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Google Works With Hotels To Hurt Travel Competition (wsj.com)
An anonymous reader shares a WSJ report: More than 100 million Americans are expected to travel during the holidays, and many will search for lodging online. But travelers may unknowingly pay more and fail to see all of their options because some major hotels have ganged up with Google to undercut competition (The link may be paywalled). Online travel agencies like Expedia, Priceline and Travelocity have replaced brick-and-mortar agents by offering consumers more choice and convenience at a lower price. These OTAs purchase inventory from wholesalers and then market rooms at a discount to consumers in addition to flights, rental cars and travel packages. Many also have agreements with companies like American Express, Costco and Delta to market their inventory. OTA websites let travelers sift through hotel offers based on price, brand, location, amenities and guest rating, among other search filters. OTAs earn a roughly 20 percent commission from hotels for each reservation they book, which covers their cost of marketing, inventory acquisition, customer support and payment processing. As hotels get squeezed by Airbnb and home rental sites, they have begun complaining that OTAs are eating into their profits. Several major hotels are now trying to use Google as a counterweight, while Google is exploiting its search dominance to steer consumers to its travel service. Some 60% of travelers begin trip-planning on Google.
But travelers may unknowingly pay more and fail to see all of their options because some major hotels have text.
Someday Slashdot will develop a publishing system that let's you edit articles in draft mode ...
I often get better pricing booking directly through the hotel company website. I just did that an hour ago and got a better price that way than what Expedia was offering.
The whole premise was that hotels wanted help to move their excess inventory of rooms. Now that there's an ecosystem around collecting and marketing that inventory, the hotels have decided they want to claw back more control (and profit) from the process. I'm not sure I see the issue here. Why not just stop selling rooms at a discount to these 3rd parties and become better at selling the capacity themselves?
shrug
I registered a hotel stay on one of those sites now. A very nice hotel but downtown, and valet parking came as part of the 'bundle'. The front desk refused to give this to us. They said we didn't have the right text in our record. We fought and lost. We talked about what we wanted to do and decided we didn't have much of a choice and took their 5% off 'sucks to be you' deal plus paying for valet parking. When I stood in line to get our room, I heard the exact same argument happening at another booth. I guess if I really wanted to raise a stink I should have pulled aside the other person and stood there waiting as our group got bigger, but I was there for vacation with my family.
Laws are rules for the court, but merely a bottom bar to hit for life. Think beyond laws in your actions always.
Maybe the searchers trust Google to have what they need, Plain and simple. I do and can enter gibberish and expect Google to produce. An example a movie I've see once and no clue of it's name, input: movie beach ball monster - results, top (first) hit was it: "Dark Star", which youtube had available (I didn't say it was a good movie).
Would the other search engines done as well? I've no clue, I have only used Google cause it's working for me.
Just another day with the need for another story.
Is it just my imagination or are they confusing "hurts competition" with "lowers retailer margin"?
They're creating a race to the bottom, and then complaining about their falling margins. That's going to be the result when you play that game. I suppose you might look at it as "bad for competition" if you're a vendor looking for better margins, and ultimately it may end up driving some vendors out of the market and lowering competition, but in a free market economy a Race to the Bottom will usually fix itself. Sometimes it crashes the market a bit hard and it takes awhile to rebound, but when it does, the remaining vendors are usually more careful to avoid a repeat occurrence.
And as for their handing out blocks of inventory for resale, that's just another angle they're trying to exploit to squeeze a little more out of their inventory. Iin the case of hotels, those few vacant rooms every day, they're just playing the "half of something is better than all of nothing" game, and the resellers getting their margin is usually okay as long as they're not selling at a loss. If they're stupid and dumping larger than necessary blocks of rooms to the resellers, which is then resulting in a drop in traditional direct sales, that's their own fault for overdoing it. It's no different than using sales to attract customers, and making the mistake of making too many, too frequent, or too heavily discounted sales. Don't DO that, the customers will take advantage of it and the outcome is your own fault. If you don't know how to play that game, you shouldn't be playing it at all, not complaining when you lose.
I work for the Department of Redundancy Department.
If hotels stopped selling to wholesalers then they wouldn't have this problem.
But they would have a different problem. If they aren't listed by the OTAs, then they are invisible to many potential customers. 80% of something is better than 100% of nothing.
They are paying 20% of their gross to outsource their marketing, which is likely cheaper than the cost of doing their own publicity and promotions.
Which is why they have nothing to complain about. They are paying 20% for marketing, which isn't some egregious amount. If Google was being accused of dropping a hotel chain from their service if they also advertised with another search engine, or for having their own direct to consumer sales, that would be anti-competitive. But currently they are just charging for marketing.
-- All that is necessary for the triumph of evil is that good men do nothing. -- Edmund Burke