Pulling rank

Google’s grand plans for the travel search sector could shake-up hotel bookings, but how will they affect travel buyers? Tom Otley reports

FOR MOST TRAVEL MANAGERS, the internet is as much a hindrance as it is an asset. The ability for an individual traveller to undertake their own flight search, or hotel search, and come up with a price considerably less expensive than the one regularly shown on their tickets isn’t exactly a help in enforcing travel policy.

Consolidator websites lead with their most attractive deals, and it’s only much later in the booking process that the restrictions become apparent, by which time the traveller is already composing sarcastic emails to the procurement department.

Of course, as we know, the moment plans change these non-refundable tickets aren’t such a great deal – although you only find out how much the whole thing has cost the company once you’ve tracked tickets paid for on trips never made, or through expense bills to see how a new ticket was booked at the last moment for the rearranged date.

Up, up and away

Still, the internet is here to stay, and as has been made clear by recent moves by search engine giant Google, things are about to get a lot more interesting. First, there are the changes occurring with flight search.

In July 2010, Google announced its plans to acquire a company called ITA Software. Its intention, according to Google senior vice-president, Jeff Huber, was to have an end-to-end flight search and booking facility.

“How cool would it be if you could type ‘flights to somewhere sunny for under $500 in May’ into Google and get not just a set of links but also flight times, fares and a link to sites where you can actually buy tickets quickly and easily?” Huber asked. “Well that’s exactly why we announced our intention to buy ITA Software...”

ITA already provided flight information for several consolidators, including Orbitz. The proposed takeover was referred to the US Department of Justice, but after Google made various undertakings with regards to ITA’s existing client contracts, the takeover was approved – to Huber’s evident delight. “We’re confident that by combining ITA’s expertise with Google’s technology we’ll be able to develop exciting new flight search tools for all our users,” he said. “Up, up and away!”

Google checks in

This year, Google has entered the hotel market in a new way, too. Until now, a hotel company was like any other advertiser on the web. If it wanted pay-per-click advertising, it paid for it like everyone else, and unless it had a huge budget, it found it difficult to come anywhere near the top of a search engine page. Companies such as Expedia, Booking.com and Hotels.com spend vast amounts, and rank accordingly.

Type ‘Hotel in Mayfair, London’ and you’ll see what comes up. Google’s secret algorithm presents the search results in a certain order, but at the top, there are sponsored links. Try that same search in Google maps, and, as well as the familiar pin-point markers, there will be sponsored research results (that is, advertisers) and also indicative prices in a box for each of the hotels in the area. Click on that box, and you’ll see those same companies offering the hotel – the likes of Expedia, Booking.com and Hotels. com. Google has plans here as well. “Google is doing a number of different things in travel”, says Nigel Russell, senior product management director for Trust International, a company working closely with Google on some of these innovations.

“It started within Google Places and Google Maps, but it’s has now expanded into the main Google. com. When you search for hotels now, rather than just coming up with the results it also displays pricing information, gives you the best price for the hotels found, and links you to specific sites which can offer that rate. For Google this is the first part of a wider strategy.”

Google also asks for an arrival and departure date, so it can give a more specific price through the various channels. The order in which the hotels are displayed is controlled by the normal Google parameters, which includes pay-per-click. Choose a hotel, and the order in which the companies are displayed is ranked in terms of price point. In other words, the cheapest is at the top, but Trust International has developed a new product at this stage.

“The pricing part is where we come in,” says Russell. “We provide a real-time feed of data to Google that populates the pricing information. So the user can see the lowest price in a little box, and when the user clicks on it they can see the different prices in the different channels. We not only  supply the hotel booking agent, we also populate the pricing information for the likes of Expedia. From the consumer point of view the product gives you a chance to compare prices across different sites. They can buy room upgrades, get shuttle services from the airport or order breakfasts, which can be more difficult to do from consolidators. They can also see the full range of rooms and rates which are available, rather than just one or two.”

Eyeing the main chance

The new system also allows a traveller to put in a corporate code, accessing any corporate discount available, although if you had negotiated these rates and communicated this fact to your travellers through a mandated corporate travel policy, one would hope the traveller came across the hotel chain’s website in some other way than going through Google.

This facility is not unique, as certain online travel agents (OTAs) also have corporate rates. However, Google’s new deal allows hotel chains to get in on the act. It’s a development that Heiko Figge, chief executive of Guoman and Thistle Hotels in the UK, has described as “...the biggest thing that happened in our industry this year”.

“It’s a massive change,” says Figge.

