential speed in doing so is what may lead to a competitive disadvantage for meta-search sites.

How do you think this is going to impact the business of OTAs, too, as it means more traffic being directed to supplier sites?

Lincoln Merrihew:

Impact could come on several fronts. OTAs are used in many cases as price comparison tools, so their booking rates in general are often lower than on supplier sites. To the extent that Google siphons off the price-comparing window-shopper traffic, OTA booking rates could increase (from less overall traffic but higher quality traffic). If Google siphons the high-quality traffic, the impact on OTAs will be far greater. A broader question is the extent to which Google Flight and the OTAs form partnerships (meaning Google flight booking bottoms could connect to OTAs—such as for cross-carrier flights—rather than or in addition to suppliers).

What else would you like to highlight?

Lincoln Merrihew:

Outside of Google, OTAs, and meta, flight suppliers are likely to continue to explore other means to attract and persuade customers, such as Facebook. Not all will be successful but they’re out there.

And there is the possibility that at some point suppliers will become concerned that they become very simple booking engines for Google and as such lose the multitude of touchpoints they enjoy with customers that complete the entire process on their sites. The touchpoints (i.e., steps in the funnel) are forums for messaging, brand-building, and upsells (“how about a hotel with that flight?”).