Tuesday, October 26, 2010

Giving users the best answer, and competing fair and square in travel search



Since we announced our plans to acquire ITA Software in July, we’ve spent a lot of time talking with players in the online travel industry -- airlines, travel agents, and search sites -- about our plans to build better flight search tools for users, and our commitment to competition in this space.

We’ve been encouraged by the travel industry support we’ve seen for this acquisition -- from airlines, online travel agencies, and also ITA’s competitors. Even longtime travel guru Arthur Frommer has weighed in. That said, it’s disappointing that a number of travel companies have today announced their concerns about the deal.

Our reason for making this acquisition is simple: ITA will help us provide better results for our users. When someone searches for “flights from San Francisco to London,” we'd like to provide not just “ten blue links” but exact flight times and prices as well -- just as our competitors do today.

We’ve already been experimenting with similar results in different areas. For example, in March we began showing hotel prices in Google Maps -- information which not only makes travel planning and budgeting easier for our users, but also improves the quality of the leads we send to travel websites and hotels:


In terms of the criticisms that have been made today, while we respect the views of these companies there are a few important areas where we need to set the record straight:

Claim: The deal could result in higher travel prices or fewer travel choices for consumers.
Fact: ITA and Google are not competitors so there will not be less choice for consumers. In addition, ITA does not set ticket prices or sell tickets, but merely analyzes data about seat availability and fares -- which are set by airlines -- and provides that analysis to websites. So it’s hard to see why it would result in higher prices. In fact, by acquiring ITA we hope to build flight comparison tools that make it easier for users to compare prices and find the best possible deal.

Claim: ITA powers most of the web’s most popular travel sites.
Fact: ITA’s QPX tool powers many websites; that’s why we’ve said that we’ll honor all of ITA’s existing agreements, and that we are enthusiastic about adding new partners. That said, the three most popular travel sites in the U.S. (Expedia, Priceline and Travelocity) use data provided by ITA's competitors. And over the past few months other travel companies have highlighted the alternatives to ITA. Kayak's CEO called Expedia’s Best Fare Search alternative "awesome" and Continental Airlines noted that "there are alternatives to the [ITA] shopping solution in the marketplace, both internally and externally.”

Claim: Google will be choosing winners and losers in online travel.
Fact: Our goal is to build tools that drive more traffic to airline and online travel agency sites where customers can purchase tickets. We also believe that giving users better ways to search for flights online will encourage more users to make their flight purchases online, which will create more overall online sales for airlines and travel agencies. Google does not plan to sell airline tickets directly.

Claim: Instead of buying ITA, Google could just license its data.
Fact: We think we can make more significant innovations and bigger breakthroughs in online flight search for consumers by combining our engineering expertise with ITA’s than we would by just licensing ITA's data service.

Claim: The deal will lead to less innovation in travel search.
Fact: Just the opposite! Today, finding the right flight at the best price is a frustrating experience; pricing and availability change constantly, and even a simple two-city itinerary involves literally thousands of different options. We’re confident that by combining ITA’s expertise in travel with Google’s technology we’ll be able to create great innovations in flight search.

20 comments:

modelportfolio2003 said...

Seems like another good example of Google addressing the needs of its search users in the most optimal way. By meeting their needs, Google is staying true to its mission of organizing the world's information. Most people start any travel search on Google so why not optimize this experience to direct better queries to companies that issue tickets?

Theodore said...

Why is a Product Manager the only one who is responding to these concerns?

There are serious antitrust worries, and yet there is nothing from the Competition Team about why Google believes that this acquisition is consistent with a healthy respect for competition in the online travel space.

Penguina said...

Anti-trust "worries," Theodore?

It sounds like a whole lot of sour grapes whining to me.

Penguina said...

boo freaking hoo, Google is being mean to us!

Donald said...

Will Google some day merge all this data with data it has illegally harvested from street view sweeps? Oh, and if we consumers don't like Google's travel data, should we "just move" like your CEO suggested?

ZETAFOO said...

Donald you're being ridiculous! Google made a mistake and they are paying for it.

This seems like a logical step in search. The current way we find travel information is broken...

Justin said...

Personally, I love what Google is doing. It makes my life that much easier, and it's very simple to use. As a consumer, that's all I care about to be honest. May the best model win, in my opinion.

Chris said...

