Yesterday in London 3 Google executives took to the stage at ABTA HQ and in front of an assembled crowd of travel industry people (and a few online marketing agencies!) they outlined their roles and took questions and answers.

On the Travolution blog I have written about CPC inflation, the UK trademark discussion and a little bit about “Troogle” (or what Google could do in the travel sector). See Travolution blog post

Personally I thought it was a very interesting morning and a big thanks should go to Google for agreeing to it.

What stood out for me was the denial that Google were going to do anything to significantly enhance travel functionality on the Google site. Daniel Robb’s words were:

Nothing I have seen or heard about that is either planned for meta search or selling as an agent

I am not sure this denial helps us for three reasons:

• As reported in the Seattle Post Intelligencer (not my local paper) - Google were bidding against Expedia and Microsoft for Farecast (before Microsoft won) - hence it seems that Google do want to get into enhanced travel content / functionality game - they just don’t want to tell us about it quite yet.
• The UK Google travel team are not, by Google UK’s own admission, always in the loop regarding developments to the core Google travel products. They are more of an advertising sales team than anything else. Hence it is possible that Google are planning something but Daniel Robb doesn’t know about it. Personally I wouldn’t like to work for an organisation where I am not kept in the loop about stuff that impacts me and I am responsible for.
• Google are already in meta-search - just they happen to use keyword search to do it. What Google are not in is price comparison….. but price comparison != meta search.

Who is safe in the brave new world?
One of the points I made yesterday was about how only those companies at either end of the spectrum are safe (or perhaps are the safest). [Referring to B2C or B2B2C travel - not business travel or group travel]

The consumer end of the spectrum
In travel - at one end you have the consumer. Consumer behaviour for online travel generally starts with a visit to Google. A consumer traveller will, via Google, visit 7 travel websites prior to transaction for OTAs while the number is only 3 sites visited prior to transaction for tour operator type travel products. (Source: Google’s own figures announced yesterday from research undertaken by Comscore).

Google’s number one aim has to be to keep this status quo.  

The last thing they want is for what I call the “Amazon.com ification” of the travel industry. For example take book sales - you tend to go to Amazon and then start searching. Even if it is an out of print book you start on Amazon because they have those details too. You may end up buying from somewhere else, but the book reviews drive you to Amazon initially.

Although there are plenty of travel specific sites that are aiming to be the site from where you start searching the opportunity is there for one of the big generic web players (like Microsoft / Yahoo / Google) to take this role in the B2C travel industry. Microsoft have an opportunity (now having purchased Farecast) - but will they be able to take on Google? That will certainly be their aim.

The reservation end of the spectrum
The other “safe” companies are the reservation system providers. Bookings end up in reservation systems regardless of how they got there. Of course, there will be fewer reservation system providers in the future because there could be fewer travel companies…… but that is a different article!

In between….. join the dots
Between the IT systems that own the consumer (Google at the moment) and the reservation system providers is a whole mass of systems all joined with spaghetti. You have

• Big online travel agents (OTAs)
• Meta search / price comparison sites
• Highstreet agents
• Traditional agents
• Traditional tour operators
• Travel inspiration / community / travel guide websites
• etc

These guys are all competing in the middle ground - not really impacting either the Google / Microsoft battle nor the competition between reservation system providers. Us guys on the ends can keep watching while destruction in the middle continues in an “Alien vs Predator” way.

The problem for being in the middle ground is that it is an uncomfortable place to be….. if you start taking too large a slice of the pie…. then the suppliers find a way to work around you…. if you think Expedia is taking too much commission - just go direct…… hence if you are in the middle - even if you have a position of strength - you can’t make use of it that much because the competition is too fierce.

Reinventing the travel industry
What is happening is that both ends of the spectrum are moving towards the middle.

Microsoft is coming towards the middle with their own vertical search engine….. reservation system providers like Comtec are moving towards the middle with Travel.co.uk  [now no longer part of Comtec].

From the consumers end I want to see Google do a good travel vertical search engine. As an industry we need a specialist metasearch that doesn’t just have the top airlines, hotel chains and car hire companies. I want to see small tour operators and activity organisers in the mix as well. Google could deliver this.

