The following is a post from Paige Brandt, TIG Global Marketing.
Big news is barraging the travel industry, following a series of swift mergers and newsworthy partnerships, as Google and Facebook race to compete in the travel sector. The recent announcement of Facebook’s acquisition of the travel recommendation giant, NextStop, falls right on the heels of Google’s recent announcement that it would be pairing up with travel software giant, ITA. So what does this mean for the future of travel search and bookings? Here are some of the details on Google’s recent developments, with more to come on the Facebook merger, as it develops.
About the Google-ITA deal
This month, Google announced the acquisition of software company ITA for $700 million, in a deal that merges the leading Internet search engine with the leading provider of flight information. ITA uses QPX software to organize flight times, availability and prices. Currently, ITA provides airline data to key companies in the travel industry like Orbitz, Bing and Kayak. Google has made it clear it does not wish to sell airline tickets at this time, but would like to use the technology to create an easier way to search for flights on site.
So, then…what’s in it for Google?
This acquisition is a strategic step for Google. While Google currently provides information about websites, it has no filter for precise travel information. A Google search for cheap airfare in one destination will turn up millions of results in milliseconds, but no traveler wants to spend their time weeding out actual deals from the millions of results. With the capabilities of ITA’s software, Google will be able to generate results that that precisely align with travelers needs.
Google’s decision to buy ITA makes sense with the global growth of online travel, and has been speculated by industry vets to be an inevitable move for the search giant. The current forecast from Forrester predicts that online leisure and unmanaged business travel spending will increase from $80 billion per year in 2010 to $111 billion per year by the end of 2014. It is no secret that the online travel industry is rapidly growing, so it is a rational time for Google to decide to get in the game.
Worries for the rest of the travel industry
It is not surprising that travel industry executives would be unnerved by the deal. Key industry players fear that Google will form a monopoly, eventually dominating the industry. With ITA software, Google will be able to develop a system that ITA competitors (who only license the software) are unable to produce. Additionally, Google will likely become the leading online advertising buy for travel-related marketers, as it transforms into a pivotal one-stop travel resource.
Industry-wide benefits from the deal
While many are worried about what the Google-ITA deal will mean for the travel industry, there may be some silver lining in the cloud. For one, it may help to raise the standards for online travel resources. Google is an Internet powerhouse and widely user-friendly, so this move may incentivize the industry to tighten up their efforts and focus on maximizing the user’s experience to compete with the Internet giant. This could possibly equate to more standardized search functionality for the industry, depending on your views.
Affect on the hotel industry
How will this acquisition affect the hotel industry? While ITA software currently works with retrieving data from the airlines and providing that information to online travelers, the hotel industry should prepare for changes as well. Tnooz.com reports that ITA software has been looking at hotel search for some time now. According to this source, ITA already has staff dedicated to hotel search with goals in mind for 2010. Google already has search and pricing information for hotels using Google Maps, so advanced technology would give Google even more dominance in the industry and cause a major shake up for online travel resources.
What do you think about this recent merger? Good, bad, indifferent? Sound off in the comments section and let us know your thoughts!
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