ITA software-google
1648 days ago
 

Panic for most, joy for a few as rumour of Google-ITA Software deal intensifies

Rumours of a deal for Google to buy ITA Software have swept around the industry for weeks, but nobody close to the pair has agreed to go on the record.

ITA software-google

A number of senior figures in the metasearch arena, for example, have said privately that they heard a deal was in the offing. But rumours fly around the travel sector every day, especially ones involving Google.

Up until now, ITA and Google have dismissed any such suggestions.

Nevertheless, the Bloomberg wire service has published a report suggesting that a $1 billion – yes, $1 billion – deal is on the table, based on three sources.

A Google official says this morning:

“While we’re always talking to various companies about a variety of things, we don’t comment on rumour or speculation.”

If a deal goes ahead in the rumoured price range it will be one of the biggest in Google’s history following the $3.1 billion and $1.65 billion deals for DoubleClick and YouTube respectively.

The price may surprise and be a big talking point to those outside the travel sector, but for those within it will be just a marker during the wider analysis of what a deal such as this really means.

The irony of such a deal comes in many forms – firstly that ITA powers the Bing Travel metasearch system (Farecast) and also because other ITA customers such as Kayak would effectively be paying the Big G twice, through advertising and use of technology.

But the serious elements to note are as follows:

  • What would be Google’s motivation for buying ITA?

In short, it would get its hands on the technology that handles airline data for metasearch engines (Kayak, Farecompare) as well as online travel agencies such as Orbitz. ITA also works with a string of airlines including Continental and United. What Google would do with the data (if anything) is a mystery at this stage, but dynamic pricing against search results seems the most obvious answer.

Google UK managing director Matt Brittin said yesterday – answering the inevitable Troogle question at the Travolution Summit in London – that Google had no intention of being a “travel agent or tour operator”.

The search engine is always experimenting and it will add more information to improve the user experience and search results, he added.

[Some might question whether dynamic pricing against travel products is just "more information" - to many it's known as metasearch]
  • How will a deal impact other areas of the marketplace?

Some suggest metasearch appears to be an obvious loser. If Google is providing the same dynamic pricing on various travel products in search results of maps, why use a metasearch engine (just brand?)?

But, of course, the same could be said for online travel agencies.

Airlines may also find themselves in an awkward negotiating position given that Google would become not only one of the biggest sources of traffic but also have its strong position as the primary advertising space on the web (certainly in many markets).

Tnooz node Alex Bainbridge suggests that a benefactor of such a move might be small tour operators (his company handles software for such firms).

“Google is very good at sending traffic direct to small tour operator (supplier) websites. Yet many small tour operators don’t have the capability (or desire) to sell flights. Hence the combination of a Google flight search plus consumers being directed to specialist tour operators is better (for consumers and specialist tour operators).

“The alternative is consumers buying on OTA websites and getting little exposure to the interesting in-destination activities and tours that can be purchsed, except those featured on the OTA websites – and these tend to be dull, commoditised, city tour style tours.”

But, overall, very few beneficiaries.

  • Where will it leave other tech providers?

Some say a company such as Everbread, which has seemingly been on the scene for just a matter of weeks, may find themselves suddenly thrust into the limelight as a result of such a deal, given that they are positioning themselves as a (cheaper) rival to ITA.

But at this stage the rumour-mill is simply heading into overdrive, inevitably.

One UK-based travel boss says the spectre of such a deal has been looming for months, even years, while another suggests it is simply Google moving toward Troogle.

He adds:

“They have picked, in my opinion, the best middleware tech provider, and this may be Google getting one step closer to search relevance.”

 
 
Kevin May

About the Writer :: Kevin May

Kevin May is editor and a co-founder of Tnooz. He was previously editor of UK-based magazine Travolution for nearly four years and web editor of Media Week UK from 2003 to 2005.

