The Google ITA deal: is it bad for Travel or can Google build a Travel Product?

Written by Simon Breakwell, COO of TravelPost, Inc

There is much discussion about what Google’s acquisition of ITA means for Travel, but an equally important question for Google and the travel industry to consider is: Can they build a compelling travel product ? Here are my thoughts.

The History

Like most things in life, understanding history is important. ITA was built to allow travelers to get more flight results, more flexibly, faster. As internet travel emerged in the mid 90’s, CRS’s (the great computer reservation systems that all bookings flow through) were not going to be capable of handling the new shape of bookings. CRS’s were designed for 1000’s of travel agents making very specific queries, not hundreds of millions of individuals browsing. The processing

heat on their systems would be intolerable, and for businesses’ like Expedia that meant - a) We would be paying large amounts back to the CRS’s, and b) more importantly, the results customers got back would be limited. We knew that we would have to build technology that would run on PC’s (not arcane mainframes), and return hundreds of flight/price queries a great deal faster. Meshing the billions of schedule and price combinations is not a trivial task. Only two web travel businesses were working this problem: Expedia with what became Best Fare Search (BFS), and Jeremy and the guys at ITA. The BFS investment did and does underpin much of Expedia’s product success in flights and now packages. By the way, we met ITA in 1997, scary smart – we tried to figure something out but couldn’t and went our separate ways. So, let’s park the history and return in a paragraph or two.

Changing Search and Travel Landscape

Meanwhile, Google is taking over the search landscape. Remember, in 1997-8 smart people seriously couldn’t understand how Google would make money, the same was true until fairly recently of Facebook – remarkable how things change and how fast we forget. By 2000-02 it was obvious: Google had invented an almost perfect, frictionless business model. By 2005 it was also obvious that travel was one of the top categories, maybe only superseded by finance. Billions of dollars were spent each year by advertisers in each category.

Why has Google made the move now ?

So what has changed ? A few things. Firstly, Google is a public business, so there is intense shareholder pressure to drive results – no matter how sanguine and relaxed the vibe from Mountain View. Secondly, and related, Google is needing to monetize the huge verticals more aggressively – Finance and Travel are the largest. Recently, Google moved into online mortgage quotes, it’s not surprising it has now moved into travel. Thirdly, the current Online Travel Agents are becoming so large, they themselves are becoming significant search nodes – rather like Amazon in retail. That’s not good for Google. All these forces converged in the last 2 years to force Google to think deep and hard about travel.


What were Google’s options?

The task was simple – monetise travel better by building a better search experience. Remember, inside Google, if you solve for better Search the money will take care of itself.

They had 3 main options.

First - buy an OTA or a large consumer website. That didn’t make sense. When you buy an OTA you get lots of “stuff” – people, complex business relationships, large marketing and sales organizations etc. Most importantly, Google doesn’t want to be a travel agent. Remember, it needs to build a better search experience.

Second - engineer their way into travel. That wouldn’t work either. Building travel booking engines at high-scale in Hotel and particularly in Flight is super complex (see history above), even for someone like Google. Also, from a resource allocation point of view the very very smartest brains at Google are deployed against other assets – Chrome and Mobile to name just two. It also takes time. And time is valuable.

Third - buy an engineering solution. Back to the history, there are only two real solutions out there: Expedia’s BFS (which comes with luggage as we’ve already discussed) and ITA. Expedia’s technology is proprietary, and in some ways superior to ITA’s platform. ITA’s model is B2B. They chose ITA.

What will Google Travel be? Can Google build a travel “product” ?
In this context, better Search means super targeted results and specifically fares. Google will need to move beyond the one generic search box; that’s not how people search for travel, that is a very large decision-point that forces a number of important product issues. In my opinion, the complex problems for Google are not technical, ITA and Google can solve those. The greater issues are product related, and Google doesn’t have a great track record of building products that are not utilities. If you doubt that statement think of Picassa, more recently Buzz (remember that?) and Google Checkout. Google is an engineering company, successful niche products are, well, products (the new Chrome OS will force Google to think product). Products need all the “stuff” that products need - marketing, support, good people, continued focus and investment etc.

The issue is that unlike Search, Maps and Email which are utilities, Travel is a niche, and with the ITA purchase, the Google Travel Search has become a product – "Super Search", if you like. How will they handle - the passing of clicks to people who don’t use ITA (like Expedia); how to integrate a part-booking experience into a Search experience; how will companies who don’t use ITA get their results in the list ? How will Google handle customer questions on when they can’t get the fares they see – and they will get those complaints and many more.

What are the certainties with Google Travel ?

So, there is much speculation and the above is my take. But there are two certainties (assuming regulatory approval). 

1. Even a poor implementation of ITA will mean more monetization for Google and a more complex landscape for OTA’s and suppliers to navigate.
2. Any ITA implementation will mean Screen One real estate becomes even more scarce and fighting for first page placement SEO will become even harder.

Finally, and to repeat myself, nailing, and really monetizing Travel for Google will mean not only building a better Travel Search experience, but also thinking about travel more as a product – perhaps not in the classical sense, but a product none the less, and that is as large a challenge for Google, if not larger than the technical one.


Simon Breakwell was a founder at Expedia, he was SVP Sales and Marketing until 2000, President of Europe 2000-2006 and a Non Exec Director at Expedia Inc,. 2006-2009. He is now COO at Travelpost.com