Sounds similar to how Microsoft made everything easier with its Windows Monopoly. I wonder how Netscape feels. Just run everything through our search engine and everything will be OK. We promise.

RobertKCole said...

It is my understanding that the average leisure travel search comprises 22+ sites across 9 sessions.

This seems to indicate that there is a substantial opportunity to streamline the travel search process.

Online travel agencies and global distribution systems have been slow to innovate - Google's entry into the sector is logical.

If Google holds to form, they will democratize the information and enable 3rd party developers to innovate.

If Google takes that approach, this will be a very positive move for the travel industry.

Mark said...

Please answer this: if Google is not "choosing winners and losers in online travel" then why have you not offered to renew contracts with current ITA customers such as Kayak etc?

Paramendra Bhagat said...

I am okay with it.

Jeremy said...

I don't see what all the complaints are about. Google's never given me any reason to distrust them before. They are currently one of the most innovative companies in the Information Technology industry today.
It seems everything they touch turns to gold, so I expect the same thing with ITA.

It's called undue righteous indignation, people!

Victor said...

I am a travel agency owner in Montreal. I have been in the biz for 30 years. I have no love of online travel companies like Expedia and Travelocity et al.
Having said that, what Google has done is strategically setting the future course for their success in the online travel business. Yes they will succeed and be the leader. This is why there is such an uproar by the Expedia's of the world...they fear a better product and finally some real competition.

Many of the huge online travel companies are losing millions of dollars and will fold regardless.
The margins are too slim which the online companies themselves caused in our industry.

Now only the smart, well executed will survive that game.
And Google has the brain trust and stack of gold bars to do it right.

I wish Andrew Silverman and Google the best of success with the new product.
Go rock them Google.
Victor

Even said...

Does anyone--ANYONE--think that current air travel prices are reasonable? They are not and they haven't been for years. Airlines gouge customers constantly through obfuscation and unclear pricing structures. This won't help the airlines, but it will help us. I'm all for Google helping the airlines become a little more transparent and in that way, a little more competitive.

Santos said...

@Even I agree with you and with most of the positive comments here. The current system is just madness. In order to find a "good deal", you have to be a nuclear scientist.

Fiona Tigris said...

According to ITA's web-site the following members of the opposing consortium are current ITA customers: Kaya/Sidestep, Hotwire and Tripadvisor. Travelocity and Expedia are not listed on ITA's site, but their competitor, Orbitz/Cheaptickets is. Farelogix and Sabre are ITA competitors.
Note the absence of any direct product supplier (airline) from the consortium.
This opposition is not about consumer protection; the purpose of this consortium is to protect their own bottom line.
A Google/ITA combination will bring the consumer closer to the product; "buy direct" has never been a bad thing for consumers - and neither has competition.
So let's let the DOJ do its job - hopefully with minimal lobbyist influence.

Holiday Mood said...

I agree with it . Google understands the needs of its user in the most optimal way.

Abdusselam Bitiren said...

It is my understanding that the average leisure travel search comprises 22+ sites across 9 sessions.

This seems to indicate that there is a substantial opportunity to streamline the travel search process like shopping coupons.

Online travel agencies and global distribution systems have been slow to innovate - Google's entry into the sector is logical.

If Google holds to form, they will democratize the information and enable 3rd party developers to innovate.

If Google takes that approach, this will be a very positive move for the travel industry.

alison said...

@Mark,

Why would/should Google offer to renew contracts ahead of the normal renewal negotiations period? Google has as much right to negotiate as tough as ITA does.

rahul said...

I am a hotelier. OTAs make little profit from booking flights and auto rentals. The real prize is HOTEL bookings...OTAs make close to 25% of the gross hotel bookings...that's clearly "gouging" and the consumer pays for it. Over 60% of profit come from HOTELs so airlines and auto rental business is almost like a loss leader. Since OTAs attract customers primarily by providing airline bookings, if Google directs away airline buyer traffic away from OTA and drives it directly to the supplier....OTAs WILL NOT SURVIVE!!!! It's almost embarrassing to see them whine with such lies. HOTELs will make more profit initially but GOOGLE driven price competition will drive hotel prices down and ultimately that 25% of gross hotel revenue that OTAs steal right now will eventually find its way down to the consumer....CONSUMERS WIN IF GOOGLE ELIMINATES OTA POWER!