Skift Research recently reported that two major players in online travel, Booking and Expedia, are facing slower growth and reduced profit margins due to increased competition from Google. Senior Research Analyst Pranavi Agarwal discussed Google’s significant role in online travel and its impact on the major players in the industry. Google’s dominance in the online travel space has led to greater reliance on the platform for bookings, with Booking and Expedia spending billions on advertising annually.
Agarwal’s analysis involved scraping data from over 20,000 hotels listed on Google to understand the bidding strategies of various online travel agencies (OTAs) and direct booking sites. The data revealed that Booking and Expedia dominate Google’s sponsored results, with Booking.com being featured most frequently. Expedia, on the other hand, tends to outbid Booking on these sponsored results in regions outside of Europe. The analysis also showed that Booking is more efficient than Expedia in terms of leveraging Google’s sponsored results.
Google’s increasing influence in the online travel space has led to questions about its impact on other metasearch platforms like Tripadvisor and Trivago. Google’s user-friendly interface and superior data management capabilities have enabled it to outcompete traditional platforms. The platform’s introduction of organic search results has further democratized online travel by allowing smaller OTAs and direct booking sites to compete for visibility.
The discussion also touched on Google’s introduction of an organic auction and its strategy behind this move. By prioritizing direct booking sites in organic search results, Google is facilitating a shift towards direct bookings for hotels. This has also led to a more competitive landscape in regions like Asia and the Middle East, where independent hotels rely more on OTAs for bookings.
The relationship between Google and OTAs is described as complex and symbiotic, with Google benefiting from ad dollars while introducing more competition for OTAs. Google’s actions are seen to be hurting the dominance of Booking and Expedia, while also encouraging a shift back towards direct bookings. The overall impact of Google’s influence on the online travel ecosystem is mixed, with winners and losers emerging in the industry.
In conclusion, the analysts at Skift Research believe that Google’s actions are disrupting the online travel market and impacting the dominance of Booking and Expedia. The outlook for these major players in the industry is expected to be challenging in the next decade, with a decline in market share gains and increased competition from direct booking sites. The evolving landscape of online travel will continue to be shaped by Google’s dominance and its impact on traditional players.
