Travel suppliers + Google. It's about love, hate and need

By Diane Merlino

Google’s continued investment in expanding and improving the travel-related search experience is transforming its relationship with travel suppliers.

Some inside the industry characterize the relationship as a partnership — of sorts. Others say that perspective is /uploadedImages/TW_Plus/xTW_Plus_Images_ONLY/Googleiconstory.jpgfrighteningly naïve. And everybody is keeping watch on what Google might do next in the travel space, given the company’s billions of dollars in capitalization, thousands of super smart and creative employees, storied technology innovations and ubiquitous reach.

“For a lot of travel suppliers, the relationship with Google is very much like the OTA relationship — you love them and you hate them, but you need them because they’re going to move your product,” said Lorraine Sileo, VP of research with PhoCusWright Inc./uploadedImages/TW_Plus/xTW_Plus_Images_ONLY/LorraineHS.jpg 

She believes much of the industry now sees Google as both a partner and a player. Google is “facilitating everything that’s happening in travel in terms of the search, shop, and buy process,” Sileo said. “It’s definitely a huge influencer, but it hasn’t transformed the travel space, and it’s not stamping out anybody’s business.”

Not yet, anyway.

“What’s dangerous about Google is they hold some interesting pieces,” said Scott Klososky, technology expert and founding partner of Future Point of View. “With Android, they hold the mobile device” which gives Google users in-hand access to location-based capabilities as well as tools to search, book, document and share the vacation experience — while they are on vacation.

“They’ve got a lot of the tools to be able create a vacation experience that has never been created before. I think that’s the most dangerous thing about them, how they could put this all together,” Klososky said. “So, if you’re in the travel space, it’s about how to partner with them — how do we take some of the things they are doing, like Street View, and leverage that so we can sell more. How can we imbed ourselves more deeply in search, or do some unusual things with them in search. There are positives like that.”

Timothy O’Neill-Dunne, managing partner with T2Impact and a travel distribution and online travel expert, believes any supplier who considers Google a partner has blinders on. “I think they will position themselves as a partner in order that they can plumb more pipes into people and get more money,” he said. “Are they a real partner? No, I don’t think so.”

For their part, Google is crystal clear about who and what comes first. Jane Butler 

“We are very focused on the user,” said Jane Butler, Google’s managing director of travel. “We think if we are taking very good care of the user, and getting them the results that they are looking for, we increase our ability to send qualified leads to travel providers. That is true across all categories.”

Noted Dave Pavelco, head of industry for Google Travel, “Where we start with everything is we think about our users first, how do we improve the experience overall for our users. And a byproduct of that downstream is we think it helps our partners and advertisers with better customers, more efficient bookings and a cost-effective channel.”

Feeding the cash register
Google might well be a cost-effective marketing and distribution channel for travel suppliers, but there is no question that those costs are going up.

“From the opportunity side, Google has so much that marketers and suppliers can leverage to increase the quality and relevancy of their digital assets. At the same time, Google is a cash register that is increasingly impossible to avoid,” said Henry Harteveldt, co-founder and travel analyst at Atmosphere Research Group.

“Everything they do in the travel space is going to be around how to provide some service to consumers that advertisers are going to pay them for,” said Klososky. “Any time they can come up something that provides value to the world, where advertisers will pay to be present when they are providing that value, that’s something that fits for them.”

O’Neill-Dunne is not so sure about the ‘value to the world’ part of that equation.

“In the good old days we used to say that Google was the gateway to the internet. It gave you a great way to get into this wild and wooly place,” he said. “What we’ve come to realize is that, in fact, Google is not a gateway anymore, it is a gatekeeper, and the tax that it is charging is very expensive. That tax is the cost of advertising, and that giant sucking sound you hear every day is Google Hoovering up cash.”

A matter of motivation
O’Neill-Dunne has a generally dark view of Google’s motives and intentions, in travel and elsewhere.

“I think those altruistic aims and goals they had in the beginning have long since been replaced by the need to generate more revenue and control more places on the web. It’s not about you anymore; it’s all about Google. Google is Big Brother,” he said. 

That isn't necessarily such a bad thing, in O’Neill-Dunne’s view. Google brought order and structure to the Internet; it brought ways to make the Internet work. But, he added, “The belief that so many people have that Google’s motives are, shall we say, honorable — of a higher plane — have been replaced by the need to generate revenue.”

What of ‘do no evil’, one of Google’s foundational principles?

