Travel Industry Cries Out Over Unstoppable Rise of Google
Patrick Andrae has spent eight years building an online marketplace that offers over 14 million vacation homes for rent. In September, HomeToGo was listed on the Frankfurt Stock Exchange with a value close to 1.2 billion euros and a growth trajectory that prompted comparisons with Airbnb.
But a vacationer sitting in London and Google searching for a vacation rental in Berlin would have a hard time finding it, having scrolled through a number of paid listings and a link to their own vacation home rental search. from Google which shows photos, prices and a map.
It is this service that is getting the attention that particularly bothers Andrae and others in the travel industry, from Wizz Air to Expedia. They say it’s unfair that they have to buy a paid slot if they want to appear above Google’s exclusive accommodation and flight search, or they will appear much lower on the screen.
Arguably the most important partner in the travel industry, Google provides an essential means of reaching customers as the world’s most widely used search engine, especially at a time when travel agencies, suffering from the continuing effects of Covid restrictions, need as much exposure as possible. to have.
But, said Andrae, instead of allowing its algorithm to rank websites based on the quality of service they offer, Google is promoting those who pay the most in auctions for ads or its own. travel products.
This gives it more data on what customers are booking, further boosting its ability to charge businesses for advertising and better placement in its rankings.
“Every company that wants to be higher in the organic sector [unpaid for] the results have to work their way up with a good user experience, which is what Google is trying to measure. The only one that doesn’t apply these rules to their product is Google, ”Andrae said.
Peter Kern, CEO of Expedia, called the company a “great tyrant.”
“I don’t think it’s them who want to be a part of our business. I think these are the ones who want to suck all the money out of our business and make us all fight for less money because they take so much of it.
Johannes Reck, managing director of the online travel agency GetYourGuide, described the “hundreds of millions” of advertising dollars that travel agencies spend with Google as “a tax on everyone else in the industry I think. unjustified “. Wizz Air boss Jozsef Varadi said Google was trying to “be part of our customer base.”
Google said it had provided “valuable traffic to travel agencies” and removed the tools it had developed for businesses to “control the information that appears on our search results page.” . . would create a worse experience for consumers and send less traffic to travel agencies ”.
It doesn’t break down the revenue it derives from its specialty services, which also include Shopping and Maps, but travel is an area that has grown rapidly. Google says its investment in travel is part of its “core mission” of taking “a complex body of information and making it useful.”
So far during the pandemic, a time when travel companies have lost more than $ 6 billion in revenue according to the World Travel and Tourism Council, Google has expanded its travel platform, merging rental services. search and hotel search, and in September he launched a specialist search for activities such as visiting the Colosseum or skiing in Lake Tahoe.
Finnbar Cornwall, the travel industry leader at Google, said about 50% of people looking for vacations online gave up on the process before booking because they couldn’t find what they were looking for.
He said Google is trying to make the process easier for travel agencies and consumers alike: “I don’t think travel is a fixed pie where everyone is fighting for a fixed slice of the pie. There is an opportunity to bring the trip to a lot more people, to remove the friction and if we can do it at Google. . . it will get more people traveling and it will bring more people to British Airways, to Booking.com.
Figures from Statcounter, which tracks web traffic, suggest that Google controls over 85% of global online search, meaning its power affects all industries. But travel is a particularly attractive price: Because vacations are a purchase once or twice a year, and can involve many elements and be expensive, consumers are more likely to spend time on Google to make purchases, which in turn results in consumers spending more time on Google. gives the group more data and more. muscle to sell advertising.
In 2019, the industry spent $ 16 billion on advertising on Google, according to Skift Research, an analytics company. Expedia and Booking.com, two of the world’s largest online travel agencies, were the biggest spenders.
“Google is one of the few companies that can cover the entire customer journey, from inspiration to visit,” Skift analysts wrote. They noted that the problem was particularly acute for sites that bundle flight or accommodation offers: “It is becoming increasingly difficult for independent metasearch sites to survive in markets where Google has a strong presence. “
But the travel industry has been encouraged by planned changes to EU law, hoping Google will be forced to stop “self-preference” – the practice of prioritizing its own products over others in the industry. his research – as part of the EU digital markets bill.
Earlier this month, the European Court of Luxembourg upheld a € 2.4 billion fine on Google for abuse of position in online shopping, ruling that it “favors its own price comparison service by compared to competing services, rather than a better result ”.
Emmanuel Mounier, general secretary of trade body EU Travel Tech, said he hopes the purchase deal will strengthen regulators’ resolve on the act. “[Google’s] domination is negative for consumer choice and negative for competition. All the money [travel companies] spend on google, we don’t spend for better products and better service. “
Parts of the industry have hailed Google’s powerful ability to channel customers as they please during a time of great upheaval.
Many airline executives who feared Google’s encroachment on the industry during the rollout of Google Flights, a search tool that doesn’t take reservations, have been grateful for the traffic it provides while ‘they’re struggling to fill planes and plan route networks, an industry consultant said. . Google does not currently charge for this service directly.
Google’s May launch of a free hotel link feed ranked by relevance to users’ search terms was’ the right thing for the industry to do ‘and hit its own revenue, Cornwall said , although he did not disclose how much.
He also introduced a system whereby hoteliers do not have to pay a group fee if a reservation resulting from a Google search is canceled. He added that he had “invested a lot, especially over the past year and the past 18 months” in sharing data that helps travel agencies keep up with demand.
But at the same time, it is getting closer and closer to a vacation booking platform, offering since 2015 a “Book on Google” button which facilitates reservations but without accepting payments.
Google said it created “a more transparent booking process for users” and boosted business sales
Axel Hefer, chief executive of Trivago, said that meant Google was “increasingly competing” with its customers.
But Richard Clarke, analyst at Bernstein, said that while Google offers more services, payment processing would likely be “too much of a step” for regulators. “You pretend you’re a search engine, but really you’re just keeping people in your own walls locked up. “