It has become harder to find the online travel agencies with the lowest prices in Google's metasearch. The apparent change this week implicitly favors travel giants, which can afford to dominate ad auctions for online search.
Google appears to have recently changed how it treats the biggest hotel discounts in its advertising-driven, price-comparison hotel search. In our test searches, we see a change.
Google used to display the lowest rates high in its rankings. Since at least Tuesday, Google has been more frequently “burying” the lowest hotel rates from smaller advertisers in its search results.
More precisely, Google is now often requiring users to click a “More” button to see the lower rates in searches. We’re talking about cases where the lowest rate is significantly cheaper than the others.
That matters because conventional wisdom has it that fewer consumers will click a “More” button to see a full set of rate listings — even if there may be money to be saved.
Google appears to have changed how its advertising auctions work. Smaller online travel agencies that have the best rate now have to bid more than before to get higher visibility.
The move implicitly favors global conglomerates, such as Booking Holdings and Expedia Inc., that can afford to outbid others.
A Google spokesperson declined to comment for this story.
Happening Fairly Often
On Thursday, a Google search for a “Wynn Las Vegas” stay March 19 turned up rates from Google’s hotel metasearch. Big brands like Hotels.com and Priceline.com offered $399 rates.
But the best rate was $119 from Amoma.com, a travel agency that typically gets discounted inventory via wholesalers. To find it, a user had to click a “View more rates” link.
Before this week, Google was likely to display significantly discounted rates like that higher up, without having to click to see “More.”
We did multiple searches by hotel name. We did generic searches for hotels in specific destinations. We used Web browsers in three countries.
Then we compared the results with screenshots from Google’s past practice and with searches on other price-comparison search engines.
Without much effort, we found two dozen examples where Google required users to click “More” to see the online travel agency that has the lowest hotel rate. That was the overall pattern.
Three other industry sources whose businesses watch Google’s metasearch changes closely said they have seen this phenomenon, too.
Our checks turned up exceptions. For example, we came across an example of Google presenting the best deal for the Refinery Hotel in New York City in the top four results in desktop search. But when we repeated the search with the same criteria, the biggest discount was hidden under a “View more rates” button.
We found more disparity in prices in our European searches than in U.S. searches because Europe has recently stopped online travel companies from requiring hotels to give the same rates to all players. Major U.S. hotel chains generally have tight control over their rates, too.
When we compared searches for the same hotels and dates on Kayak, Trivago, and TripAdvisor, the biggest discounted rate was more often in the top three or four results on those sites in desktop searches than on Google.
Inside the Black Box
Google’s competitors, including Kayak and Momondo, which are backed by Booking Holdings; Skyscanner, which is run by Ctrip; and Trivago, which is backed by Expedia Inc., all grapple with similar questions about how to display prices.
We’ve never seen any company rank its hotel metasearch results strictly by lowest price first.
Such a policy would be vulnerable to incompetent online travel agencies which accidentally quote low prices that aren’t real. It would also make metasearch prone to being gamed by deceptive companies that show rates without quoting undisclosed fees, driving up the true total price.
On the other hand, metasearch companies need to help consumers find the lowest prices or else consumers will look elsewhere.
To escape the bind, companies typically put their thumb on the scale in their ad auctions to favor an online travel agency quoting best hotel rate.
For example, when TripAdvisor was pushing an instant booking product, it often gave prominence in its metasearch results to the distributor or hotel that offered the lowest rate, according to a source familiar with the service.
Google is secretive. But experts believe the company often sets a minimum bid it will accept for top slots in its rankings. Think of the minimum acceptable bid as a floor. Google would lower the floor for an agency with the best hotel rate.
In practice, the picture is likely quite complicated, with the value of bids related to how much everyone is bidding overall and the rates in question. Auctions are ranked based on click-through rates and auction bids (among other factors), and advertisers pay the next-highest bid.
In effect, when an agency had a very good hotel rate, Google would offer the agency, say, the third-position in mobile search results for only, perhaps $1.40 per click, while another advertiser may have to bid $2 to appear in the first position in metasearch results.
We are not saying this has been an out-and-out rule — just a common outcome of Google’s mysterious processes. And now it seems Google is not being as generous to smaller agencies with the lowest rate, which means consumers must take additional steps to find the lowest rates.
Google Still Cares About Deals
The company is continuing with all of its other deal discovery tools.
For example, Google is still often letting hoteliers compete for an “official site” spot in the first few search results. The same goes for “limited offers” for suppliers and wholesalers and “mobile-only rates.”
Another example: Its Maps hotel search tool still offers the ability to filter hotel results by ones with “deals.” The product also continues to highlight hotels that have “cheaper than usual” rates, meaning rates that are low compared to their historical averages.
This philosophy, if not the detail, was outlined by Oliver Heckmann, vice president of engineering for Google Travel, when he spoke at Skift Forum Europe 2017. “What we care about is that the consumer has all the information available so that they can make an optimal choice because that’s what makes the consumer come back,” Heckmann said.
Given that history, Google’s change to how it treats best prices seems odd. Much depends on how consumers and advertisers react.
If the new way of doing things sticks, then the move would implicitly hurt smaller agencies, such as privately held Amoma, which used its access to wholesale rates to compete against bigger players.
A survey of the top advertisers as a share of placements in the top five featured deals between November 2017 and February 2018 were, in order of size, Booking.com; Hotels.com; Hotel Websites (which often enjoy the “official site” reserve bid); Expedia; Priceline; Agoda; TripAdvisor; Ebookers; Hotwire; and Hostelworld, according to research firm PACE Dimensions.
Google’s move likewise wouldn’t benefit consumers because they would have to work harder to find the lowest rates.
Since May 2016, Amoma has participated in Google’s metasearch auction. It appeared to be one of the companies that benefited the most from Google’s treatment of best prices.
Amoma executives declined to comment.
Commenting on the situation overall, one industry expert said, “At the bottom of the travel transaction funnel is a vortex.”
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Photo credit: Google Travel's VP of Engineering Oliver Heckman speaking with Skift's Dennis Schaal (R) at Skift Forum Europe in London on April 4, 2017. Skift