From the reservation system suppliers perspective we need to start moving towards the centre ground. Take the humble hotel PMS (property management system). This system knows whether you read the Times or the Telegraph or whether you prefer coffee or tea. This information (and other such data) would help at start of the hotel selection process.

So there you are Google - if you want to help the consumer and disrupt the travel industry…. this shows you how. However, I expect you are now too addicted to travel industry advertising revenues hence will wish to maintain the status quo….. This leaves you wide open to Microsoft (who don’t have travel related advertising revenues to protect)…… which probably spells a long term problem for Google. Of course, this does somewhat rely on Microsoft being able to convert the opportunity they have….. they don’t have it in the bag yet.

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It is only when you try to do something that you realise quite how hard it is. The other day I set myself a challenge to come up with some ideas for location / mobile based travel services. My goal was to understand what could coming over the horizon in the next few years.

It is surprisingly hard.

I have been working with the web for a long time (first website in 1994 when you hand wrote HTML in Windows Notepad) - and this maybe the cause of the problem. My mindset is now fully web based - I can come up with web ideas “just like that” - but this whole mobile game is going to be tougher.

Why will it be harder?
Firstly mobile and location based services are going to be pushing up against the inevitable skills shortage in travel technology and the new media sector in general. Like today, the big companies, before spending millions on a project, want a project leader who has at least 5 years experience in the travel domain. These people are just not going to exist in mobile services at the quantity that will be required by the travel industry.

Even finding someone with over 5 years experience in travel websites / travel technology is difficult - and once you find the right person - expensive. Mobile experience will be even more valuable and hard to find.

Is commoditisation of mobile services the answer?
I am sure that companies are going to crop up that will aim to address this issue. This maybe through the production of commoditised software and tools. These tools could be rebranded in a travel companies name - and presented - as their own - to their customers. Call it private labelling if you wish.

I am not convinced that this is going to be a popular route. Regardless of company size all business owners want to differentiate their service. Just look at travel websites - yes many share the same style - and share the same back end technology - but as a result of web design / HTML layer changes - they are able to differentiate significantly from their competitors.

I am not sure that with mobile that this superficial top layer differentiation will be as easy - the underlying technology / functionality will be more exposed to the end customer than with websites - hence if another company has the same service from a technology supplier - there is little differentiation.

So if commoditisation won’t be popular and bespoke will be too expensive - what will happen?
This move to mobile / location based services may be the next tipping point for travel on the web. One aspect that I am looking out for signs of is the “Amazon.comification” of the travel industry - where just one leading website becomes dominant - rather than supplier websites each being their own island.

Imagine if a big travel company really buys into the mobile idea….. and starts innovating wildly. This move to mobile may just be enough to create enough momentum to lock out competitors (in the B2C space) because once consumers adopt a service it may take them a while to look for an alternative.

Think for a second - what would happen if Google was that one company?

I will publish my location based services ideas in a future post…. this one is long enough already!

The Boot blog has suggested a new industry definition (quoting Phillip Wolf, CEO PhoCusWright)

They have defined a “zero percent site” as a site where zero (or near zero) percent of the site’s content is controlled or produced by the owner. Phillip / Tim suggest that 4 of the top 10 online travel sites (by traffic) are zero percent sites.

This therefore would group meta-search and user generated content sites into one group.

Of course, Google is a zero percent site as well….. not sure if they included that!

How the definition fails
I like the definition but I would prefer it if it was more consumer oriented.

For example, say you are signing up for a profile at a travel social network - when you first join there is no content for you to interact with (because you have no friends). These are the true zero percenters - sites where - on first visit - as a consumer you have nothing to play with.

A different way at looking at zero percenters
Perhaps a different way at looking at defining zero percenters is to define as the sites where zero percent of the company equity is owned by the web design team!

A few years ago you would find a number of leading travel websites were entrepreneur backed - hence there would be equity throughout the business - including the web design / development team. Nowadays leading travel portals are corporate backed hence stock isn’t given / earnt by mid-level employees (which the web team normally are)

I remember being offered 0.5% of the stock for a VC backed (non travel) website I was involved with in 1999 (as web design lead). I am still not sure if that was a good deal or not - but the offer was for a reasonable salary and some stock - and so that certainly got my attention at the time. When talking to web teams at large travel companies (who really are the key to the companies short and medium term success) none of them seem to have any stake in the success of the business. No wonder much of the current innovation is coming from start ups.

