11 ms·

Google works with hotels to hurt travel competition

103 points by mudil 9y ago

em3rgent0rdr 9y ago
paywall.
- ocdtrekkie 9y ago
  http://archive.is/ http://archive.is/ almost always has the full version of any WSJ article cached. Feel free to make use of it. :)
alpb 9y ago
Protip: you can just paste the following to the address bar to bypass the paywall: javascript:window.location='https://facebook.com/l.php?u='+window.location
- skydv 9y ago
  in Chrome you paste window.location='https://facebook.com/l.php?u='+window.location https://facebook.com/l.php?u='+window.location in the Console. Also you can follow the link https://facebook.com/l.php?u=https://www.wsj.com/articles/google-hotel-travelopoly-1514419414 https://facebook.com/l.php?u=https://www.wsj.com/articles/go... great tip, thanks
- mehrdadn 9y ago
  Do you not need encodeURIComponent?
- lordgrenville 9y ago
  Still paywalled for me. Maybe FB users have a metered paywall?
  - arthurfm 9y ago
    Try this bookmarklet instead... javascript:location.href='https://facebook.com/l.php?u='+encodeURIComponent(location.href) It successfully bypassed the paywall for me.
phsource 9y ago
This seems to be a sour grapes article representing the grudges of online travel agencies (OTAs) against Google. This quote really caught my attention: "OTAs earn a roughly 20% commission from hotels for each reservation they book, which covers their cost of marketing, inventory acquisition, customer support and payment processing." 20% is a ton! Later in the editorial, the writers complain about how Google takes "a 10% to 15% commission on net revenues from reservations booked through its meta-search. Google thus gobbles up most of the profits that OTAs earn". But Google is taking on the marketing! To be fair, inventory acquisition and payments are also costs, but from running travel sites before, travel truly is a marketing game. As a result, their take makes sense given that they're really taking the place of the traditional marketing channel. Google's concentration of power definitely is concerning. But the OTAs (who have been living off fat profits for years; see Priceline stock [1]) get none of my sympathy. [1] https://finance.yahoo.com/quote/PCLN/; https://finance.yahoo.com/quote/PCLN/; has outperformed Google stock over the past 10 years
- prostoalex 9y ago
  Seems like almost every hotel chain nowadays pitches booking through their own Web site, often throwing some extra perks for direct bookings. They also try to rope the customers in with fairly generous loyalty programs, “unpublished” rates and credit card marketing tie-ins. So yeah, seems like OTAs were okay with this as long as it was IHG, Hilton, Marriott, Accor, Choice Hotels and Best Western doing this on their own (or through fairly low-traffic sites like roomkey.com or pointshound.com), but now that Google actively promotes direct bookings, they’re feeling the effect.
  - aviv 9y ago
    This. I book quite a few hotel stays throughout the year and you will definitely get perks and resort credits when booking directly. Just ask for it. They don't want you hanging up the phone and going back to Kayak which may lead you to another property while deciding.
  - yardie 9y ago
    I’ve tried to book directly through the hotel site. And when I’ve informed the reservation desk the rate is cheaper through an OTA they tell me to book using the OTA. That was a 20% commission they could have kept or given to me as a discount. I guess I don’t know how agreements work. Seems like OTAs are more flexible with pricing compared to the hotel staff.
BoiledCabbage 9y ago
Yay anti-competition! It's it impossible for any large company to simply make a better product any more and use that to compete? Or must it always be bend the rules, bend the law, lock people in to avoid competition? Is there an alternative?
- Zarath 9y ago
  At a certain level of complexity, it's easier to simply externalize costs than to improve the product. Especially when you have organizations as large as Google, it's hard for any single employee to make decisions in the best interest of the user, as there are massive incentives all the way up the ladder to maximize short term profits. It's really on small, agile companies to innovate.
- nol13 9y ago
  Dunno first-hand about hotels, but at least for flights google's interface is VASTLY better than any alternative I've found. It's like they actually let me find the information I'm looking for.
electic 9y ago
Question to anyone here who is familiar with this industry. Would one be able to save even more by just going to a wholesaler? I mean, with the right know how, can someone just buy from a wholesaler directly?
- thesumofall 9y ago
  What do you mean by wholesaler? You can certainly negotiate special rates directly with the hotels if you have the leverage. Wouldn’t be surprised if OTAs do the same. Same for Amex and the likes
- lowpro 9y ago
  I don't know about hotels since airbnb is almost always cheaper, but with flying you will almost always find cheaper flights going directly to the airline or using something like The Matrix [1] than using kayak, expedia etc. These companies used to be cheaper than going directly with an airline, but since they were so easy to use everyone uses them now and they charge high margins for that convenience, so the position has switched in the last 20 years. I also use secretflying.com which is like skyscanner but better imho. Using these flight websites I normally get flights from Chicago to east asia in the lower $400 range roundtrip, the cheapest I've seen was $300 roundtrip from ORD>SIN! [1] https://matrix.itasoftware.com/ https://matrix.itasoftware.com/
