|Expedia and Booking Are Getting Googled|
Google’s added accessibility crimps incumbents in hotel travel
By Laura Forman
Wall Street Journal
July 11, 2022 6:33 am ET
Online travel agents may be falling from the top of the travel funnel at an especially bad time.
Last year, Alphabet’s GOOG 0.72%? Google added the ability for hotels and travel platforms to add their hotel listings to its platform for free. The idea, according to Google, was to democratize travel as the pandemic eased. But this democratization seems to have come at a cost to traditional gate keepers such as Booking Holdings and Expedia Group.
An analysis of about 7,000 hotel auctions across Google Travel in the U.S. and Europe by AB Bernstein analyst Richard Clarke published recently showed more fragmentation of the online travel agent market as a result. In 2020, the average U.S. hotel auction on Google Travel had fewer than six bidders, the analysis shows, while this year it had over 26. Nearly 50 websites, for instance, were recently competing for clicks toward a stay at the MGM Grand in Las Vegas. The result, according to Mr. Clarke, is more price competition with Booking.com and Expedia.com less likely to be the cheapest option.
That is especially bad news for these large online travel agents, considering that we are currently experiencing both a supposed red-hot travel summer and a consumer cash crunch. Even under normal circumstances, absent specific brand loyalty, consumers tend to click on the cheapest price that is the highest up on the page. AB Bernstein’s analysis found that last year, Booking or Expedia brands had the so-called cheapest earliest price over half the time, but that this year, they managed this just 28% of the time.
Mr. Clarke also noticed lesser-known online travel agents suddenly coming out of the woodwork to appear in Google’s hotel auctions. Spanish online travel agent eDreams, he noted, was recently present in more auctions than even Booking.com.
In 2020, the Justice Department sued Google on antitrust claims that the platform was hurting consumers by reducing choice in search. In response, Google’s president of global affairs argued in a blog post that Google had given nothing but choice, putting “the world’s information at the fingertips of over a billion people.” Google is now proposing to split parts of its business into a separate company under the Alphabet umbrella to ward off a potential U.S. antitrust lawsuit aimed at its ad-tech business, according to a Friday Wall Street Journal article.
Back in 2020, Expedia Chief Executive Peter Kern suggested at a GeekWire Summit that Google had made the marketplace for travel inequitable. Expedia declined to comment specifically on whether Google’s recent changes to its travel platform have affected its business, but last month at a Bloomberg technology conference, Mr. Kern said Expedia has issues with some of Google’s products, adding “we sort of accept their game as it is laid out to us and have to play it.”
Nothing drives traffic like a good sale. But competing on price isn’t something every industry can afford to do. You are likely to find an airline ticket for the same price on Google Travel as you might on Kayak.com, for example. Airlines are a more consolidated industry than hotels with much less differentiation. Hotels also are higher-margin businesses, and therefore can afford to discount more highly.
Still, giving choice in other sectors has proven an effective way for Google to boost its own popularity. Google began offering free listings for merchants on its Shopping tab in 2020, ostensibly to help struggling retailers as the pandemic set in, though surely managing Amazon.com’s growing threat in ads was a nice bonus. Bill Ready, at the time Google’s president of commerce and payments, reportedly told Search Engine Land that within two months of making that change, Google recorded a 70% lift in clicks and a 130% lift in impressions on its Shopping tab.
Similarweb data show Google Travel has more than doubled its presence in consumers’ travel journey since 2019 in both the U.S. and the U.K. Over 70% of visitors to Hilton’s website this year also visited Google Travel, for example, more than double the percentage that overlapped in 2019.
For smaller hotel-booking sites, those are stats worth competing for on price—especially if you don’t have to pay to be able to list. Who says Google never did anything for the underdog?
Write to Laura Forman at firstname.lastname@example.org