Google and ITA: King Maker, Not Category Killer

 

Rheem

It would be difficult, if not impossible, to think of a travel industry topic that has garnered more speculation or prognostication than Google’s proposed acquisition of ITA Software, argued Carroll Rheem, director of research for PhoCusWright, in a recent FYI blog post.

Below is an excerpt from Rheem’s blog post, which can also be read in its entirety here:

“The long-awaited decision by the U.S. Department of Justice (DOJ) addresses the main concerns outlined by the group of travel companies that created FairSearch to oppose the acquisition. While FairSearch praises the outcome of the DOJ decision, the organization clearly failed in its ultimate goal of killing the deal,” Rheem said.
 
“…  The true opportunity to create new value lies in Google’s sophisticated ability to process text along with price. Jeff Huber, Google’s senior vice president, commerce and local, alluded to intentions to integrate ITA Software’s capabilities this way in his blog post. This ability would allow them to smash open the rather rigid structure that has governed travel search from its inception. And the initiatives will presumably stretch across all the platforms (such as Android) and touch points (such as Gmail) Google controls, possibly appearing even when consumers are not actively searching for travel.”

“To be a true game changer, Google’s travel offering must systematically lead users to better and easier decisions, which is a very tall order. Therefore, even though the metasearch business model has the highest risk of being trampled by Google’s integration of pricing, it is far too early to ring the death knell for companies like Kayak. Much depends on how Google chooses to approach the integration and user experience. Online travel agencies (OTAs) do not carry that same risk because their business model is transactional. OTAs also happen to be huge advertisers with Google, so there is intrinsic incentive for Google to continue to support healthy OTA business. Ultimately, while there is still plenty of room for improvement across the trip planning life cycle, even the world’s most powerful search company may not be able to shift mainstream traveler behavior,” Rheem wrote.

Visit www.PhoCusWright.com.
 
 

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