Google's recent efforts to expand further into the online
travel space could result in a pivotal change for the hospitality industry.
In August, the tech giant announced it had started offering exclusive
hotel discounts to paid subscribers to its Google One cloud storage service,
while also announcing the development of a "hotel-plus-flight
Sean Hennessey, clinical assistant professor at New York
University's Jonathan M. Tisch Center of Hospitality, said Google's play in hotel discounts could prove beneficial for hotels looking to bypass
the high commissions that have long been synonymous with traditional OTAs.
"From a hotel company's standpoint, the OTAs are a
mixed blessing," Hennessey said. "They have been extremely successful
in delivering guests to properties in a way that makes them attractive, but
they also have the highest cost of securing those customers. So if Google can
come in and provide the same service at a lower cost, hotel companies would be
eager to replace one distribution channel with, perhaps, a better and cheaper
"Hoteliers are keenly focused on driving down customer
acquisition costs, and some are hopeful that Google could potentially benefit
Recently, Airbnb has allowed hotels to list rooms alongside
its home-sharing offerings, while promising to take a smaller commission cut.
Hennessey cited that foray into the hotel space as a potential road map for
Google's hotel discounts strategy.
Airbnb's outreach thus far has primarily targeted boutique
and bed-and-breakfast properties, with the company's hotel-focused marketing
centering on its claim that OTA fees, at up to 30%, are too high.
"Hotels, and particularly independent hotels, are
excited about Airbnb because of its commission approach," Hennessey said. "So
Google could similarly be revolutionary in that regard."
Hennessey also predicted that Google will likely continue to
be discreet with hotel discounting. This is primarily because hotels, as well as OTAs, represent a major
customer base for the company's lucrative Google Ads advertising platform,
which promises to help improve clients' online visibility and drive traffic to
"When I speak with both hoteliers and OTAs, they are
somewhat confident that Google will remain circumspect with its entry into the
online travel world because hotels and OTAs spend a lot on Google Ads," he
said. "If Google ever tried to unilaterally enter the travel market in a
big way and really throw its weight around, Google would be cutting a gigantic
revenue stream off at the knees.
"So, while Google certainly has the reach to enter and
compete aggressively in that market, it has not gone all-in at this point, and
there's certainly some belief that they won't go all-in at least for the
Atmosphere Research Group president Henry Harteveldt said
that although Google's recent online travel rollouts have been relatively
low-key, the company could easily turn them into a much more significant
"The way Google got these hotels to agree to these
Google Cloud deals is likely by saying, 'Look, this is no different from
offering a discount to AAA members, AARP members or members of any other
affiliated group,'" Harteveldt said. "So from the hotel standpoint,
they probably looked at this and said, 'OK, let's try it.' But who's to say
Google can't turn around and expand this?"
Harteveldt added that hoteliers and other travel industry
players should be wary of Google's next moves.
"What does Google want? I am only half joking when I
say total world domination," Harteveldt said. "Like Amazon, what
Google really wants to be is the supermarket of services for almost everything,
and that includes travel."