With travel advertising revenue that’s already twice the size of Expedia’s, Google, of course, won’t share any market share or revenue data about Google Flights or Hotel Ads. There are many reasons for Google’s reticence, including that this is just Google being Google and the fact that the company doesn’t want to alienate its largest online travel agency advertisers.
But in a LinkedIn post, Mario Gavira, managing director of Paris-based metasearch site Liligo.com, crunched data from Google Trends and stated that Google’s gains are contributing to likely consolidation fervor in Europe.
In the quest for global domination, last November saw the 2nd biggest M&A Transaction in the Meta landscape history happening with Ctrips’ acquisition of Skyscanner for $1.74 Billion.
A few weeks later, Skift reported rumours around Kayak shopping for a potential acquisition among European Meta leaders like Momondo.
The reason for this sudden rush might well be spurred by the increased interest of search giant Google in expanding its presence in the existing online travel ecosystem.
Last year Google Flights gained massive traction in the US market according to Google Branded Queries.
If true this could be the start of the biggest shake-up in the history of the online travel business.
Here is where the trouble for the rest of the industry starts. Gavira:
The seamless Uber integration in Google Maps announced beginning of January gives a glimpse where Google can head with its native app strategy for Google Flights:
Your Google Maps itinerary search to drive from New York to Boston shows massive traffic jams? Google Flights surfaces this last minute flight option New York to Boston.
Your Google agenda/Gmail app shows a 2 day business meeting in Atlanta next week? Google Flights suggests the most convenient flights to optimise your travel time for this meeting.
Searching Google Trips for some in-destination activity in Paris? Google Flights shows you flight prices from your origin town.
It is still mainly the US market in which Google Flights thrives.
Meanwhile, Skyscanner seems to be making gains in its core European markets, as well as in Asia, where it now has China’s Ctrip as a benefactor. Heavily dependent on its flights business, though, making strides in the hotel sector is another matter for Skyscanner. […]
With Google Flights making gains and further consolidation in the offing — we pointed to talks between Kayak and Momondo, for example — it is clear that the big players will be making moves to accelerate growth and try to position themselves for the future.
At the other end of the spectrum is AirBnB, which is preparing to go into the flight search business as well. AirBnB may have become profitable in 2016, preparing for a possible IPO in the near future. (To which a flight search engine and more would add a good growth story..)
There is actually very little money in flights relative to hotels; Booking doesn’t even have flight search, while other Priceline properties like Kayak use flights mostly as lead generation for hotel search (as does Expedia). I suspect this is the case for two reasons:
There are a lot fewer airlines than there are hotels; this means it is much easier to get a critical mass of airlines onto a search service. This, though, means there is more competition which means the airlines don’t need to pay very high fees
In truth, most of airline booking is done via a handful of global distribution systems (GDS); these are useful in that any airline search site can contract with a GDS for flight data, but the implication is that the GDS’ capture nearly all of the profits
The fastest route to market for Airbnb would be to contract with one of the aforementioned GDS’; this would accomplish the goal of keeping their users on site, although it wouldn’t do much for the bottom line, and the experience of booking flights wouldn’t be much different from other online travel agents.
That, though, is why one of the most interesting revelations from Chesky’s Christmas tweets was the possibility that Airbnb takes a different path:
@herbigt the reason tools are so bad is they have to connect to a 1970s GDS software system (Amadeus, Galileo). This can be circumvented
— Brian Chesky (@bchesky) December 26, 2016 […]
if Airbnb really wants a flight tool before an IPO in the next year-and-a-half, as suggested by the Bloomberg report, then partnering with a GDS is the most obvious option. However, creating something meaningfully new may not be possible with GDS’s, which means it will take a whole lot longer. What makes Airbnb compelling is that they even have the choice, and that comes back to owning the users.