  - electic 9y ago
    wow, thank you so much. Great site. If anyone has any other tips/hacks etc, would love to hear about it.
  - somberi 9y ago
    I am not associated with the site below, but I find it useful to book itineraries that show up in Matrix (but you cannot book from them). https://bookwithmatrix.com/ https://bookwithmatrix.com/ Also the original WSJ article is written by its Editorial Board (as opposed to their reporting arm). Editorial board can and does operate with its the owner's mandate, in most newspapers.
  - 9y ago
deleted 9y ago
[deleted]
bengrunfeld 9y ago
"Don't be evil", they said. "Do the right thing", they said...
thesumofall 9y ago
This article is largely incomprehensible and seems strongly biased. Having said that, I don’t quite see how consumers are being hurt. The issue only seems to be with very targeted search queries such as “Hilton Houston” where Expedia, etc. ageeed voluntarily not to show ads and smaller ones are allegedly somehow blocked by Google. But: if one searches for such a specific term, a customer will almost always be harmed by booking through an OTA. Most hotel chains guarantee the lowest rates on their websites plus offer benefits such as points that you wouldn’t receive when booking through an OTA. Someone has to pay for the 20% cut - and it’s not the OTA
- bkor 9y ago
  > Most hotel chains guarantee the lowest rates on their websites To be clear: My response is not about OTA vs Google. It's OTA vs hotel. Various OTAs used to have clauses in their contracts prohibiting this. See e.g. https://www.lexology.com/library/detail.aspx?g=ad48f831-75c3-4832-960e-c378fe53e30a https://www.lexology.com/library/detail.aspx?g=ad48f831-75c3.... They made them switch terms. Before that it was pretty much impossible for a hotel to offer a lower rate through their website. Consumers were being hurt (by OTAs) due to not being able to offer lower rates in their own website. It only changed after EU stepped in. Nowadays you see that you can book directly with the hotel, immediately become a member for free and immediately get a discount for that booking. Before the lowest rate was usually via the OTA. Then obviously people will book via the OTA.
  - thesumofall 9y ago
    This is certainly correct except some little semantics: they were prohibited to publish lower rates but could absolutely publish the lowest rate on their website (basically the same as for the OTA with the highest leverage). By bundling in benefits such as points, hotels are also stretching those clauses to their limits. Edit: ... and let me say: I’m absolutely in favor of the ruling you cited
  - fjsolwmv 9y ago
    Why are customers helped by driving OTAs out of business?
autokill 9y ago
http://archive.is/ECDvi http://archive.is/ECDvi
sitepodmatt 9y ago
I was always of the impression that the 18%-22% commission charged to small hotels using an OTA most of it went back into PPC and other online marketing anyway, kind of like a slot machine winnings, hence you needed a lot of cash to bootstrap competition. In this instance paying out to Google meta search is probably no different than a PPC campaign for the OTA, you have to pay to get the eyes. Slightly off topic, I remember a hotel manager bitching about how much OTAs charge and then saying he was going to fund his own site and charge hotels only 5% and make a killing, I'm not sure how far that Joomla project got lol Back on subject, I don't have too much sympathy if this is deemed unfair, as OTAs are quite anti-competitive too, they force hotels to sign agreements that disallow themselves from running their own promotions or advertising on other sites for anything less than the best rate given to the OTA, and yes this is enforced, in the old days via screen-scraping of competitors. >Most hotel chains guarantee the lowest rates on their websites. I've never seen this to be true, even though nearly all big chains litter their website with it, it's always marginally more expensive (with other surcharges etc..) and massively more annoying due to clumsy UI and harsher terms & conditions.
ucaetano 9y ago
Oh, wait, so Google competing with OTA is resulting in lower margins for intermediaries and aggregators, and higher margins for those actually providing the services: the hotels? And the Editorial Board of the WSJ publishes this advertorial shamelessly promoting OTAs? "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." "OTA websites let travelers sift through hotel offers based on price, brand, location, amenities and guest rating, among other search filters"
aglionby 9y ago
Google's products are at least free of the dark patterns which pervade other sites. I can't believe how unpleasant the experience of booking travel online is -- it's so hard to get a clear picture of price anywhere with all the hidden fees. Google Flights/Hotels are somewhat nicer than other experiences, but you then lose out on the combo discounts that OTAs offer. With it being such an expensive market to enter I'm not convinced we'll see much changing soon.
londons_explore 9y ago
In my view, the contracts between hotels and OTAs which preclude the hotel from offering lower prices to the public are at fault here. Contracts which sell some goods from person A to person B, but then apply conditions on person A selling similar goods to person C should be outlawed.

