Google's Thorny Path To Travel Success

Google FlightsGoogle Flights

Photo: Google

Google has been making waves in the online travel world with the recent releases of Google Flights and Google Hotel Finder.Both currently function like travel meta-search engines, not unlike Kayak. When you search for a flight from New York to San Francisco, Google Flights lists the results by price and airline. When you decide to book the flight or hotel it takes you off the site, to either a direct supplier (like United) or an online travel agency, or OTA, (like Priceline or Expedia).

However, we may have a glimpse into the future of Google’s quest to build a smarter travel search engine. As Macquarie Capital analyst Tom White wrote in a note this morning, Google recently bought ITA, a flight data firm. ITA’s technology powered Air France-KLM’s new search interface and may hint at what we can expect from Google Flights in the future. 

Air France-KLM’s new search strives to be “inspirational.” Users choose a departure city, travel dates, and budget per person, and are then presented a map with potential destinations and prices (see screenshot below).

Air France

Photo: Air France

Google reportedly wants to take it one step further and create a travel search engine that can provide answers to complex user questions. For example, it could theoretically handle queries like “flights to somewhere with good skiing in February for $400.”  However, that dream is still far off in the distance. Google Flights currently acts and looks like a less cluttered Kayak, which is to say underwhelming.

While Google currently doesn’t process bookings itself, it nonetheless has OTAs terrified that it will make the next logical step and jump directly into the online travel market. On the one hand, Google Flights and Hotel Finder can be a great source of leads and traffic, and Google search reportedly refers some 25 per cent of hotel shoppers alone. On the other, living under the threat of Google’s traffic club is not an enviable position ot be in.

However, Google’s travel initiatives ultimately strike as misguided for several reasons.

Gogole ScreenshotGoogle does not book directly–yet

Photo: Google

First off, their addressable market is not as big as it may look at first glance, because as airline prices rise, air travel becomes commoditized. Some OTAs, like Priceline, have already begun to de-emphasise the business. Consumers look for the cheapest flight without regard to carrier or who sold it to them. In other words, Google would have to compete on offering the lowest price points, something largely out of its hands. It’s also worth mentioning that some of the largest carriers, including Southwest, use proprietary booking systems and would be direct competitors.   That leaves Google with hotels, which again is not as large a market as it may first look. While the American hotel industry is dominated by chains—Marriott, Hilton, and the like—the international hotel landscape is incredibly fragmented with numerous small operators. In other words, you need to establish relationships with an enormous amount of operators to compete. One of Priceline’s subsidiaries,, has carved out a dominant position in international bookings. Because of those manifold relationships, it has a very high barrier to entry.

That leaves Google with the domestic hotel market. While it is feasible it could make a splash in the market, it would be competing against established players in the market. What’s more, it has started to attract antitrust scrutiny because of Google’s dual role as the gatekeeper of internet traffic. This morning, TripAdvisor filed an antitrust complaint against Google following a similar complaint from Expedia last week.

Finally, the travel initiatives leave Google in the baffling position of competing with some of their largest business partners. OTAs spend an enormous amount advertising online because of the highly competitive nature of online travel. Priceline, for example, spent more than $550 million for online advertising in 2010, presumably much of it with Google. If Google turns around and starts directly competing with the OTAs, one can’t help but wonder: is this the best way to foster healthy business relationships?


  • Google’s travel offerings are currently underwhelming.
  • Google Flights and Hotel Finder could improve and innovate, but it remains to be seen whether consumers are drawn to “inspirational” or answer-based travel search engines.
  • Google’s travel initiatives have limited upside because the online travel market is intensely competitive and the efforts have already drawn antitrust scrutiny.


Our Explainer On Priceline’s Business →

Our Explainer On TripAdvisor’s Business →

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