REPORT FROM THE U.S.—Although the most recent changes to the distribution landscape might not directly affect day-to-day operations today, experts say hoteliers should pay close attention as major players in the space are making moves that could shape the future.
Two announcements Friday—Expedia spinning off TripAdvisor and Google receiving permission to purchase ITA Software—are steps toward a very different distribution model than hoteliers use today. TripAdvisor could become more “hotel-friendly,” and hoteliers could be enticed to spend additional money there, said Max Starkov, chief e-business strategist at Hospitality eBusiness Strategies. And moves by Google point to an increased role in aggregating travel search options for consumers, which could increase Google’s potential as a distribution channel.
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Daniel Edward Craig
consultant |
“They’re very interesting moves,” said Daniel Edward Craig, former hotel GM turned independent reputation-management consultant. “I can’t help but wonder if it’s all part of a master plan to get all these people to play their role in the future.”
Alan Gonzalez, director of distribution and e-commerce for Warwick International Hotels, a collection of 30 global luxury properties, said he is monitoring the changes closely.
“We have to because there are so many changes today,” he said. “Tomorrow there is going to be something new.”
TripAdvisor going public
Expedia announced Thursday the company will separate into two publicly traded companies—TripAdvisor and Expedia, which includes the operations behind Expedia.com, Hotels.com, eLong, Hotwire and others. Expedia stockholders will receive a proportionate amount of TripAdvisor stock when the spin-off is completed in the third quarter of 2011.
“We are excited about the road forward for our companies: for TripAdvisor to emerge as an independent, dynamic and leading publicly traded media company, and for Expedia, Inc. to continue to return to its roots of technology innovation and speed, and to move forward as a pure play, scale global online travel agency,” said Dara Khosrowshahi, Expedia’s CEO, in a statement to HotelNewsNow.com.
“They’re two different businesses, really,” said Warwick’s Gonzalez, who monitors TripAdvisor reviews daily. “What TripAdvisor sells to us is their enhanced listings—putting our phone number, Web address and the ability to highlight special offers. Despite the fact that it’s owned by Expedia, they make it clear that they’re not particular or biased.”
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Alan Gonzalez
director of distribution and e-commerce,
Warwick International Hotels |
Other hoteliers might take a different stance. Starkov said even though TripAdvisor claims there is a “Chinese wall” between it and Expedia, in reality revenues were shared and reported as the same company, which made hoteliers skeptical. He thinks the decision to spin off TripAdvisor is part of a strategy to offer the perception to hoteliers that TripAdvisor is no longer “part of the evil empire” and target them for advertising spend more aggressively.
“The current Expedia investors are not getting good value for their money,” Starkov said. “TripAdvisor is the only true growth part of the Expedia empire.
“With travel demand increasing, there is a humongous downward pressure to lower Expedia’s merchant commission,” he continued. “(The spinoff) will give TripAdvisor ammunition to say, ‘Guys, we have nothing to do with Expedia anymore; we are independent, unbiased’—and it will give TripAdvisor ammunition to go after more marketing dollars from the industry.”
If that truly is the motive, it fits in with other actions the company has taken. TripAdvisor has been making a concerted effort to reach out and be more responsive to hoteliers, Craig said.
“If anything, it’s good for the hotel community,” he said. “Now it’s very clear that Expedia sells rooms and TripAdvisor is there to share travel experiences. Now it’s just a bit more clear cut, and it lets hotels know it’s more of an even playing field.”
Either way, hotels should continue to monitor guest reviews and respond appropriately, now more than ever, sources reported. Gonzalez said Warwick is seeking an automated reputation management tool to quickly respond to customers on all review sites.
“Reputation management is a new dynamic,” he said. “You need to be cognizant to not just your rates but your content as well.”
Google acquisition OK’d
The immediate implications for hoteliers from Google’s approval to buy ITA Software for US$700 million, announced Friday, are more speculative. What is clear is Google intends to become a major player in the travel search field and adding real-time access to flight prices and availability gets the company closer to becoming a one-stop shop.
But most experts remain certain Google won’t begin selling airline tickets or hotel rooms. Rather, the company will focus on aggregating real-time information in its search results and driving users to advertisers via a pay-per-click model.
“Google has a very persistent corporate strategy to provide the best possible content and the most relevant content to its users. Anything they do is focused on the user experience,” Starkov said. “ITA Software has the same culture; they are exactly like Google. They are extremely bright guys that have figured out how to sift through gigantic amounts of data and make sense of it.
“Google’s only intention is to improve its search results,” he added. “All of these speculations are from people who do not know how Google thinks and operates.”
As long as Google doesn’t begin showing bias or preference to its partners in search results, Gonzalez doesn’t foresee a negative effect.
Still, some argue Google entering the travel space will only make it more difficult for hotels to drive bookings to their own websites because, for Google, working with third-party intermediaries for rates and availability is quicker and more efficient.
And if, by chance, Google decided to simply add a “Book” button, it would dramatically change the game.
“Google has reviews and pricing and selection and information on hotels and flights and car rentals,” Craig said. “The only thing left for the user—the only missing piece of the puzzle—is to be able to book.”
