The crucial battle: Google vs. OTAs. Who’s going down?
Google and online travel agencies (OTAs) have had this love-hate relationship for many years. But recently, it evolved into a crucial battle. To understand the roots of this invisible war, we must go back to 2014.
Launching year of Google My Business
2014, Google started implementing the first strategy to conquer the hospitality industry. Basically, Google saw that OTAs were improving throughout the years, the revenue was massively increasing, and Google wanted a little piece of that pie. So, they launched Google My Business. It's a tool specifically for businesses to put the information, so they can improve their findability, meaning that if they are searched, they are more likely to be found on Google.
Launched in 2016 and shut down in 2019, then relaunched in the same year - Google Travel seems to own it all. Google travel hub, which includes flight check-in and hotel booking abilities, a search site for hotel availability by destination, and many more things, became a real threat to the titans such as Booking.com, Expedia, Airbnb, and similar ones.
We can all agree that travel planning supposes to be easy, meaning no unnecessary effort, time, or research. Additionally, it would be ideal to have everything planned in one place, so you don’t have to constantly navigate through different sites searching for booking confirmations and information. So, Google Travel combines all those things and enters the market.
The ongoing battle is between Google and OTAs.
Google VS OTAs
As of today, Booking.com and Expedia are the titans of the travel industry. They have grown to such a point by relying on Google to attract new customers and increase bookings. As a result, OTAs are forced to shell out even more advertising money to keep up with Google's game-changer strategies. This is undoubtedly awesome news for Google because the higher everyone bids, the more money Google will generate.
And now, OTAs are forced to think of new ways to change their monetization methods. If Google Hotels takes a lot of traffic from OTAs and decreases the overall number of bookings, hotels are likely to withdraw from their sites, meaning that OTAs will need to increase marketing budgets as well as run even more Google Ads.
Although it seems to be a threat to OTAs, in this case, Airbnb also fails to beat Google because vacation rental listings are available on Google Travel.
All in all, what Google does and creates is one platform for all travel plans. So, if you’re asking if Google is now becoming the new travel booking platform, the answer could be - that’s already the case. It now has attributes of a broad meta search, and in some parts of the world, you can book hotels directly through Google. If Google finds that this case is well received, it will certainly become available worldwide.
What does it mean for the hotels?
Google Hotels existence and increasing popularity can mean 2 things for hotels: a chance & a loss.
If hotels are scared of competition on the other platform and remain loyal to OTAs, they will have to accept an increase in their commission rates. That's why experts foresee that if OTAs are forced to pay more to compete for traffic, the hospitality industry could be experiencing "an era of unprecedented distribution cost inflation."
Hoteliers will be forced to take extra money to cover the increased commission costs from somewhere. So, ultimately the cost inflation will have one impact: it will increase room rates.
However, chances to increase sales and attract new customers for independent hoteliers can raise since the Google Hotels platform was launched. When potential customers search for a hotel in a specific area, Google lists hotels based on reviews, amenities, price, and hotel class, giving smaller hotels a chance to get more visibility and findability because the well-known biggest hotel chains don’t always appear in the top results. However, the total game changer in order to succeed and have a positive outcome from this platform would be a strong SEO practice, a high-quality website, an easy booking engine on the hotel’s site directly, and mobile-friendly navigation. Considering that there are over 700,000 hotels and resorts worldwide to exchange OTAs and betting all-in to Google Hotels platform wouldn’t be wise. As much as hoteliers don’t like the increasing commission rates to OTAs, the fact that OTAs invest about 50% of their revenue in digital marketing promoting hotels plays a significant role.
On the other hand, given that the whole hospitality industry is already overcrowded and that there are many hotels competing online, OTAs' chances when Google Hotels disrupt everything seem scaringly low. Hotels have a chance to reach more traffic because Google Hotels include paid ads that go through Google searches. This will increase hotels' opportunities to get direct traffic and skip the middlemen.
This major change in the hotel industry can potentially bring many good things to hotels as they will be less dependent on OTAs. However, OTAs will have to adjust their offers and try to retain the vast number of hotels on their listings. And as long as they can keep up with Google Hotels increasing popularity, they will remain in the game as big players. As for the customers, this new platform will make it easier to search for and book hotels in one place without leaving Google.
While hotels still strongly depend on OTAs, the game is still on. As of now, OTAs will keep playing with commissions, and prices of the hotels will be different on various websites. One way for customers to win is knowing the OTA, which offers the lowest price for their wanted hotel. However, it’s hardly possible without spending an average of 2-3 hours checking and then rechecking each OTA. Therefore, the solution would be an automatic live comparison that can identify your searchable hotel prices on all major OTAs in seconds.