If we think about it, it all makes sense:
✅Google enters the hotel-distribution game
✅OTAs start freaking out and whilst they were fighting each other until the day before, now they all jointly point their finger to Google as their main competitor.
✅Q3 2019, some more some less, but all OTAs report poor performance: Google to be blamed.
✅In a time-span of a single week all major OTAs started reacting to their bad latest results. Against who? Hotels, of course. Because, from a distribution perspective, neither BO can compete with Google, so they are only left with the option of winning the battle from a pricing point of view. In other words, they look at where they can assert their strong authority: hotels.
- Expedia announces that hotels adding resort fees will lower their ranking
- Booking announces that their Genius rates will be extended to all their partners: either you accept it, or you are out (and they keep referring to hotels as “partners”)
Google is to OTAs as OTAs are to Hotels.
Big G may not be friend to hotels, but for sure it’s not to OTAs either, who now have some competition, finally!
Some beautiful things are about to happen. Actually are already happening!
Better? No, Different.
I might sound to you very optimistic after reading what I just said until now. And yes, I am positive, however, I think I’d better put things into the right perspective, to avoid being misunderstood.
In no ways am I saying that Google is about to replace the OTA’s.
For the sake of our dearly beloved Hotellerie, we’d better hope this is never going to happen.
Can you imagine yourself and your hotel dealing with G instead of BO, EX? Does that look any good?
Of course not. An oligopoly turning into a monopoly. Equal, a complete disaster.
It’s like going to a doctor to cure a sickness and ending up into a hospital with a cancer. That one, yes, will be the point of no return.
I, personally, don’t think this will ever happen. As someone else already pointed out, pulling and publishing rates from 3rd-parties is a thing, becoming an OTA and hosting hotels’ prices and data, is a totally different job.
What it will be, no one knows.
But, for now, we are shifting – relatively quickly – from a 2-player game (OTA’s and Hotels) to playing a 3-player game, with the addition of Google.
This is the greatness of what’s happening in these days and weeks: we are no longer at the mercy of the OTA’s, as long as the OTA’s can be at the mercy of Google.
The 3-player game requires new rules and new relationships between the players: rules that, I hope, will bring that balance our industry has never experienced.d
Let’s bet though.
I just said, no one know what will be. Neither can anyone even foresee the future, as no one know what’s in big G’s mind.
However, speaking of hypotheses, I just wanted to share mine.
Hypotheses, not an indisputable truth of what’s going to be, so bare with me if it’ll be something totally different ?.
Let’s say that Booking spends 1 million dollars a day in Google advertisement.
Don’t look at numbers, it is surely more than 1 million, but it’s beyond the point.
Think about it: BO is willing to spend 1 million dollars in Google Ads, because they know their return of investment is going to be, let’s say, 10 million dollars, thanks to your generous hotel commissions.
As simple and obvious as it sounds, this may already explain the reason why Google has jumped into the hotel-distribution game:
If you were Google and based on my example, why would you settle for earning 1 million dollars, when you can earn 10 times as much?
I was quite confused when I first read the talks and discussions about Google’s entry into the game, with many people sustaining that Google did not have any interests in competing with BO and EX, considering their huge Ads budgets.
Less money from Ads, certainly, but way more from hotels’ commissions.