This article is part of a series examining Google’s potential involvement in the travel space. More exclusive Travel Weekly PLUS coverage of the topic can be found in the Special Reports section.
Of the many opportunities Google has in travel, introduction of a direct booking engine is the most worrisome for suppliers.
The purchase of ITA Software in 2010 and the introduction of Google Flight Search the following year ignited a firestorm of speculation about whether the master of search would expand into transactions. While much of the initial chatter has cooled, opinion remains divided about what might transpire.
Google itself is hedging its bets.
Rob Torres, Google’s managing director for travel, said the company will undoubtedly develop more products that make it easier for consumers to book travel on a variety of devices, like the recently introduced virtual Google Wallet.
But when it comes to “becoming a transaction engine, a merchant of record, I don’t think there is any rush for us to get into that side of the business because of the nuances that come with it,” Torres told Travel Weekly PLUS.
“I can never say never,” he added, “but I just don’t see it as crucial to what we’re doing right now in trying to improve the user experience in travel. What we’re doing is just trying to improve the search.”
Henry Harteveldt, cofounder and travel analyst at Atmosphere Research Group, shares Torres’ “never say never” perspective on Google’s possible entry into the transaction arena. But he thinks that development is “doubtful” due to three compelling dynamics: “There is simply not a lot of margin in it, it has a huge customer service burden, and it would put an awful lot of advertising and other business relationships at risk.”
One Minute, One Thing: Henry Harteveldt
Stephen Joyce, CEO and cofounder of Rezgo, is part of the ‘it’s doubtful’ camp as well, based on what he describes as Google’s propensity to send leads directly to suppliers.
“There was a lot of controversy around Google Flight search, a lot of worry that Google was going to be another intermediary,” Joyce said. “What we’ve seen is that they are really interested in sending customers directly to the authentic source of the information or product. We’ve seen them do this on the review side, we’ve seen it on the hotel side, and now, most recently, we’ve seen it on the flight side.
“In a lot of ways that’s not a good thing for OTAs or intermediaries,” Joyce added, “but it does bode well for suppliers.”
Lorraine Sileo, vice president of research for PhoCusWright Inc., said the worry over Google becoming a booking intermediary is a lot of sound and fury, signifying nothing.
“We think all the hysteria about Google creating a killer booking engine is premature,” Sileo said. “It’s a whole other business — why would they want to do that? Then they have to do a call center, GDS agreements, work on customer care. It would be wasteful for them.”
One Minute, One Thing: Lorraine Sileo
But what if they do?
Some experts in travel technology and the ways of Google believe that while the killer booking engine hysteria might have been premature, it wasn’t misplaced.
“My feeling — and this isn’t based on any knowledge of what Google plans — is that there are places where that’s really the virtue, where you could finish the booking,” said Steven Levy, whose in-depth access to the inner workings of Google and its employees led to his best selling book, In the Plex, How Google Thinks, Works and Shapes Our Lives.
“You can see them getting closer and closer to that now,” Levy noted. “I was looking for a hotel the other afternoon and you could pretty much get into the reservation page of any hotel from Google. So that takes you right up to the desk, without leaving the search engine.”
Perhaps the strongest detriment to Google’s introduction of a booking engine is potentially damaging impact it could have on the substantial — and ever growing — advertising and search/transaction revenues generated by travel suppliers and intermediaries.
That view is shortsighted, according to technology expert Scott Klososky, founding partner of Future Point of View.
“I don’t think the fact that they have big customers who do advertising with them and also do transactions will stop them,” he said. “Not if they see that they need to — or want to — get into the transaction space to provide value to searchers, or that they need to in order to make sure that their mobile device is valuable to customers.”
In fact, Klososky says competition with Apple in the mobile arena could be the determining factor that kicks Google into transactions.
“Everybody realizes that the mobile device is going to become the outboard brain — it already is the outboard brain for a lot of people — and it’s an absolutely critical battleground,” Klososky said. “I’m sure they are very nervous about Android. It’s a two-horse race at the moment, and Google does not want to get too far behind Apple.
“If they see that the mobile unit becomes something that is highly transaction enabled, there is no way they are going to sit back and not want to compete with Apple,” Klososky said, adding, “I think it’s pretty naïve to think they are not going to figure out how to get deeper and deeper into doing the transactions.”
Also see:Jeremy Wertheimer on Google's Latest Innovations in Travel