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 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."
Rheem'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.
Coupled 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.