While talking about stock…… just what is going on over in the States?
Two VC backed sites have got my attention recently - Nile Guide (a weird name for a travel website - but at least doesn’t have the word trip in) and TravelMuse (named after this blog, obviously!)

Both seem headed for the overcrowded travel guide / travel suggestion sector - but what has piqued my interest is their “about us” pages.

TravelMuse has 16 named individuals (and a board of directors). Of the 16 - from the senior team - only the Director of Product Management has a travel industry background. The others are travellers….. yeah I like eating - but doesn’t make me a great person to run a restaurant. One example of where this lack of experience shows is on their inspiration finder - http://www.travelmuse.com/inspire/ (which actually isn’t a bad tool) - if you search for London - you are defaulted from London, Canada - rather than London, UK. This is the kind of thing travel websites sorted out years ago.

NileGuide has 11 named individuals (and a board of directors). These guys seem to have many more travel industry types…..

For what they are doing they both appear over staffed. I am not convinced that paying for 15 staff is going to make it that easy to make a return on just monetised destination content. There is too much competition. Also, if they are in “start up” mode - the stock will be spread thinly between their VC investors and all the initial employees. Content lead websites can be started with 2-5 experienced people and a community…. not 15.

Google have finally let the cat out of the bag….. it is not a matter of IF Google are going to launch further travel functionality - but WHEN - and WHAT will it look like. Read the article on Business Week 

Google moving deeper into travel has always been inevitable (in my mind) - and this was confirmed when I heard that Google (and incidentally Expedia) were bidding for Farecast (then Microsoft got them)…. You don’t bid for a company that large unless you have big plans in the travel vertical sector.

Lets pretend a second that I work for Google and I am pitching ideas to my boss - Rob Torres (MD Travel USA). How would the pitch go? What would I cover? What would I propose?

Strategic considerations

• Has to complement existing keyword based advertising - No desire to risk hurting the relationship with leading travel websites and airlines (who make up some of Google’s largest advertisers)
• Wish to create a “lock out” effect - generating a barrier to entry for new or existing players. Therefore has to either be technologically complex, contractually exclude certain players from taking part with competitors or be consumer driven and grow massive quickly.
• Has to be deliverable within the next 8-12 months - There is a possibility that Microsoft is coming over the horizon…. and besides, now having announced that something is coming soon - we had better launch something that merits this raise in expectations.
• Probably monetised via advertising - as this is where Google is currently strong. Yes we have revenue from services (such as software access) however consumer facing advertising is key
• No desire to sell airline fares or hotel bookings - as this requires too much investment in customer service
• Being an infrastructure play - helping join consumers and travel companies together - which could generate long term lock in and competitive advantage

What about the ideas?

Basically my ideas fall into 4 main areas:

1. Owning the traveller profile
2. Increasing content that can have adverts served against them
3. Meta search
4. A.N. Other

#1 Owning the traveller profile
I suggest that Google create a system where we can “own” the traveller profile. Yes there are sites out there already in this space - Dopplr, WAYN etc - so this demonstrates that consumers have an appetite for this kind of functionality. However, to make this more commercial, these profiles need to join consumer needs with existing Google advertisers - and be more about the individual benefit than about a network of consumers.

Take for example Google Health (which gives you an idea what Google could do in a vertical space). The benefits page says:

Google Health puts you in charge of your health information. It’s safe, secure, and free.

• Organize your health information all in one place
• Gather your medical records from doctors, hospitals, and pharmacies
• Keep your doctors up to date about your health
• Be more informed about important health issues

 Right, lets swap the word health for travel…

Google Travel puts you in charge of your trip information. It’s safe, secure, and free.

• Organize your trip information all in one place
• Gather your travel records from airlines, hotels, and tour operators 
• Keep your agent and suppliers up to date about your latest plans
• Be more informed about important travel information

Sounds good so far. Lets see what else Google Health -> Google Travel has:

Import medical records -> Import travel records
A mechanism where, with partner websites, a traveller can import their itinerary into Google Travel.

