Google has tremendous wisdom and knowledge of most of the Internet users who search for their specific problems and requirements through its search engine. By converting the raw information and queries into meaningful and commercially viable inputs, Google decides about its future commercial projects and initiatives. Google’s flight travel search service is an example of this strategy of Google.
Google has now entered into partnerships with hotel chains but this has raised concern among others in the travel industry. Carlson Rezidor Hotel Group, which includes the Radisson and Country Inns & Suites chains, announced a pilot program late last year allowing guests to search, shop and pay for hotel stays using Google Hotel Finder, Google Business Photos and Google Wallet payment applications. The Best Western chain also signed up to have interactive photos appear in Google search results.
Some believe that these partnerships of Google’s are directed towards grabbing more advertisement revenue. This situation has also created environment of fear and uncertainty among many travel industry stakeholders. Travel industry has been very active in spending over online advertisements at various platforms and Google is well aware of this potential revenue area. Google intends to get a share out of this advertisement pie as that is the core strength and main source of revenue of Google.
Google already owns ITA software, a flight information provider, and has a hotel price ad program that routes consumers to hotel websites for booking. In recent months, hotels have agreed to test Google products, and last month, Google reached a licensing agreement with a startup called Room 77 that lets guests compare hotel prices and book rooms. While many analysts don’t think Google is a big threat to online travel agencies in the immediate future, such agreements have sparked buzz about what it could eventually do in the travel sector.
Industry researchers don’t believe Google is looking to get into the business of processing purchases done by online travel agencies, which are some of its biggest advertisers. They add the transaction business would require certain capabilities that would bring new overhead and fixed costs. But Google would like to court more travel advertising revenue. Google doesn’t want to process travel bookings because there are better profit margins in travel advertising and search engine marketing, less complicated businesses.
Of the $4.7 billion spent on US travel advertising last year, 52% went to websites and other digital channels. Of that, hotels spent the most, followed by online travel agencies and airlines. However, the taxation issues are yet to be resolved by Google especially in India where its online presence can be easily attached to tax liability in India. Nevertheless this is a worth shot that Google is well committed to take.