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Google & ITA Software Could Be Game Changer For OTAs & Travel Industry At Large

Lots of "buzz" cyberventilating the blogosphere this week about Google potentially acquiring ITA Software. No, not Google Buzz (that's old news) - but a buzz with further-reaching ramifications for the online travel space. ITA is the meta-search software that provides the booking functionality for Online Travel Agencies (OTAs) and even Bing Travel. If and when this happens, Google could virtually shake up and reconfigure the entire travel landscape online for at least the next decade or more.

According to a PhoCusWright report, rumors have noted a buying price as high as US $1 billion. Sure, that's chicken-feed for Google, but significant that it's a dollar amount that exceeds most of Google's previous acquisitions.

Existing OTAs like Hotels.com and Expedia might need to worry if Google was in this driver's seat. ITA's technology would permit Google to consolidate 'search' for hotels and airlines with the actual 'booking process.' This would eliminate any need for travelers to search on a search engine and then book on an existing OTA's booking engine. Google would virtually become its own OTA. This is truly a game-changer for the travel industry.

Bing Travel made a vein attempt at doing something similar last June with their Farecast model (see "Unpack Your BING Before You Travell") which also uses ITA Software. But Bing does not control the search engine marketshare, nor does it have the critical mass of users to make their plaform the "GO TO" travel site. Google does!

Carroll RheemCarroll RheemCarroll Rheem, director of research of PhoCusWright market research believes that "if Google unleashes a metasearch product, its brand power and pivotal position in the travel planning process gives it the potential to impact consumer traffic patterns in a major way." Underscoring the fact that Google wants to dominate the travel space arena online, Rheem goes on further to say that "(Google's) interest in ITA is a signal that the search giant is serious about building a robust travel offering."


Jake FullerJake FullerRheem's colleague, Jake Fuller, senior research analyst thinks that the threat to the OTAs is significant because "improved air search capabilities would likely shift organic traffic from the OTAs to Google…plus buying a now highly qualified lead from Google would likely cost less than the GDS fee and override commissions that are incurred for a ticket sold through the OTA."

 
On  Google Adword's Solutions For Travel page, Google points to how they help travel marketers reach consumers at all stages of the buying cycle – while they’re doing initial research, comparing specific options or getting ready to purchase. The result? Highly-qualified traffic, with increased sales and ROI to match. (Note the operative word 'purchase' - which is presently the only component Google hasn't taken an active role,)

On the same Web site, Google acknowledges a Jupiter Research survey that shows that Internet searches have surpassed “referrals from friends/ family” and “visits to a travel agent’s office” as the #1 source for determining where to go on vacation.

On the mobile search side, this acquisition also makes a lot of sense. Since Google is already taking the lead on all smartphone platforms such as iPhone, Nokia Symbian and Blackberry, if Google were to become the number one travel search-and-booking site, travelers would eat it up. This would provide them with an expeditious one-stop-shop functionality no other OTA could compete with.

Google LatitudeGoogle LatitudeCoupled with this, if Google was to expand upon Latitude, its location-based social network service, it would virtually have covered all bases. Now, the traveler would not only be able to search & book - he or she would also be able to geo-locate and communicate with his colleagues while "on the go"  - in essence, putting Google in control of all the cards in the travel experience deck.

Yes, I would say this acquisition makes all the sense in the world for Google to take control of the world of travel. Unless you think they have their sites set even higher?

UPDATE: TechCrunch - July 1
- Google is now in the flight information business. The search giant just announced it is paying $700 million in cash for ITA Software, an essential provider of flight information to airlines, travel agencies, and online reservation systems.A consortium of rivals including Microsoft, Kayak, Expedia, and Travelport tried to counter Google’s offer last Spring because they all rely on ITA’s data and wanted to keep the company out of Google’s hands.

Google AirlinesGoogle Airlines

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Comments
May 2, 2010
by Anonymous

How will travel products benefit from the OTA/google war?

Paradigm shift? It is already in the balance since companies like Kayak have been out, building a filter between browser and OTAs. Now the competition for the web user is between traditional browsers (hence google) and mobile devices which are breaking free from the use of browsers (ie embedded apps with search functions).

Next point is the integration of pricing into mapping. While Kayak is getting ready to launch direct booking features, independently of OTAs, what would stop browsers or apps to break free from Expedias and other pricelines? So far maybe a rest of business ethic possibly. How long will it last?

My bet is: war is coming. To be seen is how travel products (airlines, hotels etc) will be able (at all?) to benefit from it.

May 2, 2010
by Anonymous

Google & ITA Software Could Be Game Changer For OTAs & Travel In

Google is now showing hotels details on their maps the game is changing. When a big player like Google get involved you need to keep your eye on the ball. Things are always changing small is nimble big is powerful and the game will change.

May 3, 2010
by Anonymous

Additional Considerations

There is no denying that the Travel Landscape is changing, and to ascribe the lead of the innovation to the new bell weather of the web, Google, at first glance, seems to be a safe bet. But, I don't see the integration and enterprise backbone to support the necessary LOB applications and business processes (abstracted, in the code) to pull this off in any relevant timeframe.

It might be best to not align an industry focused framework on a particular platform or technology, yet on open standards to allow for the greatest level of proliferation of the new architectures in the wild. Change is coming, but it will be entrenched in a real focus on the Hoteliers and the Industry itself to participate, across platform implementations, to assure success and fit to the industry.
To further clarify, ITA certainly lends its enterprise, industry and process expertise (as well as its customer base) to Google; however, natural tendency is to leverage quickly what you've acquired, in order to enjoy a more immediate return on investment.

It's not just a matter of changing the UI, or the technologies behind the distributed model. It's more a matter of the innovation that will be required to take travel to its next evolution.

Building from an existing infrastructure backbone can capitulate an existing application and it's form and flow to existing and past workflows and design; whereas next generation codebases and constructs from ISV's and value add services can be levied against new development, storage and infrastructure platform paradigms to yield the "new" travel archetypes.

May 3, 2010
by Anonymous

Will Google become a competitor of their own customers? I don’t

Will Google become a competitor of their own customers? I don’t think so, they are earning more money being search engine with a very smart advertisement model instead of being an OTA.

They have an other problem; being a horizontal search engine they are loosing it from specialist vertical travel search engines ( like Kayak, Expedia and Tripadvisor ). A consumer is not finding his ideal holyday anymore on Google, consumers are going back to the Travel shops to the real travel search experts.

Google is searching new specialized ( travel ) search possibilities to become the best search engine in the travel industry to keep their advertisement income on the same level they have now. If they will become the Travel search experts where the consumer will find their ideal holydays, I don’t believe it.