Industry keeps wary eye on Google's moves in hotel booking

The spectre of Google’s hotel booking capabilities expanding had a significant impact on the travel industry last month when it influenced the Justice Department’s approval of Expedia’s acquisition of Orbitz Worldwide. 

Now, the world’s largest search engine is set to broaden both its hotel booking capabilities and the amount of content it will include with each listing.

Google late last month announced “an expansion of the Book on Google feature to more partners.” Google, which debuted hotel booking in addition to its search listings specifically for mobile users in 2013, added those booking capabilities for desktop and tablet computer users earlier this year.

“With Book on Google, Google facilitates the booking payment transaction,” Tom Mulders, senior program manager for Google’s travel division, wrote in a Sept. 22 blog post. “The hotel partner owns the guest relationship, including sending the confirmation email, answering post-booking questions and handling changes to the reservation or cancellations.”

Granted, a Google search last week still shows that a majority of the hotel listings for cities such as Los Angeles link to OTA sites and don’t include direct booking capabilities. Still, Google said it will broaden that feature to more hotels while adding information on hotel amenities such as swimming pools, parking availability and free WiFi. Google had already listed basic information such as price, room availability and user reviews.

Industry watchers are keeping a wary eye on Google because of its massive influence on the search process. Its sites receive about 240 million unique visitors a month, putting it ahead of Facebook and Yahoo, according to ComScore. User-review leader TripAdvisor has about 70 million monthly visitors.

While Google doesn’t lack the resources to market itself as a distribution channel, the company has so far been low-key about its moves into that sector. What is more, some travel-industry analysts are predicting that getting customers to recognize Google as a shopping source rather than just a search service could be a long process.

Max Starkov, CEO of hotel Internet marketing firm HeBS Digital, said it would take “a ton of advertising dollars” to get prospective online travelers to change their habits and move away from OTAs and suppliers.

Douglas Quinby, vice president of research at Phocuswright, said, “There’s no question Google holds enormous sway early in the funnel. But it’s going to take more than just adding a booking and payment layer to make travelers comfortable booking [with Google]. It’s not going to happen overnight, and don’t think for a minute that the OTAs and TripAdvisor and Kayak and others won’t put up a fight.

Still, Google this year has already increased its influence in the U.S. online-travel market, which Phocuswright estimates will generate $155 billion in revenue and account for 45% of U.S. travel spending in 2015.

In approving Expedia’s $1.34 billion acquisition of Orbitz last month, the Justice Department, among other things, cited Google’s travel-booking feature as an example of a “rapidly evolving” online travel business and evidence that combining the two OTAs would not pose antitrust issues.

The hotel trade group American Hotel & Lodging Association publicly disagreed with that assessment and argued that Expedia’s acquisition of Orbitz would hurt competition and boost consumer pricing. Still, Christopher Anderson, associate professor at the Cornell School of Hotel Administration, said that hoteliers are likely to welcome Google’s potentially increased role in the travel-distribution sector because it could weaken the OTAs’ distribution power.

“In general, this is a good thing for hotels as more options are always better than less,” Anderson said. “The tricky part for hotels is more moving parts to manage.”

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