Opinion Forums Google and the travel industry: It's not just a search game By Alan Clarke / June 16, 2014 Share 1 -- The travel industry has been all abuzz about Google lately, especially after its move to license Room 77's hotel booking software. The talk has moved from the watercooler to the trading floor, with stocks like Expedia's suffering in recent months after reaching all-time highs earlier in the year. The industry's concern is warranted, but it also might be somewhat misguided. There are several burning questions on everyone's mind. They include: • Will the Room 77 acquisition impact the businesses of the major online travel agencies (OTAs) like Priceline, Orbitz, TripAdvisor and Expedia? Priceline and Expedia, for example, together account for 5% of Google's total ad revenue, according to Yahoo Finance's Daily Ticker. • Does Google want to become more like Microsoft and really start competing with the OTAs, or can it still play nice with them? • Finally, what does this mean for the rest of the travel industry, not to mention the average traveler? These are certainly important questions to ask. But Google is not the only threat to OTAs. A bigger threat is the fragmentation of the user experience. This isn't just a threat to OTAs but to Google, as well. From this perspective, Google, Priceline, Expedia and all the other search engines and OTAs are in the same boat. E-commerce marketplaces have always had a dependency on search platforms for discovery, and Google has been an essential gateway for directing high-performing online traffic and also for building both presence and awareness. But today's mobile consumer is looking for travel in different ways: from multiple apps, on various devices. There's a new travel reality, and focusing all of our attention on Google isn't going to change things. Searching for the new travel realityBefore we discuss this new travel reality, let's deal with the reality of the Room 77 agreement, which is probably a little less exciting than the hype would suggest. Bear in mind, first of all, that Room 77, a lodging-focused metasearch site similar to Kayak but limited to accommodation listings, is focused on the mobile travel experience, not the Web. That said, mobile Web bookings are nothing to sneeze at: They are expected to account for 28% of hotel revenue by 2015, according to PhoCusWright. But today, mobile is a much smaller percentage. Also note that Hotel Price Ads, Google's current Web travel purchase platform, has not performed at the level Google had hoped, according to research from Motley Fool. So the acquisition of Room 77 was certainly a strategic move. Finally, note that past Google acquisitions and business deals -- ITA, for example -- did not disrupt the industry too much. And one OTA in particular, Expedia, stands to make a lot of money from the arrangement. It's an investor in Room 77. So given all of that, what is this new travel reality? As consumer purchasing habits migrate to mobile platforms and mobile platforms become ubiquitous in all parts of the globe, the challenge for Internet gateways and search platforms is how to address the inherent fragmentation that comes with them. Rather than conducting most of their online interactions via a single Web browser on one computer, today's consumers might do some of their online travel searches at the office, some on their home laptop, some on their tablet and a few more on their mobile phone. On each of these devices, they have multiple options for browsers and applications to use. On the mobile device, apps are quickly outpacing browsers. The fragmentation that comes with the use of multiple browsers and multiple single-purpose mobile applications is a much bigger threat to OTAs than any move by Google to counter this trend. Real threats, real opportunityLet's be clear: Despite Google's forays into e-commerce platforms, the OTAs' primary concern remains visibility on Google's search engine platform, not the direct threat of competition from Google. More specifically, OTAs are looking for ways to address the fragmentation they're seeing among consumers, the same fragmentation that Internet gateways like Google are seeing. Given this mobile fragmentation, it is natural that Google and others explore technology platforms to see if they can bring their e-commerce marketplace visibility and influence to multiple new devices. OTAs have always had to figure out how best to get in front of consumers and stay there. As consumer behavior on mobile devices diverges from behavior on the desktop platform, OTAs need to segment their approach, just like the Internet gateways. By the way, I use the phrase "Internet gateways" very specifically to mean more than just a search engine. I also am including social and community platforms such as Facebook, Twitter or, yes, Google Plus. These platforms are the homes of emerging, collaborative-consumption marketplaces that both the gateways and the OTAs are trying to foster. The challenge for the brands in question is how to bring these powerful social network platforms to bear on their own marketplace growth as well as how that approach must differ by device and marketplace platform. On the desktop platform a question in the context of Google is how to integrate some of the community-based technologies embedded on Google Plus to enrich the social structure on which these marketplaces are built -- for example, using Google Hangouts and Google Circles to support reviews, brand awareness and network growth. Do we fight them or join them?For these marketplaces, the challenge is finding ways to use social media platforms and the technologies already present on Google to accelerate network growth and improve conversion. On mobile devices, the question isn't how to fight this fragmentation; it's how to take advantage of it. How to get your application "on deck," as an app on the phone. Here, the question when it comes to Google is: What options are there to embed app-download ads across the suite of Google's mobile products? I don't see the Room 77 acquisition directly impacting OTAs' businesses. Google understands what Google does best, and that is search. This means there will always be opportunities for OTAs, but they will have to become more nimble to stay ahead of Google's changes. Google is right to be concerned about how the marketplace is developing. For all the talk from industry pundits about convergence, it is divergence that we must pay the most attention to. As far as the travel consumer is concerned, Google is hoping that it can provide a seamless customer experience, no matter what browser or device the consumer is using. That's something to which every OTA should aspire. From the consumer's perspective, we do not expect pricing to go anywhere but down. The margins for hotel bookings are typically much better than those of airline bookings, for example, and that means there's wiggle room in room rates. At Homestay.com, we are thinking about how to work with Google's social platforms to accelerate our network growth, increase ad conversion and drive our visibility. Despite the recent departure of the head of Google Plus and predictions of its imminent demise, we believe social media will play a major role in the Google universe for some time to come. Home stays are inherently a social experience, so we see nothing but upside in Google paying more attention to the travel space. Alan Clarke is the CEO of Homestay.com, a Dublin-based online service that enables travelers to book rooms in private homes for a fee, with the homeowner present and acting as host during the traveler's stay. Before joining Homestay, his decade of e-commerce management experience included stints at PaddyPower.com, Yahoo and McKinsey & Co.