No topic sets travel executive tongues wagging like Google‘s potential to upset the status quo.
On Thursday, the buzzy topic was tackled directly by Rob Torres, managing director of the travel sector for Google, when he spoke onstage at Skift Forum Europe in Berlin.
“We’re very, very happy being the trusted place people go to search for now very relevant and personalized travel information… regardless of where you are in your journey — high up in the funnel dreaming or in your destination and experiencing,” Torres said.
“We don’t absolutely believe at this point we need to transact to make that happen,” he said.
As of today, Google is primarily an advertising service that lets consumers research their trips or do comparison-shopping for a limited range of products, such as flights.
Torres said the industry should expect Google to continue to partner with the current online travel players to optimize its long-standing ad-based models, in both search and metasearch, rather than compete as a rival player trying to compete for consumers and suppliers.
The OTA Question
The proposition at hand is whether the search giant might try to “become an online travel agency” by making three moves: actively expand its instant booking interface — where consumers do not leave Google to complete a transaction; promote its commission-based model; dramatically increase its supply of inventory.
Torres noted that he joined the conglomerate nearly a dozen years ago from Expedia. People assumed then that the company would act more like an online travel agency. They are still waiting.
“As a connector, we believe the more information and the better results we can provide to our users, the travelers, the better-qualified leads that we can provide to [advertisers].”
“We feel really comfortable that that’s what we want to continue doing,” said Torres. “We still have a lot of work to do as well. I think we’ve done a great job on Google Flights, but we have a long way to go on hotels, etc., to really make sure that the experience is really something that everyone would always want to go and use.”
Torres oversees the strategy development and profitable growth of integrated marketing campaigns and his group serves many large travel brands.
Diversifying Beyond Paid Search
Google’s risk/reward equation for becoming a light online travel agency is heavily skewed to the downside, according to Skift Research’s “A Deep Dive Into the Google Travel Ecosystem 2018.”
The best-case would be where Google quickly took market share from legacy online travel players while also maintaining its present pricing power and holding onto a majority of the online advertising pie for paid search.
But even then, it might only enjoy a modest gain in revenue relative to the investment required to get a flywheel effect in motion.
In a more probable — or even in a worst-case scenario — Google would not be able to achieve all of those goals, which might put it in a worse position than where it was before.
Never Say Never
On the other hand, as more consumers move to mobile devices, Google faces higher costs in traffic acquisition, such as by having to pay higher fees paid to other companies such as Apple. This trend takes its toll. In the first quarter of 2018, the company’s operating margin was the lowest since it went public in 2004.
The smaller screen real estate also may change consumer expectations about what they want from online travel, and consumers might demand Google become more like an online travel agency to spare them from having to make countless searches.
Google’s engineers have approached this problem with a product-led vision. That means they try to solve user problems via Google Hotels, Flights, Maps, Trips, and Home rather than strategically trying to knit all the tools together — as Skift noted in its 2018 Megatrends essay on the topic.
How long until Google knits it all together? Torres said, “If it was up to me, we would have done it yesterday.”