So I’ve been trying to wrap my head around this Google Places / Google Maps / ITA acquisition topic for some time now. I’ve finally made a little “headway,” and realized Google is taking steps I think could have major implications on the hotel industry and the way rooms are marketed and distributed. And I think there are more than a few hoteliers out there who could benefit from taking a closer look at what’s happening.
So let’s do just that.
Last week, HotelNewsNow.com’s Stacey Higgins reported live from HSMAI Europe’s Revenue Management & Internet Marketing Strategy Conference, where she listened to a presentation from Nate Bucholz, industry manager at Google. Bucholz’s main takeaway was that Google will not become an OTA, rather the search-engine giant aims to provide a comprehensive, easy-to-use experience for customers searching for hotel rooms.
“We’re not interested in taking consumers’ money directly,” he said. “We’re not going to become an OTA. We want to get the consumer to become a qualified lead.”
While this sounds all well and good for the hotel industry, it may be a little misleading. He’s accurate that Google may not directly conduct booking transactions, but in the end that doesn’t really matter for hoteliers. What really matters is that Google is in no way helping to drive bookings to the hotel website, which we all know is crucial to a successful operating model for the hotel industry. Instead it seems that advancements to Google Places will in fact de-emphasize the importance of booking direct, and, if hoteliers want to be part of the booking game, they must completely alter their distribution strategy to spend more money on advertising with Google.
To better illustrate this, let’s pretend I’m planning to attend a conference in New York City next month and I need to book a hotel for my trip.
I know the host hotel is either sold out or too expensive, so I am hoping to get a cheaper rate somewhere nearby. Problem is: I have no idea what hotels are nearby. Pretty common issue. So I do a quick Google search for “New York City hotels.” Up comes a map at the top of the search results, which is pretty handy in determining which hotels are in walking distance, as well as other information. I click on the map and it takes me somewhere most of us are familiar with: “Google Maps.”
Now, what you might not be so familiar with is Google’s newest features, implemented just this month. Today, Google Maps shows an average price and availability for the hotels listed. And if you click on the drop-down arrow next to a hotel’s price, a small box appears directing you to several different places where you can book that hotel, and the different prices at each respective site.
Interestingly, in each box I tried, prices were listed for several different OTAs, but no price was listed for the brand’s own site. And, in all cases, the brand’s own site was listed dead last.
A handful of GMs got wind of this last week and immediately posted questions to Google Help, where a Google employee named Brianna offered the following response:
“We’re currently working with a number of partners to allow users to click through and begin the booking process. In addition, we’re working to expand these partnerships and exploring ways to allow individual hoteliers to easily share updated pricing /availability. In the interim, you can already add direct booking links in Google Places (see help article).Thanks for your excitement about participating; we’re looking forward to opening this up to more partners.”
It is unclear how much hoteliers will pay to have their price listed in the box, or whether they can jockey for a higher position in the list. Trust International, a Frankfurt-based hotel CRS vendor, is helping Google create the new advertising program, the company told tNooz.
In London last week, Bucholz said it’s easier for Google to get pricing and availability from mass distributors (OTAs) and much more difficult to get that information from each and every individual hotel. In fact, Google can just crawl the OTA sites to get those prices, never even having a conversation.
“Before we had the date of travel and the price range, but we wanted to provide information right away and get Google off as fast as possible,” Bucholz said. “We need good and accurate information; it needs to be scalable. We can’t talk to every hotel in a market.”
OTAs, review sites scared, too
For maybe the first time since 9/11, hoteliers and Expedia are standing on the same side in opposition of these new Google functions. Expedia, which owns the popular review site TripAdvisor, is understandably worried that Google Maps and eventually Google Places will replace the need for TripAdvisor. Google Maps currently pulls guest reviews from TripAdvisor and includes them in search results.
TripAdvisor CEO Steve Kaufer, in a Q&A on TripAdvisor’s blog, initially stated in late January TripAdvisor would ask Google to stop pulling reviews from its site, but recently told tNooz Google is “forcing” them to comply and simply skimming the reviews from TripAdvisor. He also spoke out against the placement of Google Places, occupying a large space atop the page and pushing TripAdvisor’s appearance in search results down considerably.
In Expedia’s end-of-year investor relations filing with the SEC, the company stated:
“We expect to face additional competition as other established and emerging companies enter the online advertising market. Competition could result in higher traffic acquisitions costs, reduced margins on our advertising services, loss of market share, reduced customer traffic to our websites and reduced advertising by travel companies on our websites. For example, Google, through its launch of Google Places and its proposed acquisition of ITA Software, if completed, as well as Bing, through its launch of Bing Travel, each took steps during 2010 to appeal more directly to travel customers, which could lead to diversion of customer traffic to their own websites or those of a favored partner, or undermine our ability to obtain prominent placement in paid or unpaid search results at a reasonable cost, or at all. In addition, if one or more large search engine begins to facilitate travel transactions on its own websites, it could also adversely affect our results.
“We cannot assure you that we will be able to compete successfully against any current, emerging and future competitors or provide differentiated products and services to our traveler base.”
How will hotel brands react to the new distribution channel? Stay tuned to www.hotelnewsnow.com