“When you link a website to your profile, you may authorize that website to read your Google Health profile or to automatically send and update information in your profile (such as medical records or prescription histories). You decide which permissions to grant when you sign up with each website.” 

Well if we are going to do this medical records and prescription histories - then proposed trips is going to be a doddle.

Pros and cons of managing the traveller record

Pros

• Owning the traveller profile would fit nicely alongside other similar Google tools such as Google Friend Connect and Google Health.
• Infrastructure play - would help join existing advertisers with consumer travellers.
• The information in the profile would help assist with Google searches as we know the kind of travel the consumer is interested in and also details about forthcoming trips. This should help monetise the searches better - and also give more relevant results to the consumer.
• If we don’t own the traveller record - someone else will - and it would be a costly acquisition later - we should build something ourselves before others are all full throttle.

Cons

• Will require working with travel industry partner companies ahead of launch (on the data import system). Will it be possible to keep this out of the press or bloggers like that Musings on Travel ecommerce?
• Will we get further negative PR from having all this information about customers? Will consumers be concerned about the level of information we have about them?

[Side note - Google health maintains a consumer’s immunisation record - which is a whole area that travel websites / travel companies haven’t really got into. This wouldn’t be a big ROI….. but it could be something that would be interesting to demonstrate the benefit of joined up profiles and of interest as a PR exercise]

#2 Increasing content that can have adverts served against them
One of the missed opportunities with the keyword based search system is the “next page”. A user comes to Google, searches for a destination or product, and off they go to a 3rd party website. Maybe they come back - but often the content on that 3rd party website (which could include adverts) is sufficient that they remain there.

While we can’t create specific product pages on Google (because that would complicate our advertiser relationships), we could build specific destination pages.

In order for these destination pages to be fair, we would need to build them as something that looks a bit like:

• Google news (open to all qualified newspapers and magazines - but excludes bloggers)
• Google finance (e.g. GOOG) where we can track information about a specific company to a single page.

They would be a mixture of web pages (links to), adverts, destination information, forthcoming events etc.

Pros and cons of creating more travel focussed pages

Pros

• We will have more tightly focussed content hence will increase the inventory of advertising space that should convert well for our advertisers. This will keep advertisers happy.
• Forms a large container that could make use of Google Maps, Youtube etc integrated into a strong user experience. This would make a nice Google “shop window” to other Google location based services
• Existing major advertisers (airlines and travel companies) won’t feel threatened by the generation of more travel focussed pages.
• Many destination content pages on the web currently are run by SEO groups and contain many affiliate links. This is an opportunity for us to remove these tacky destination pages from the Google index and point users towards our better quality pages.

Cons

• One of the hardest aspects of any travel website is the geography information architecture. How are we going to get this right for all kinds of travel - and at what level of granularity should we go to (country, city, street etc)?
• Is this really “big enough” a concept? Better content - build it they will come - is a strategy that dates from 2000.
• There is a difference in perspective between someone who travels to a destination “as a local” and as a tourist. Designing these pages to handle multiple use cases could become complex.

Probably a good step forwards - and would give us a further 18 months runway to build other services around travel - but not the “end game”. Probably a “just do it” (as long as it doesn’t divert management attention from activities that will have a longer term impact).

#3 - Meta search
Now that Microsoft have Farecast - this is a sector that Google are going to be falling behind on. We (Google) should react.

Rather than recreating Farecast we should enhance the Google Product Search (i.e. turn Froogle into Troogle).

The first step would be to create a simple travel product description standard (!) that would be possible for NON-professional developers to generate. We need to hit the long tail of travel companies.

Pros and cons of meta search

Pros

• By having enhanced product information we can find new and interesting ways to search on it, generating a better consumer (and advertiser) experience
• Having a product feed would help us understand who are product owners and who are product agents - and this would help filter out affiliate sites and potentially some agent sites.

Cons

• In order for this to be successful, we need to get this to be accepted quickly in the marketplace. Acceptance may have to be “forced” through discounted Adwords advertising or other mechanisms.
• A half-hearted meta search would not show Google in a good light. This either has to be a success or not happen at all.

#4 - A.N. Other
I have another idea for Google. However, for various reasons, I will not go into it here. I am keeping it to myself for the moment!