“It says to all our intermediaries out there, the Expedias and the rest, that hoteliers have found an alternative way to distribute their inventory online. Now, you watch it blossom over the next year or two. Because if we can actually go to the search engines directly, if they have the facility to distribute our inventory, that will cause havoc among the intermediaries.”

Trust International already supplies real-time inventory to many consolidators, but is now busy signing hotel chains as diverse as Rotana, Solara and Motel One through to Leading Hotels of the World and World Hotels. The firm’s website states that “few marketing tools are as powerful as appearing in Google’s Hotel Price Ad feature, which shows hotel prices next to organic results” and offers hotels a central reservation system (CRS) enabling them to display rates, and rates, availability and booking link with the search results (see ‘How Trust International’s Google programme works’, below).

Russell says: “What Trust is able to offer hotels is the opportunity to compete with the large consolidators who spend massive amounts with Google so they appear at the top of the search results. Typically, if you type in the name of a hotel in Google, generally a consolidator will appear on top, and although a hotel will get a booking out of it, they have to pay upwards of 25 per cent to those channels, so it’s very expensive for them, and they can’t compete.

“We are offering a way to compete for the booking in a way they haven’t before. Because it’s pay-per-click they can control what they spend, but with Google they may get a 25- or 30-to-one return on investment, which is huge.

And they get people coming direct to their site instead of paying a 25 per cent booking fee to a consolidator.

What we charge is incredibly small compared to that, so it’s a much cheaper option for the hotel.

“The hotels want direct access to customers. While the consolidators are very important for the hotels, they are also competitors in a way. Hotels want a direct relationship with the customer – particularly the chains.”

The fight back

Although this is good for hotels, as might be imagined, the consolidators aren’t happy about Google’s moves into the travel arena, and as a result have clubbed together to form FairSearch.org, pointing out what its members say is Google’s anti-competitive behaviour.

The website asserts that Google has “power over” where sites rank in search results, how search results are displayed, who can advertise, and what price advertisers must pay. It summarises: “Google is abusing its dominant position in search to stifle competition and capture more control over the flow of information and commerce online.

Officials charged with protecting innovation, economic growth and consumers must step up and enforce existing laws that will prevent Google from further stifling competition on the internet.”

Healthy competition?

Despite attempts to get a comment from Google, Buying Business Travel has been unable to elicit any response from the search giant. We have also found it difficult to get comment from consolidators. Still, does any of this matter? Corporate travel managers might regard this as only an interesting sideshow, since their travellers generally aren’t allowed to book flights or hotel rooms directly from the web, whether with the consolidators or the hotel chains.

An industry manager, who wished to remain nameless, said: “There is no guarantee that Google will be successful at all. They have entered a number of verticals outside the core general search, such as Google Wave and Google Buzz, and haven’t been successful.

“Google is such a prominent brand and so well known that making a move in this space gathers a great deal of attention, but the competition of consumer-focused online travel to corporate-managed traveller services is something that’s been going on for 15 years, and corporate managed travel, as well as individual travel agents, have learned how to compete in that dynamic.

“Hopefully what will happen in the US, as well as the EU investigation, will make sure that Google does not unfairly leverage its monopoly in that competition.”

He adds: “Clearly this is a signal that there will be continued healthy competition in online travel, and that means corporate travel managers are not going to be able to sit and not continue to innovate.”

It’s a sentiment echoed by Trust International’s Russell. “Each year we see a substantial increase in traffic from GDS [global distribution system] to web, either booking engine or OTA, so the web in general is a threat to the GDSs. They are very aware of that and doing different things. The GDSs will be around for a long time yet and they are very clever at developing new products.”

The GDSs welcome the competition, according to Dean Bibb, vice-president for Sabre Travel Network in Europe, the Middle East and Africa. “Corporate travel programmes and those who manage them must be able to efficiently and transparently comparison shop a wide range of content,” he says.

“Every year the GDSs invest hundreds of millions of pounds innovating and delivering new shopping and reporting capabilities that make it ever more efficient to manage this content.

“More than 60 per cent of all air bookings are made in the GDS, and as long as the need for transparency and comparison shopping exists, the GDSs will continue to be a valuable partner for corporations, agencies and the suppliers that use them

AND IN CHINA ...

Google’s moves are being mirrored in China, where Baidu Inc, China’s top search engine, has just bought the country’s leading travel website, Qunar. Google withdrew from China over censorship concerns, further strengthening Baidu’s position.

“Travel has long been one of the top categories on Baidu, and the number of travellers in China has been growing rapidly, so this is a market of obvious strategic importance to us,” Jennifer Li, Baidu’s chief financial officer, said in a statement. “Our investment in Qunar will create an even better search experience for users planning trips.”