103 points by mudil 9y ago

em3rgent0rdr 9y ago

paywall.

ocdtrekkie 9y ago
http://archive.is/ http://archive.is/ almost always has the full version of any WSJ article cached. Feel free to make use of it. :)

alpb 9y ago

Protip: you can just paste the following to the address bar to bypass the paywall: javascript:window.location='https://facebook.com/l.php?u='+window.location

skydv 9y ago
in Chrome you paste window.location='https://facebook.com/l.php?u='+window.location https://facebook.com/l.php?u='+window.location in the Console. Also you can follow the link https://facebook.com/l.php?u=https://www.wsj.com/articles/google-hotel-travelopoly-1514419414 https://facebook.com/l.php?u=https://www.wsj.com/articles/go... great tip, thanks
mehrdadn 9y ago
Do you not need encodeURIComponent?
lordgrenville 9y ago
Still paywalled for me. Maybe FB users have a metered paywall?
- arthurfm 9y ago
  Try this bookmarklet instead... javascript:location.href='https://facebook.com/l.php?u='+encodeURIComponent(location.href) It successfully bypassed the paywall for me.

phsource 9y ago

This seems to be a sour grapes article representing the grudges of online travel agencies (OTAs) against Google. This quote really caught my attention: "OTAs earn a roughly 20% commission from hotels for each reservation they book, which covers their cost of marketing, inventory acquisition, customer support and payment processing." 20% is a ton! Later in the editorial, the writers complain about how Google takes "a 10% to 15% commission on net revenues from reservations booked through its meta-search. Google thus gobbles up most of the profits that OTAs earn". But Google is taking on the marketing! To be fair, inventory acquisition and payments are also costs, but from running travel sites before, travel truly is a marketing game. As a result, their take makes sense given that they're really taking the place of the traditional marketing channel. Google's concentration of power definitely is concerning. But the OTAs (who have been living off fat profits for years; see Priceline stock [1]) get none of my sympathy. [1] https://finance.yahoo.com/quote/PCLN/; https://finance.yahoo.com/quote/PCLN/; has outperformed Google stock over the past 10 years

prostoalex 9y ago
Seems like almost every hotel chain nowadays pitches booking through their own Web site, often throwing some extra perks for direct bookings. They also try to rope the customers in with fairly generous loyalty programs, “unpublished” rates and credit card marketing tie-ins. So yeah, seems like OTAs were okay with this as long as it was IHG, Hilton, Marriott, Accor, Choice Hotels and Best Western doing this on their own (or through fairly low-traffic sites like roomkey.com or pointshound.com), but now that Google actively promotes direct bookings, they’re feeling the effect.
- aviv 9y ago
  This. I book quite a few hotel stays throughout the year and you will definitely get perks and resort credits when booking directly. Just ask for it. They don't want you hanging up the phone and going back to Kayak which may lead you to another property while deciding.
- yardie 9y ago
  I’ve tried to book directly through the hotel site. And when I’ve informed the reservation desk the rate is cheaper through an OTA they tell me to book using the OTA. That was a 20% commission they could have kept or given to me as a discount. I guess I don’t know how agreements work. Seems like OTAs are more flexible with pricing compared to the hotel staff.

BoiledCabbage 9y ago

Yay anti-competition! It's it impossible for any large company to simply make a better product any more and use that to compete? Or must it always be bend the rules, bend the law, lock people in to avoid competition? Is there an alternative?

Zarath 9y ago
At a certain level of complexity, it's easier to simply externalize costs than to improve the product. Especially when you have organizations as large as Google, it's hard for any single employee to make decisions in the best interest of the user, as there are massive incentives all the way up the ladder to maximize short term profits. It's really on small, agile companies to innovate.
nol13 9y ago
Dunno first-hand about hotels, but at least for flights google's interface is VASTLY better than any alternative I've found. It's like they actually let me find the information I'm looking for.

electic 9y ago

Question to anyone here who is familiar with this industry. Would one be able to save even more by just going to a wholesaler? I mean, with the right know how, can someone just buy from a wholesaler directly?

