The shiver of collective OTA fear during the Google Destinations presentation at this week’s Phocus Wright conference in Fort Lauderdale was palpable.
Google has applied its vast technology resource to produce a product which could easily dominate the top of the travel search funnel; it’s called “Google Destinations”. With an emphasis on inspiration via content aggregation, and a laser focus on price comparison using cached pricing data, Google at first glance appear to have produced another killer application.
The key advantage Google has over any other travel player is its total dominance of search, which gives it the ability to deliver huge customer volumes to any new tools. So when Google launches a new travel product, we had better take notice.
Apparently 45% of travel searches start with a destination-led query e.g. ‘holidays to Majorca’. Google, via a visual carousel, will place “Google Destinations” at the top of organic listings and are therefore set to divert traffic from traditional link-driven search, to a content-rich format.
Once a destination has been chosen, customers will be delivered to an aggregated super page of relevant content, featuring destination and attraction information, video, weather etc. This is supplemented by a popularity index to show the best time and date to travel based on weather and price. Admittedly great content, but nothing too scary so far…
It was the ‘What’s next?’ section of the presentation that created the shiver.
Google are using cached flight and hotel data to create daily best-value destination and route pricing. This is presented as a simple slider, showing the cheapest periods to travel to the destination across the year within a month by month view or a more traditional specific date search. Alternatively, customers can utilise a budget slider to see which destinations fall within their budget and desired dates.
Once customers have decided on their destination and date of travel, they can drill down through results using traditional filters such as star ratings and UGC review scores, as well as continuously comparing prices between non-stop flying and via flying, or their chosen duration verses slightly longer or shorter stays e.g. the price to add an extra weekend on a 7-day trip to extend it to a 9-day trip.
Once the route and dates have been decided, the customers will be deep linked into the existing Google flight and hotel searches, which currently still link out to suppliers’ sites. However, it was 100% clear at the conference that instant booking and payment via Google Pay are fast approaching.
The scale of the data being aggregated and the speed of results being presented back are amazing. When combined with Google’s ability to deliver simple user interfaces, this creates a very impressive product that, in my opinion, could quickly become a game-changer.
Google continues to avoid the regulatory downsides of being an OTA by maintaining a media model where bookings are made directly with suppliers. However, the customer tools Google are providing squarely compete with the functionality delivered by the traditional OTA sites.
Google again stated that the motivation for the new “Destination Search” is to improve both customer inspiration and remove friction from the mobile booking process. I have to say they are doing a great job.
A less obvious but key motivation may also be to rebalance the power game in a USA OTA market, where 2015’s mega consolidation game resulted in Expedia and Priceline controlling 65% of the market. In a mobile-dominated world where real-estate is restricted, these two advertisers completely dominate. The new destination search will allow Google to flow bookings to a much more diverse customer base by acting as a virtual OTA, whilst maintaining its media model.
You may ask, “Why are Google bothered about other advertisers when competition between the big two keeps click cost high?” Google have always taken a long term view and realise that if they stop providing traffic to smaller players, these will be forced to work more closely with their biggest competitors i.e. social media giants like Facebook. Secondly, if competition in auctions is controlled by two players, competition could mysteriously disappear.
Being the best market place for advertisers, whilst reducing consumer friction in the mobile world remains the Holy Grail for Google, and they appear to be on the right track. Unfortunately, bi-product may be direct competition with OTAs.
If the only differentiator between the two offerings is how payment is made, it appears inevitable that OTAs will soon be complaining in the courts about an abuse of power by Google, in terms of how prominently “Google Destinations” is promoted within search results. An answer that its decided by a “secret source algorithm” may not cut it as a justification.