Google have saved the niche B2C travel industry (in my opinion)

One theme that came up at yesterdays TTI conference (London) was Google. Yeah I know we are always talking about Google - but get used to it - they are important (indeed critically important) to the thriving niche B2C travel industry.

Zero % profit margins
One argument goes that the increasing advertising inflation on Google (20% year on year for travel keywords) is pushing large online travel agents to breaking point. Companies are tending to bid right up to zero profitability. That isn’t sustainable over the long term and when coupled with the other problems in the industry (credit crunch, fuel prices etc) this may cause a couple of leading online travel agents to fail (or at least be forced to cut back considerably what they are offering…. failure is a bit extreme but not out of the question).

This has lead to leading players dreaming of an alternative…..

What would have been the alternative if Google hadn’t existed?
The problem of course is what would the industry rather have instead? Would we prefer a single travel website to be dominant? For example in books (and other ecommerce sectors) Amazon is where consumers start their research journey. Amazon may not capture all the sales - but they have an opportunity to do so. In B2C travel, consumers are still starting at Google.

The reason that I say that Google have saved the niche B2C travel industry is that at least with Google they run their site like a marketplace. New entrants can join, pay, advertise - and receive sales - without too much fuss. I am thankful that we have this openness rather than, say, everyone starting at Expedia. In a situation where a single travel website is dominant - I don’t believe that smaller B2C companies would be able to thrive. You would struggle to get any access to the consumer when they start their search. The big boys and their bland websites would win the day.

What should Google do with their position of power?
Microsoft is yapping at their ankles - now with two dedicated travel websites (an itinerary bookmarking system and a meta-search site). Yahoo have long had an interest in travel (but we can discount them as they don’t seem to be very active). And of course there are plenty of other travel websites who wish to believe they are where a consumer starts….. this may be achievable for a particular kind of travel - or for consumers in a specific region - but the universal start point is still Google. Nothing looks likely to budge that for the moment.

Recently I have been hoping that Google would start to flesh out their travel offering. However there have been few signs of it that I can tell. But Google Chrome was a bit of a shock as well - so never discount that they are working on something. If they do launch some new functionality I only hope they retain the concept of easy access by the smaller players. If not we may end up with the situation that the major suppliers dread - a single, all powerful, travel website with booking capabilities. Instead of it being called Expedia it would be called Google. The product negotiating power of this single entity would be massive.

In the meantime I expect Google should be looking at increasing the number of travel themed pages that they serve advertising against. This would then, through increased supply, reduce the CPC inflation that if left unchecked could be a problem for their clients very soon.

2008 - World Travel Market - London
Perhaps I should remind everyone again that I (along with a couple of others) will be chatting with Google Travel on stage at the forthcoming World Travel Market. Its a free seminar….. you can get me for free - just like you get this blog for free! [Seminar details - 13th Nov - World Travel Market (London)]

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