“I don’t want to paint Google as necessarily evil, but the theory of do no evil is blown away by the accidental evil that Google can do because of its size,” O’Neill-Dunne said. “That’s a very relevant point when dealing with Google, because it’s so huge.”

He cites the introduction of Google Maps, a user tool he claims decimated traditional mapping businesses and virtually wiped out the industry in Europe.

“When you are this big and this powerful you have to take a far higher level of responsibility for your actions because you are not in a free space any more,” O’Neill-Dunne said. “Google’s abuse of its power, accidental or otherwise, is irrelevant. It’s the fact that it has the power to abuse. It’s like a giant; he might crush somebody just by moving in his sleep.”

He added that, “Google is struggling to understand how it can appropriately self regulate in all these markets where it commands so much economic power.”

Klososky has a more upbeat view about Google’s mission and motivation, although he also believes that a push for profits will shift the company’s focus and intentions over time. Scott Klososky 

“When you are publicly traded, the reality is that you have to make money and make shareholders happy,” Klososky said. “I think for the foreseeable future, perhaps for the next decade, they will carry a decent amount of ‘do no evil’ and ‘how do we bring value to the world.’ That’s part of their heritage. But their shareholders will always be putting pressure on them to monetize.”

Google’s response to that pressure will likely occur on “a continuum” rather than an either-or seesaw, Klososky said. “Will they slide more over to monetizing things and really drive profits, or will they slide the bar a bit more over to saving the world and experimentation? Are they going to move three notches one way or three notches the other way? They are not going to move a hundred notches in either direction.”

What the future holds
Questions abound regarding Google’s future in the travel space. Will Google acquire more companies, introduce a much-feared direct booking capability, or perhaps even launch it’s own Google-branded travel site? At this point, just one thing about Google’s involvement in the travel space is certain: the company is just getting started.

“These are early days and early steps in terms of getting better at answering a very complicated and very important Dave Pavelcocomponent of our users’ lives,” said Google’s Pavelco.

“Google is an environment of launching and iterating,” he said. “We’ll test things, we’ll tweak things, we’ll get feedback from users about what they like and what they don’t like. As for the more complicated elements, in terms of the grand vision longer term, we use feedback from users as well as technology enhancements to figure that out over time. You don’t really map out exactly what the plan is for a year from now.”

Travel is “very, very important” to Google, said Rob Torres, Google’s managing director for travel. “And one of the reasons why it’s so important is that searches for travel-related products and interests are one of the highest we see in terms of query volume.”

Given travel’s importance to Google, and the company’s massive size and resources, “Suppliers — and in fact the entire travel industry — need to watch Google with an air of wariness, a little bit of suspicion,” said Harteveldt, with Atmosphere Research Group. “A lot of us wonder if Google is getting to be too large, perhaps becoming a victim of its own success.”

Harteveldt pointed out that it is now impossible for travel suppliers to do business on the search side without using /uploadedImages/TW_Plus/xTW_Plus_Images_ONLY/Henry HardeveldtHS.jpgGoogle. “Will Google start to leverage the use of other assets against the general search product? Are they going to say, ‘If you don’t use this product or this tool, either you don’t get access to other things or you have to pay more to use those things.’ That’s what I worry about,” he said.

Despite Google’s many strengths and assets, Klososky says the company’s ultimate standing in the travel space is far from certain.

“I don’t think the odds are really high that they will get in there and cripple other people in the travel space. I don’t think they are going to be able to do that. I think they are going to be pretty distracted with lots of other things,” he said. “They may some day be a force in the travel space, but I would not be at all surprised if they stumble around, and stumble around, and don’t ever really become a huge force in travel.”

One of the things Google will definitely do, Klososky said, is “force the travel industry to move forward with providing a better experience for people. 

“I don’t want to hurt anybody’s feelings, or make anybody mad at me,” he said, but the experience of researching, shopping for and buying travel online “is not good, it isn’t even close to good. Let’s be honest, it sucks from the moment you start. There isn’t one person I know who would say, ‘Oh, I love the experience of assembling my vacation.’ No. It’s like having a baby. It’s something you have to do but you don’t like it. The travel industry hasn’t done much at all to try and make that experience better.”

This article is part of an exclusive series examining Googles invovlement with travel and potential impact on the industry. Also see: The Google-ization of Travel. A one-on-one interview with journalist and best-selling author Steven Levy.

 

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