Google, Airbnb and the evolving distribution landscape
Airbnb and Google made notable announcements in the first week of February – the former opening its platform to hotel distribution and the latter rolling out updates to expand and simplify travel search.
Both moves are indicative of the evolving landscape in distribution, creating new challenges to online travel agencies and additional options for hotels and other accommodation providers.
Google is known for its focus on user experience, and Gino Engels, co-founder and chief commercial officer of online revenue management provider OTA Insight, says that could give it an advantage in luring travelers who have been using OTAs.
“If Google gives a better experience for travelers, then it could be a good opportunity for hotels to fight back from OTA dependency,” he says.
Google is focusing on its mobile interface, adding a new navigation bar that puts common tasks on one screen with simple swipe-and-click functionality.
Engels says this is a smart move as mobile becomes more popular for travel planning, especially among millennials, and it could drive more bookings through Google.
But just how aggressive will it become in courting this business?
Engels says he expects Google will continue to move into booking “gently,” to maintain the lucrative – but increasingly delicate - relationship it has with OTAs, which pump billions of advertising dollars into the search platform.
And to counter this challenge to its dominance, the OTAs could take steps to undermine hotels that ally with Google.
“The OTAs have a lot of leverage and power,” he says.
“If they see a big drop-off from hotel bookings, and if they see they’re losing clicks, they will try to use their power to de-rank the hotels on their own platform, to push up hotels that are not actively pushing their own hotels via Google.”
Another opposing strategy for the OTAs: upping the commissions charged to hotels.
Meanwhile the OTAs are also coming to terms with Airbnb’s foray into hotel distribution.
For now, SiteMinder is the only platform that has been given the right to list its properties on Airbnb – and at a low service fee of 3% to 5%, a direct challenge to OTAs that are often criticized for charging much more.
Engels says these new choices offered by Google and Airbnb are good for suppliers, but the onus is on each individual property to determine the right channels to optimize bookings.
And he suspects the OTAs will find a way to prevail in this ever more crowded field of hotel distribution.
“The OTAs have been leading the charge for a long time. They haven’t been challenged,” he says.
“So I think it’s definitely good that these innovations are moving us forward and give more opportunities for hotels and consumers. It’s definitely an interesting time that will challenge them, but OTAs are in their position because they are very strong players, so I think they will find a way to outmaneuver this new challenge.”