Chains, OTAs and Google: Time to Heal Old Wounds or Go Head-to-Head?
By Eye for Travel
Thursday, 21st March 2013
Google Hotel Finder was hyped as potentially the biggest ever game changer in the ever-evolving travel landscape but has that really materialised and has it done what everybody thought it would? And if not what will be the big disruptors of the next 12 months? Pamela Whitby finds out.

When Google Hotel Finder launched back in 2011 some hotels may have been that this would work in their favour by driving more direct bookings. It was certainly the impression that Google seemed to want to create, but did this really materialise? Today, is Hotel Finder really a threat to the hotel industry? HotelPlanner chief executive Tim Henschtel thinks not. "At end of day it wasn't disruptive," he says. 

In fact if anything Hitwise data shows that bookings via OTAs have increased. As Hentshcel points out this is down to the fact that when it comes to a price-per-click model everybody is basically paying around the same, and the OTAs can monetise that traffic a lot better than the chains. After all the OTAs now have over a 100,000 hotels for consumers to choose from, the biggest hotel chain around 5,000.

 "It certainly hasn't impacted our company [which deals with online group travel], where corporate group travel is up 25% year on year and leisure group travel demand is up 45%," he says.

Although Google holds more power than any other in history, for Henschtel the only way it is going to change the travel industry is to take a little bit more money out of it. "Why would they waste their time trying to change who gets what [more direct traffic to hotels]? They are a publicly owned company, for-profit company not a public service of any kind." So in fact what was hyped as the great disruptor is doing nothing else than to make Google more money.

Unintended consequences

Hentschel wonders if the hotel chains fully understood the unintended consequences of more traffic going to the OTAs from Hotel Finder. "If the chains and OTAs had worked together as a cohesive unit [in the legal battle for fair search] against one search engine that effectively has a monopoly in the industry, maybe these powers would have been strong enough to keep Google from exercising its strength," he says.

Ultimately the Federal Trade Commission's decision to settle in the antitrust case against Google for giving its own services top billing and pushing down rival offerings came down to whether that was in the interests of consumers. Antitrust laws protect consumers not competitors.

And while Google is more than likely using its internal search power to promote its own services, if that benefits the consumer then there is no case. For online travel services this doesn't seem fair and the only consolation is that if Google services don't stack up, consumers are likely to quickly go elsewhere.

Henschtel is not so worried, arguing that it is harder than you think to change consumer behaviour. So if people have a favoured OTA or chain, or always turn to a meta-search engine to book, chances are they are likely to stick with that unless there is a really compelling reason not to.

And for hotels like Best Western that means adding value to the customer. This where ‘big data' steps in: "We need to be able to segment data in order to get information and better information on our customer so we can target them more accurately," says Richard Lewischief executive of Best Western Hotels Great Britain.

Will Google Hotel Finder go further and get into bookings aspredicted last year when he gave it three years before Google "marched into our territory"? That remains to be seen but hotels will have to continue to look for the right partners – and Google may even have a place – providing they "play fair". In spite of its somewhat sleepy image, Best Western was the first hotel to become fully bookable on Facebook and has not been shy to embrace new partnerships.

As a self-confessed ‘new breed' of hotel, for citizenM it has certainly been a case of adapt or die. "Sometimes one needs to reshift the way business is done and change the fundamentals; that time has arrived right now for many hotels and hotel chains," says citizenM's Michael Levie.

Why? Because the traditional business segmentation of the hotel industry is changing rapidly, without them actually realising it. "The OTA's are providing cumulative information on behaviour patterns, expenses and anything else they can provide better than individual chains ever could," says Levie. "The industry better brace itself and adjust the way they do business, or they will go down complaining!"

So maybe this is the time for traditional travel industry players to heal old wounds. The thought of working closely with the ‘big bad' OTAs, now even stronger with their foray into meta-search, may stick in the throats of many hotels but is there another way? Hotels have tried to go down the co-operative route but just look what happened when Roomkey tried to join forces with Travelocity?

Bigger issues

The bottom line is that Google has a good search product which is why everybody uses it. According to Levie, Hotel Finder will have a big impact. "Google again makes a piece of the market more transparent and visual and it will be interesting how much they will grow this service over time," he says.

Watch out for the full interview with Levie on EyeforTravel.com next week.

But we also that know organic search in Google is moving further and further down the page, and that the advertising game is changing rapidly. Hentschel may think that the impact of Hotel Finder has been quite mild, but when it comes to advertising practices "there are lot of things that are a lot more controversial than whether or not Google can embed metasearch into search results for hotels searches for brand names," he says.

With Google advertising becoming increasingly personal and targeted with the evolution of Google+ (see A social signal for 2013: is Google+ where it's at?) it is only going to get more challenging.

Also things like predictive search have had a huge influence over people's purchasing decisions. And the hard, cold reality is that only 10% of users currently go to page two when searching on Google.

In Europe Google, however, faces similar antitrust claims and Hentschel wonders if this could be the real disruptor. After all, in Europe online consumption is growing rapidly. And while in the US the chains may dominate, in Europe – and other emerging markets - the independents have a stronger voice. So everybody will be waiting and watching to see whether Europe will be willing to take a tougher line with Google.

Tim Henstchel chief executive HotelPlanner, Richard Lewis chief executive Best Western Hotels Great Great Britain and Michael Levie of citizenM are speaking at TDS Europe in London on May 23-24.  Join us there for what is expected to be a heated and lively debate.

Global Brand Awareness & Marketing Tools at 4Hoteliers.com ...[Click for More]
 Latest News  (Click title to read article)

 Latest Articles  (Click title to read)

 Most Read Articles  (Click title to read)

~ Important Notice ~
Articles appearing on 4Hoteliers contain copyright material. They are meant for your personal use and may not be reproduced or redistributed. While 4Hoteliers makes every effort to ensure accuracy, we can not be held responsible for the content nor the views expressed, which may not necessarily be those of either the original author or 4Hoteliers or its agents.
© Copyright 4Hoteliers 2001-2024 ~ unless stated otherwise, all rights reserved.
You can read more about 4Hoteliers and our company here
Use of this web site is subject to our
terms & conditions of service and privacy policy