thesumofall 9y ago
What do you mean by wholesaler? You can certainly negotiate special rates directly with the hotels if you have the leverage. Wouldn’t be surprised if OTAs do the same. Same for Amex and the likes
lowpro 9y ago
I don't know about hotels since airbnb is almost always cheaper, but with flying you will almost always find cheaper flights going directly to the airline or using something like The Matrix [1] than using kayak, expedia etc. These companies used to be cheaper than going directly with an airline, but since they were so easy to use everyone uses them now and they charge high margins for that convenience, so the position has switched in the last 20 years. I also use secretflying.com which is like skyscanner but better imho. Using these flight websites I normally get flights from Chicago to east asia in the lower $400 range roundtrip, the cheapest I've seen was $300 roundtrip from ORD>SIN! [1] https://matrix.itasoftware.com/ https://matrix.itasoftware.com/
- electic 9y ago
  wow, thank you so much. Great site. If anyone has any other tips/hacks etc, would love to hear about it.
- somberi 9y ago
  I am not associated with the site below, but I find it useful to book itineraries that show up in Matrix (but you cannot book from them). https://bookwithmatrix.com/ https://bookwithmatrix.com/ Also the original WSJ article is written by its Editorial Board (as opposed to their reporting arm). Editorial board can and does operate with its the owner's mandate, in most newspapers.
- 9y ago

deleted 9y ago

[deleted]

bengrunfeld 9y ago

"Don't be evil", they said. "Do the right thing", they said...

thesumofall 9y ago

This article is largely incomprehensible and seems strongly biased. Having said that, I don’t quite see how consumers are being hurt. The issue only seems to be with very targeted search queries such as “Hilton Houston” where Expedia, etc. ageeed voluntarily not to show ads and smaller ones are allegedly somehow blocked by Google. But: if one searches for such a specific term, a customer will almost always be harmed by booking through an OTA. Most hotel chains guarantee the lowest rates on their websites plus offer benefits such as points that you wouldn’t receive when booking through an OTA. Someone has to pay for the 20% cut - and it’s not the OTA

bkor 9y ago
> Most hotel chains guarantee the lowest rates on their websites To be clear: My response is not about OTA vs Google. It's OTA vs hotel. Various OTAs used to have clauses in their contracts prohibiting this. See e.g. https://www.lexology.com/library/detail.aspx?g=ad48f831-75c3-4832-960e-c378fe53e30a https://www.lexology.com/library/detail.aspx?g=ad48f831-75c3.... They made them switch terms. Before that it was pretty much impossible for a hotel to offer a lower rate through their website. Consumers were being hurt (by OTAs) due to not being able to offer lower rates in their own website. It only changed after EU stepped in. Nowadays you see that you can book directly with the hotel, immediately become a member for free and immediately get a discount for that booking. Before the lowest rate was usually via the OTA. Then obviously people will book via the OTA.
- thesumofall 9y ago
  This is certainly correct except some little semantics: they were prohibited to publish lower rates but could absolutely publish the lowest rate on their website (basically the same as for the OTA with the highest leverage). By bundling in benefits such as points, hotels are also stretching those clauses to their limits. Edit: ... and let me say: I’m absolutely in favor of the ruling you cited
- fjsolwmv 9y ago
  Why are customers helped by driving OTAs out of business?

autokill 9y ago

http://archive.is/ECDvi http://archive.is/ECDvi

sitepodmatt 9y ago

I was always of the impression that the 18%-22% commission charged to small hotels using an OTA most of it went back into PPC and other online marketing anyway, kind of like a slot machine winnings, hence you needed a lot of cash to bootstrap competition. In this instance paying out to Google meta search is probably no different than a PPC campaign for the OTA, you have to pay to get the eyes. Slightly off topic, I remember a hotel manager bitching about how much OTAs charge and then saying he was going to fund his own site and charge hotels only 5% and make a killing, I'm not sure how far that Joomla project got lol Back on subject, I don't have too much sympathy if this is deemed unfair, as OTAs are quite anti-competitive too, they force hotels to sign agreements that disallow themselves from running their own promotions or advertising on other sites for anything less than the best rate given to the OTA, and yes this is enforced, in the old days via screen-scraping of competitors. >Most hotel chains guarantee the lowest rates on their websites. I've never seen this to be true, even though nearly all big chains litter their website with it, it's always marginally more expensive (with other surcharges etc..) and massively more annoying due to clumsy UI and harsher terms & conditions.

ucaetano 9y ago

Oh, wait, so Google competing with OTA is resulting in lower margins for intermediaries and aggregators, and higher margins for those actually providing the services: the hotels? And the Editorial Board of the WSJ publishes this advertorial shamelessly promoting OTAs? "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." "OTA websites let travelers sift through hotel offers based on price, brand, location, amenities and guest rating, among other search filters"

aglionby 9y ago

Google's products are at least free of the dark patterns which pervade other sites. I can't believe how unpleasant the experience of booking travel online is -- it's so hard to get a clear picture of price anywhere with all the hidden fees. Google Flights/Hotels are somewhat nicer than other experiences, but you then lose out on the combo discounts that OTAs offer. With it being such an expensive market to enter I'm not convinced we'll see much changing soon.

londons_explore 9y ago

In my view, the contracts between hotels and OTAs which preclude the hotel from offering lower prices to the public are at fault here. Contracts which sell some goods from person A to person B, but then apply conditions on person A selling similar goods to person C should be outlawed.