Travel agencies

Google presents a “permanent threat to online travel agencies”

Online travel agencies (OTAs), reeling from the impact of Covid, are facing additional pressure from Google’s growing presence in the market and how the tech giant’s control could impact on competitiveness and therefore on consumer choice.

According to GlobalData, the market value of OTA declined by around 60.4% year-over-year (YoY) in 2020.

Ralph Hollister, travel and tourism analyst at GlobalData, comments: “Google’s growing presence in online travel will bode ill for OTAs who have no choice but to rely on the search engine. for web traffic Regulators are beginning to scrutinize Google’s practices, but the company must be treated differently because of its position as a dominant search engine, as well as the fact that it does not offer directly competitive services. Low competition can lead to higher prices, so striking the right balance is vital for all travelers.

Laura Petrone, thematic analyst at GlobalData, comments: “Google certainly has a huge responsibility when it comes to competitiveness. Google has a monopoly on internet searches and has been repeatedly accused of breaching competition law to preserve that monopoly. Digital platforms such as Google can use the knowledge generated by a market’s data and, taking advantage of their scale, they can expand their services to new markets, however, they must be careful: in doing so, they end up by attracting even more regulatory attention, as they are seen as data monopolies in whatever industry they move in.”

From 2015 to 2019, the OTA market grew by 9.4% compound annual growth rate (CAGR), reaching $480.3 billion. This rapid growth rate and potential for future growth has intensified Google’s focus on online travel. In 2019, the OTA market was already blaming weakened visibility in Google search results for low Q3 revenue. Expedia Group’s net profit fell 22% year-on-year in the third quarter of 2019, which it partially blamed on changes to Google’s algorithm, leading to loss of visibility.

Hollister continued, “Google really ramped up its business in online travel before the pandemic. In 2019 alone, Google launched its Travel Hub, added flight check-in and hotel booking capabilities to Google Assistant, attached accommodation listings to its Maps feature, created a search for hotel availability by destination, and Alphabet has even launched its own route. home app.

“Google clearly has both the business model and the capital to better weather an event like Covid-19: in 2020, Alphabet’s (Google’s parent company) revenue was more than 15 times that of of Booking and Expedia combined Struggling OTAs will increasingly rely on Google search traffic as they seek to recover from the impact of the pandemic Google will need to be careful not to expand or act in ways too aggressive in the short term or face more frequent anticompetitive claims, lawsuits and fines.”– TradeArabia Press Service