My 4th idea:

• Hits on a weakness that Farecast has
• Sits alongside other Google web services
• Wouldn’t preclude Google from other strategies already outlined in this blog post
• Takes into consideration their desire not to get into airline or hotel product distribution (directly) (because of the customer service issues)
• Doesn’t risk existing airline or hotel advertiser relationships

I hope everyone enjoyed this post…. I am available for consulting (!) (UK)

4 weeks ago I reported (yeah that makes me sound like a journalist!) that Microsoft had acquired Farecast for 115 million USD (see original blog post).

It hasn’t taken long for Farecast to be integrated into the new home at http://farecast.live.com/

However, just a change of URL wouldn’t be enough to get me to write a post. What has got me to write is another Microsoft project that has gone live this week - Live Search Cashback - http://search.live.com/cashback

One advantage that Microsoft has over competitors (such as Google) is plenty for cash…. (or so one can safely assume). They are now using it to buy market share.

What is Live search cashback?
Basically Microsoft is bribing consumers to search via its Live.com search engine by giving discounts on purchases found from products located on live.com search results.

It is a “cost per sale” (CPA) type deal where most of the advertiser revenue gets refunded back to the end consumer (hence Microsoft is subsidising the overall system with its own bank balance - rather than making this a profit generating scheme)

Press and blog coverage has been favourable… and it may be a great success. Previous trial runs (where prizes were on offer from Microsoft) have had a positive impact on Live.com search traffic…. so the chances are that “Cashback” will gain traction.

Read the official pitch on how you can become involved as an advertiser (non travel though)

Yeah but what about travel?
None of the existing products are travel products (no flights, hotels, packages etc)…… however, if you listen to the Gillmor Gang podcast from the 22nd May http://gillmorgang.techcrunch.com/2008/05/22/gillmor-gang-052208/

Right at the end, start at about 55 mins - Mike Arrington (Techcrunch) mentions that he has heard that Farecast is going to run the cashback scheme “soon” for travel products.

In particular he mentions that this means you may be able to get a United Airlines flight on Farecast / Live.com cheaper than you can buy on the United Airlines own website……

Would that be enough to wake Google up and be forced to build a travel portal? If this cashback system becomes successful, it probably would be…..

p.s. I promise not to write about Google for an entire week next week.

Even though I have the now monthly “website review” offer I still get a constant flow of emails asking for help on this or that. I never like not helping….. but sometimes people need to realise what it is like being on the receiving end of all this communication and they should focus their request appropriately (If you are buying something from me, that is a slightly different scenario)

So - now I am going to ask for your help so I can share the load around a bit.

This weeks challenge:

“Requires the student to prepare an individual critical evaluation of Expedia. This will typically be represented in the form of a business plan where the key technological, business and wider aspects are recognised. The report should identify to what extent it has made a success of eCommerce and provide a reasoned discussion about its future success. Word count 2000 words max”

This is for a BSc. in Ecommerce and the Internet at a UK university. Yes the irony that the request says “requires the student to prepare” isn’t lost on me.

So - rather than having to write 2000 words….. the real challenge for you will be to come up with a succinct answer using fewer than 250 words. Please either write below…… or perhaps on your own blog (and add a link to your blog in the post below).

Actually this could be fun.

What can you win? Er…. nothing! (Unless someone from Expedia wants to sponsor this!). However somehow (to be determined) we will choose a winner….. and I am sure the student will be grateful.

PS - Note to professor / lecturer….. obviously we are not actually writing the report….. just coming up with ideas and themes…. isn’t this just how the Internet is meant to be used for research?

UPDATE: I have now added my 230 word critical evaluation below!

Yesterday Yen Lee, from Uptake (the travel search engine formerly known as Kango), stated (as quoted by Travolution)

“What’s surprised me is that when there are so many really strong brands in Europe, we’ve spent 80% of today talking about price. People don’t go to Barcelona because it’s cheap. They go because of what they can do there. Think more about the experience, rather than the cost.” 

[Travolution Summit 2008, London]

Jo Buhler, in a comment on the Travolution blog, replied

“Amen to that, Yen!
It’s the industry that keeps shooting itself into its collective foot with this price focus, which has dominated the discussion since day one of online travel and then being surprised at the resulting mass media coverage that, of course, hammered away at this as well. When does the smart benefit emphasizing marketing finally kick in……?”

