The coalition known as FairSearch.org failed to stop Google’s acquisition of ITA Software earlier this year, but it is keeping alive its struggle to stop what FairSearch characterizes as the search giant’s threat to competition, innovation and jobs in the online travel space.
While Google’s entrance makes any sector shudder, a major source of FairSearch’s concern could be that the online travel market, despite its many players and years of technological advances, has a long way to go to meet the needs of consumers and the trade.
In other words, the fear is that Google has the resources and the smarts to be not only bigger but better.
FairSearch, which includes online travel agencies Expedia and Travelocity and metasearch engine Kayak, was formed last year to lobby against Google’s $700 million acquisition of ITA, which was approved in April by U.S. antitrust authorities with stiff conditions.
Google’s entrance into the world of flight search in September, using the technology it acquired with the ITA deal, further rankled the online travel industry.
FairSearch sent all 50 state attorneys general a 44-page paper titled “Google’s Transformation From Gateway to Gatekeeper: How Google’s Exclusionary and Anticompetitive Conduct Restricts Innovation and Deceives Consumers.”
The paper outlined the coalition’s concerns about Google’s business practices.
Google has declined to respond officially to FairSearch’s position. But whatever the merit of the coalition’s argument, experts and analysts agree that there is plenty of room for improvement in the online travel space.
Forrester Research found that in the first quarter of 2011, the number of leisure travelers who said they enjoyed using the Internet to plan and book vacations was 47%, down from 53% in 2007.
Forrester also found that growth in online travel bookers was moderating; it was expected to grow from 89.7 million people this year to 104.6 million by year-end 2016, an increase Forrester termed modest and which it said continued a trend the research firm had identified in 2007.
“There was a bump in bookers from 2010 to 2011 but almost no forward growth,” Forrester reported. “We’re getting close to near-flat year-over-year growth.”
Virtuoso CEO Matthew Upchurch, citing data indicating that travel website loyalty had dropped from 42% to 28%, told consortium members in August that they should take advantage of such trends.
Analysts who cover the online travel industry generally agree that while major progress has been made, a great deal of room for improvement remains.
Carroll Rheem, a research director at PhoCusWright, said, “I think the challenge is that the suppliers have one mission and consumers have another, and they don’t match.”
Rheem said that airlines, for example, have been trying very hard to decommoditize their products and differentiate themselves on more than price. The problem with that, she said, is that “the consumer really, truly is about price.”
This constant battle, Rheem said, creates friction for the intermediaries, the online sellers and metasearch engines, which strive to cater to the way consumers want to see things.
Consumer frustration is highest, Rheem said, when it comes to more complicated trips.
“For simple trips, where it’s just a flight and it’s domestic, the [online booking] products are really pretty sufficient,” she said. “Where the frustration lies is in anxiety about booking more complex travel and not knowing the best times to book. It feels like a game of chicken.”
Henry Harteveldt, an industry analyst with Atmosphere Research Group, warned in a report four years ago while he was with Forrester Research: “To keep online consumers interested in online booking, travel companies need to overhaul their systems to sell the way people want to buy.”
More recently, Harteveldt acknowledged there are players in the space that have made great advancements, but said that “the wheels of change in online travel turn agonizingly slowly.”
He added: “I wish we’d seen more innovations and more adopters of innovation than we’ve seen thus far.”
Harteveldt pointed to several innovative ways people can search for travel with individual suppliers using new parameters.
The Amadeus GDS, he said, developed an “affinity shopper” tool, which Lufthansa and Cathay Pacific use. British Airways and American Airlines have also introduced ways to search based on factors “other than a person’s travel dates and his or her origin and destination.”
Marriott and Hilton, he said, have calendars where one can find the lowest hotel room rates and shop within their budget while adjusting their travel dates.
Yet the OTAs, he said, have not innovated in this area.
“They are certainly doing better things, but they still rely on more traditional inputs like origin and destination — and dates, for example, for flights, and destination and dates for hotel search. We haven’t seen them come up with too much inspiration-based shopping.”
These factors, he said, have halted online travel’s growth, though the current environment might force them to do better.
“The fact that you are seeing a plateauing of the number of people buying travel online, a tough economic selling environment, the lack of brand loyalty, are all helping to drive travel companies to be more innovative,” Harteveldt said.
Nor is he alone in pressing the need for better search parameters in online travel.
Martin Lumbye, a partner at the Copenhagen-based metasearch engine Momondo.com, said online travel needs an upgrade.
“Online search needs more filters, which will help answer more intelligent requests,” he said in New York last month.
One such search filter consumers should be offered, he said, would be “I know where; you tell me when” or “I know when; you tell me where.”
“The more filters you have, the more targeted and intelligent your search will be,” Lumbye said.
The kinds of filters both he and Harteveldt describe are exactly the services that agents offer users, a fact that Harteveldt noted.
“Technology has not yet been able to adequately reproduce the service or focus that a human travel agent can do for his or her client,” Harteveldt said. “The travel agent has the ability to ask questions before he or she starts to search for things and can then do the research and go back to the customer with suggestions based on what they were told.
“We haven’t seen technology replicate this type of a process. And in fairness, that’s because [the process is] very complex.”
For news and updates on agent and distribution issues, follow Johanna Jainchill on Twitter @jjainchilltw.