Google continues to encroach gradually on OTA turf. The tech giant's most recent move was to begin offering exclusive hotel discounts via its Google One cloud storage platform, at the same time announcing the development of a "hotel-plus-flight product."

Google's hotel discounts are currently offered only to paying users of Google One, a cloud storage product that offers paid plans starting at $2 a month for 100 gigabytes. 

But Phocuswright research manager Alice Jong said that despite their relatively limited rollout, the discounts still pose a "strategic risk" to OTAs and travel metasearch competitors. 

"Google keeps launching all these little features, and if you look at each one independently, it's not as if they're going to turn Google into the next travel-deal website overnight," Jong said. "But they keep taking more and more little pieces out of the travel pie, and in many cases, these pieces are differentiating value propositions for other online players." 

Jong added: "Google's sheer size and reach is keeping the travel industry on its toes." 

Atmosphere Research Group president Henry Harteveldt, too, warned that OTAs should be wary, especially since Google One's hotel discounts could easily be extended across other Google channels. 

"What starts as an offer to cloud subscribers could potentially be expanded to other groups," Harteveldt said. "Who's to say Google can't turn around and expand this to Gmail users or people who use other Google products, like Chromebook users or Android device owners?"

Google's primary web services competitor, Amazon, could also follow suit, he said, by adding travel-related offers to its own cloud marketing efforts.

In addition to discounts, Google eventually plans to add upgrade options, such as free breakfasts, to its Google One hotel offers. 

At a recent media event in New York, Richard Holden, Google's vice president of product management, detailed the company's foray into the travel package space.

"Traditionally, people think of packages as flight plus hotel plus ground transport, exclusive meals, everything," Holden said. "We're really starting with just flights and hotels, and we may add those other pieces. If you do searches, you can find that flight and hotel combination now, but we're going to feature and surface that more."

However, Phocuswright research analyst Mark Blutstein said Google could face some headwinds when it comes to competing on the package front, as loyalty appears to play an outsize role when it comes to combining hotel, flight and transportation bookings. 

"Among U.S. consumers at least, a company really needs to have some traction to compete in packages," Blutstein said. "Loyalty is big within the Gen X and baby boomer demographics, and they're still the ones most likely to book packages. So it may take more time for Google to break into that sector."

Google also recently bolstered its flight and hotel search capabilities, launching three in-product offerings in August. These include a Thanksgiving-focused pricing feature for U.S. airfare searches on mobile as well as a global mobile and desktop feature that targets travelers with some flexibility, highlighting fares to various destinations that are priced significantly lower than average. 

On the hotels side, Google has debuted a global price insights feature on mobile devices, enabling travelers to track hotel prices over time, see if a price is lower or higher than usual and compare one hotel's rates with those of similar hotels during the same time period.

Collectively, these launches continue to bring Google "one inch closer" to becoming a full-fledged OTA, according to Harteveldt. 

"If you look at the Google ecosystem, they're gradually filling more and more spaces within digital travel with their own products," he said. 

"It seems that there's a strong interest in travel coming from Google corporate right now," Harteveldt added, "and because Google is so omnipresent in both business-to-business and business-to-consumer areas, no travel company, not just OTAs, can afford to ignore it."

A 2017 Phocuswright study reported that nearly half of U.S. travelers use a metasearch provider, including Google, when shopping for flights and hotels.


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