Yeah I am not going to get into a big “price vs benefits” discussion - but I thought I would highlight an economic theory that relates to this - and explains why price is so important. The theory is called price disperson.

Price dispersion is variation in prices across sellers of the same item, holding fixed the item’s characteristics. If price dispersion didn’t exist (and everyone sold at the same price) then there would be no reason to comparison shop and consumers would always buy from the same places, and agents profits would stagnate. New online entrants would also find it difficult to break into a market.

i.e. suppliers create price instability on purpose - and actually this benefits both the “agent” and the supplier. So lets stop worrying about it and get on with making great products, websites and systems!

In conclusion, actually these price differences are fairly fundamental so the successful operation of the travel industry.

And before anyone thinks I have suddenly become an academic (!) I am “borrowing” concepts from this article on Slate. Thanks should go to Hal Varian (an economist at U.C Berkeley) for these findings. Should I stick to technology? Umm.

As has been widely published, Microsoft has purchased Farecast for a reported 115 million USD. The acquisition (but not the price) is confirmed by a post on the Farecast blog.

“We’re excited to confirm that Farecast has been acquired by Microsoft! This acquisition creates tremendous opportunities for the Farecast team and our customers.  We look forward to sharing more details in the weeks to come.  On behalf of the Farecast team, thank you.”

Why this acquisition makes sense (to Microsoft)
To answer this question we firstly need to look at what the Farecast system is about:

• A system containing 13 billion airfares (mainly US, but has some US to Europe, Mexico, Caribbean and Canada routes)
• Helps consumers determine when would be a good time to buy a flight - as Farecast predicts whether the flight price is likely to go up or down in the near future (so nicely messes up airline yield management systems by using yield management on the consumer side - a poacher turned gamekeeper approach)

The approach that Farecast uses is based on predictive data mining. From the Farecast website….

How does Fare Guard Work?
Fare Guard is powered by Farecast’s patented and revolutionary predictive data mining technology. There are three main components to Farecast’s predictive technology: Data collection and persistence, predictive modeling and simulation testing.

Data Collection and Persistence: Each day, Farecast systematically collects huge volumes of round trip airfare prices for a window of 90 departures dates and 7 corresponding return dates (see figure 2. below). This collection process occurs on each of Farecast’s 2000+ supported markets (e.g. LAX-JFK).

This means that for each departure and return date combination, Farecast will have measured the cheapest prices 90 times by the time of the departure. Farecast stores this data for all time. In fact, Farecast has collected over 150 billion airfare pricing observations to date! This data is used to build powerful predictive models that can predict the future direction of the cheapest prices in a market for specific departure/return dates.

 

 

Predictive Data Mining: Data Mining is the process of identifying novel, understandable, useful patterns in large, multivariate data stores. Using state-of-the-art techniques from the fields of machine learning and statistics, Farecast regularly builds predictive models that are created or trained using historical pricing data. Measurements of the raw historical data are engineered into features or attributes that are ultimately used to train a complex ensemble of predictive models.

 

 

Simulation Testing: How does Farecast know how well their technology works? Farecast uses sophisticated simulation technology that creates groups of virtual passengers with different purchasing profiles. Leveraging their vast store of persisted historical data, these virtual passengers arrive in the “past” and follow recommendations from the Farecast predictive models. Because the operation is run on historical data, the correctness of the prediction and profit or loss the consumer experience can be calculated instantly and tallied.

 

 

 

All in all, this is pretty impressive stuff. But why of interest to Microsoft? First, lets look at another ecommerce area where data mining is important.

The Netflix prize
Netflix are an online DVD rental company. One of their business challenges is improve the accuracy of predictions about how much someone is going to love a movie based on their movie preferences.

Netflix have built their own system for making these predictions but they were curious to see if their system was as good as it could be. As a result they have put up a prize (1 million USD) for any individual who can develop a predictive system that is better than their own. This competition is being co-ordinated by the Nexflix Prize website. So far they have received 25,000 submissions and they have a leaderboard. No one has won the grand prize (yet).

