Everybody knows that Google is a behemoth inside the travel industry, since it serves as the nexus between the traveler and the rest of the value chain (destinations first, accommodation and flights later) and every step taken in Mountain View is closely watched by the different sectors in the travel business. The search company, now a part of the Alphabet Inc. Holding, started its career in tourism with the acquisition of ITA Software, which provides the QPX software platform used by many airlines and reservation portals. Google has taken a step forward and, in partnership with Sabre Holdings, it will allow to book rooms directly from its interface for certain select hotels.
Tourism has always been strongly linked to technical progress: a multitude of breakthroughs are able to improve one or several of the many aspects involved in making a trip and visiting other countries. In the last decades tourism has been slowly detaching from a standardized travel experience towards much more flexible models in every part of the process. This evolution towards sustainability has been fostered by the advances in information and communication technologies (a field strongly represented by Google) since they have allowed for information to be used much more fluidly by travelers.
So far, however, Google’s role had been exclusively an intermediating one. If we search a hotel in its engine it will show us a card that displays basic information on the place, and it will also allow us to book through a portal like Booking, as shown in the picture below.
This means that booking the room is a process effectively made and sealed in the reservation portal, and hotels pay Google for visibility in their search engine (the traditional pay-per-click). This move by Google is subtle, but it marks a paradigmatic shift: users can book the room directly through Google Travel interface, skipping the reservation portal, and the hotels in the programme will pay Google a credit card processing fee.
It might not look like a great deal, but if we consider it with a certain foresight it has some implications that could change the industry:
- Google also has an enormous database on flights, which are integrated in a similar fashion as hotels have been so far (Google is an intermediary, and the purchase is realized in a dedicated reservation portal). Google could shift the purchase of flights to its own interface just like it does with hotels, which would leave even less space for vertical operators.
- The more clicks that are needed by purchasing online, the lower the conversion rate. Since Google can provide the whole infrastructure to book reserves directly, not only does it control the user experience entirely, but it also benefits from the higher conversion rate since there are less clicks involved.
- If Google has the credit card data of the customer already, he or she will be able to use that card without having to input said data again. Taken without context this seems to be a small detail, but Google also has the most widespread mobile operating system (Android) whose users can buy Play Store applications for their phones. In 2014 Android phones sold more than one billion units, and a majority of them have the Play Store preinstalled. This means that there are millions of cards that are two taps away from a reservation.
- Aside of credit card data, Google’s reservation tool is embedded in every Android device and can be installed in iOS too: it’s Google Now, the personal assistant included in the search application (see below). If Google Travel can integrate its services it would be enough to say “OK Google, book a flight from Madrid to London and a room in the Meliá White House hotel” to have a trip ready.
This is not an original idea: another huge travel hub like TripAdvisor allows travelers to book rooms in Hotels directly from its own interface, both in the desktop website and in the mobile application. However, when a company with a market cap close to $400B (40 times higher than TripAdvisor) makes such a move, its impact can potentially redefine the future of tourism.
Today a traveler can gather information not just about the destinations or the means to travel that are available to him or her (which makes planning a trip much more flexible) but also to acknowledge the effects and consequences of travelling. This tourist is very well informed, and is also aware of the damage that obsolete touristic models have inflicted upon destinations and the people that live in them, which drives the need to look for travel experiences that make this traveler feel good both during the trip and afterwards.
Google is a company which is aligned with that mindset (remember their famous slogan “Don’t be evil”) and is ready to tinker and experiment even when things are going well for them. A relevant example of this drive to experiment is the Project Sunroof initiative which helps homeowners and businesses to calculate the best way to implement solar power equipment in their buildings. In Mountain View they have always denied their intention to enter the travel market directly as an OTA, but it is hard to figure out what Google’s ultimate plans for these touristic products. It is certain, however, that in the current situation where traditional companies are trying to grow through acquisitions to protect themselves against the advances of online-only operators, further strikes against the intermediary businesses will keep fueling this consolidation process in the future.
Moments like the present one, in which traditional operators are losing their relevance when it comes to bring travelers to destinations and hotels, it is clear that the latter need to be able to attract customers from the search bar and differentiate themselves from the competition. The best way to do it is by taking the steps towards economic, social and environmental sustainability, an approach which has proven to render a great ROI in the middle and long term. Travelers wish to go to sustainable places, residents want to live in sustainable cities and towns, and therefore those who have the clearest link with sustainability will have much of their work done for them with regard to finding customers in the future.