What can we learn from the Netflix prize?
One of the key findings so far is that, as reported by Consulting assistant professor Anand Rajaraman from the computer science department at Stanford University, is that more (diverse, but related) data usually beats better algorithms.

i.e. entries that have in some way incorporated data from the Internet Movie Database and other external sources tend to come out better than those which are solely based on algorithms and the shared, central, dataset.

This is much like the real situation in travel ecommerce - as every large OTA has pretty much the same data nowadays….. hence are, in the real world, much like the academically accurate environment that Netflix have setup.

Further discussion on Anand’s blog post on the subject

Back to Farecast / Microsoft
OK - so what Microsoft now has is data. Lots of it (and more than their direct “web search” competitors). What will they do with it?

I expect that somehow this data will be used to inform a very good travel vertical search engine (after all, Farecast is a great search mechanism already, from the consumers perspective). This search functionality will compete much better with the likes of Google, Yahoo etc because, looking at the learnings from Netflix, we know that more data often makes better search (rather than better algorithms)

What will Google do? We know that Google has some nice extra data for travel already (they are not just an algorithm any more). (see my previous post about how Google maybe categorising all travel advertisers or my summary post about what Google is upto in travel, including how they now have flight and hotel data on their main search results)

However Google don’t, to my knowledge, have any accurate, live, fare data (and I have no knowledge!). Maybe they will buy Expedia after all!

Google have a number of account managers who specialise in travel. One of their previous employees, on their public Linkedin profile, has the following:

• Senior account manager - Travel - For Google (January 2003 to September 2007) 
• Lead Relationship Manager for Expedia Inc
• Managed all aspects of the Expedia - Google relationship for Expedia.com, Hotels.com, Hotwire, Expedia Classic, and Expedia Corporate
• Work with different Expedia teams to build out an effective Advertising strategy on Google as well as partnership opportunities to help drive additional revenue to Expedia
• Coordinate efforts with Global teams to share US successes to all Google Account Managers who work with Expedia Inc Co’s
• Appointed Global Lead for Expedia relationship, spoke at Expedia’s Global Marketing Summit and held a Global workshop at Google’s International Travel Summit
• Built out the “Power 16″ marketing plan that is currently what Expedia’s entire Search Marketing program is based on 

That last point I find interesting. It would appear that Google have devised Expedia’s entire search marketing program (well that is what is says!). Yes I know that, if you spend enough as an advertiser, you get help….. but upgrading help into letting Google devise an entire search marketing plan is quite a bold commercial step.

If you want to find the profile yourself, Google it….

This particular individual, according to their profile, is no longer working for Google.

Read further coverage about Expedia / Google at the base of this post - Would your business cope if Google stopped sending you (free) traffic?

With the speculation that Expedia maybe a takeover target for Google (see Yahoo Finance) I thought now would be a good time to revisit how important Google has become to many travel companies.

Changing the face of travel distribution (UK leisure travel)
First a bit of history - a few years back (not that many) UK leisure travel was dominated by the high street (and a few call centres). Google came along and enabled, for the first time, businesses to put their products in front of consumers at less cost of distribution than through other indirect channels. Much of the growth in online travel has been due to organic (i.e. free) traffic from Google over the past 5 years.

Indeed, it has not just been a change in distribution habits from existing companies, but whole new companies have formed that would not have been in existence without Google. For example I know many smaller tour operators who, with 5 or so staff, can run profitable businesses. Previously they would have had to have a couple more staff for marketing purposes - and have produced a costly brochure - which would have made the small business model less viable . i.e. Google has enabled smaller travel businesses to flourish.

It hasn’t just impacted small travel businesses - I know travel businesses employing “thousands” where a strong proportion of their sales can be accounted to Google organic traffic. These companies, large and small, are now “addicted” to Google web visitor traffic and without that tap continuing to flow they could be in trouble. Some senior executives at these large companies don’t even realise how important Google has become to them so haven’t mitigated any risk this exposes them to.

Google becomes commercial
The question with Google isn’t really about traffic…. it is about free traffic. I would argue (without having any knowledge of what Google are doing!) that Google are dominant in “search traffic” while other websites, such as Yahoo, have “display” traffic…. Due to travel being so product search dominated, this is why Google is so important to the travel industry.

It is a fairly obvious point - but Google is a business. They have to make money. Indeed, they can’t just “sit still” but their investors want to see constant growth. It was only last month that the financial press reported that Google had missed 4Q profit target (as set by analysts). So Google are under pressure to perform. Travel may be  the answer.

Introducing specialist search
Google have 3 kinds of specialist search for travel (some with us for a while, some recent to the scene)

Flight search
Go to Google.com and search for “JFK to LHR” (without quotes). You will get a result set that looks something like this:

Yes you can “pay to play” (with the PPC adverts showing at the top) however there are also direct links to partners (CheapTickets, Expedia, Hotwire, Orbitz, Priceline and Travelocity) where you are navigated straight into a product page showing appropriate flight availability (or date entry search for that flight city pair). Regardless of whether this link is commercial or not (and I expect it is) Google will know how successful these mini-searches are.

If I were a flight selling travel agent, I would be concerned where this may be leading. The traffic is not coming your way (unless you want to pay for it and are a large player).

Hotel search / reviews / map
From an individual hotelier’s perspective hotels tend to undertake SEO on four aspects:

• The hotel name (normally quite easy unless you have a non-unique name)
• The location (town name, city name etc)
• Local attractions (harder - as there are multiple hotels all looking for the same slot)
• Events (harder still - because they are based around a certain time period)

However Google have begun to upset this a little recently (to the benefit of consumers but the detriment of hotel travel agents). Now if you search for a hotel - such as “De Vere Southampton” (without quotes) you find this at the top of the results:

This is all useful information to consumers. Clicking through to the top result (where it says 102 reviews, directions and more) you find this:

On that page you can find:

• Consumer reviews from 3rd party websites (including the capability to add your review straight into Google)
• Listing of hotel details (such as rating, number of rooms, services available etc)
• Photos & Videos of the hotel
• Contact details - including web address, postal address and telephone number
• Directions (on a map)

A full list of sources for these hotel reviews can be found on the search engine guide website .

This google page is impressive stuff - no need to for the consumer to go elsewhere for information - but perhaps only for pricing.

If I were a hotel selling travel agent, I would be concerned where this may be leading. The traffic is not coming your way (unless you want to pay for it and are a large player).

Search within a search
A new addition to Google’s impressive line up:

Search Google for “Hilton” (no quotes) and you find this:

The “problem” for big companies with “search within a search” are as follows:

• Competitors may soon be putting PPC adverts against what the consumer may think is an “internal” search (circumventing the trade mark search restrictions that many big brands have in place)
• Google can alter the results order (rather than Hilton when a user does a search on the Hilton website). For example if, on the Hilton website, a user searches for London - Hilton may choose to put certain pages first…. (for example information pages, commercial pages, a particular hotel etc) - however now that the user is first doing their detail search outside of Hilton’s site…. Hilton have no control over what order the first results will be in.

The Expedia / Google deal (rumour!)
So where does this leave the rumoured Expedia / Google deal.

I think it would be an interesting move for both companies. It would be most damaging to the larger OTAs (excluding Expedia) as they would lose a potential visitor stream and gain an even stronger competitor.

However it is with the product owners (the airlines, the hotel chains etc) where the most influence will occur. Historically, with thousands of small travel agents all selling their products, no single distribution channel had any leverage to negotiate the margins down or the commissions up. An Expedia/Google consortium may be strong enough to have an impact.

The one European OTA that would benefit from Expedia and Google tying the knot would be Opodo (a consortium of European airlines). It would take them from being a side show to key to how the airlines could react to commercial influence being exerted by a single, strong, Google/Expedia travel consortium. Which of course is why Opodo exists in the first place….. it is a Thames Barrier company for just this strategic eventuality….. useless until very useful indeed.

Incidentally, the University of the Highlands and Islands (Scotland) have a course coming up (in Inverness, July 9th 2008) called “Would your business cope if Google stopped sending you traffic?”. I think the risk of this outcome is slight - however there is every chance that Google will stop sending free traffic (or at least change the proportion of free vs paid) and this could be just as bad, commercially, for those that have been reliant on the free traffic gravy train for too long. I suggest companies try to break their addiction to free marketing before it is too late.