He has also worked in regional newspapers (Essex Enquirer) and started his career in journalism at the Police Gazette at New Scotland Yard in London. He has a degree in criminology and a postgraduate diploma in magazine journalism.

 

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  12. Fred

    While we are talking rumours … why not speculate about others…

    Amadeus is putting itself up for sale at the end of this month, they also have advanced search and meta-search technology … so could they be of interest to Microsoft ?

     
    • Kevin May

      Kevin May

      @fred – I think there’s a difference between Amadeus being put up for sale and heading for an IPO, to be fair.

      Of course, Microsoft could snap up all the shares, but indications are that is unlikely.

       
  13. Norm

    What will be interesting to watch is how Google displays ITA search content. In essence all the Meta-search engines have copied Kayak’s interface. What we’ve seen with Google maps and hotels may yield a display more like the Amadeus/LH shop by budget/price via map application (winner of last year’s Travel Innovation Summit)for airline fares. With both Bing and Google having meta-search as part of their core offering, this could spell trouble for Kayak and Fare Compare. Fly.com may need to have tighter branding and integration with Travelzoo and Trip Advisor is somewhat insulated with their core function as a review site, but if Google could get the social media effort on the right track (not like Buzz!) they may compete here as well.

     
  14. Dennis Schaal

    Dennis Schaal

    William: For a time, Google has been reluctant to dig into travel metasearch or to create its own online travel agency.

    Now, you have Google becoming a GDS.

    Hmmm…that certainly would be a deep dive:)

     
    • william

      It’s not only Google … Microsoft, exalead and some other will jump on the bandwagon.

      Not a GDS as we know it today. A GDS 2.0 offers travel/trip data and advanced search. It enables you to do shopping and availability search.

      The ranking of those search results will also be a very interesting subject (biasing based on Ads or on user criteria will then be possible).

      I think the booking will stay on the supplier web site. Google and others wanting to offer a Mega direct connect switch and continue earning money with Ads. They will also try to drive more users to their social platforms and provide features to customize the travel offer for you.

      Those GDS 2.0 will use/enable mashup. This will also revolutionize destination Marketing. People will be able to create their own dashboard enabling to couple search, local information and social knowledge.

      The question is then is Google (& others) ready to “open” travel API to all? As of today the Travel industry was very reluctant to open travel API for free (SITA, etc.). Access to any API was fee based. Rail is for example still a closed world.

      The impact on the business model is: we will move from a business model where travel companies/OTA had to pay at each level (API, GDS, CRS, etc.) to a a more open model where search is done on Internet and payment is done when a click is done and the travel booked directly on the site (advertising model based on performance).

      Since today, GDS are not catching up more than 50% of the market on Air and far less on hotel and car, I suppose that both models will survive. At least for some time.

      Merger and acquisitions in the travel industry will give some indications of how and how fast the ecosystem will change. Stay connected to TNOOZ, I’m sure the coming months will be interesting …

       
  15. william

    Well

    The more I think about it, the more I think that this is not a coincidence. American Airlines direct connect plans are well aligned with Google strategy around ITA acquisition and “direct connect switch”. This is a smart move. This could be the perfect example of creative destruction related to evolution to travel 2.0.

    If ITA is to be acquired, then Google will reinvent Travel 2.0 and create a kind of GDS 2.0. Access to hotel data, airlines deals and ancillary fees, local destination information all in one. Google places is perfect in the local strategy.

    The travel industry was to slow to react and was not able to admit that things can change. Everybody thought that hotel, airlines will follow the business model where they have to pay each time a booking is done.

    Google, Bing, Exalead could drive much more travel bookings in the coming years than all 3 GDSs and propose an alternative model. A performance based model.

    The questions are:
    - is there a place for new business model in travel?
    - could this model co-exist with the one around GDS/OTA?

    Since the travel market is very fragmented, then, we can imagine that coexistence will be possible for a certain time. At least until two or three giants emerge.

     
    • bs

      the travel industry isn’t always slow to react on purpose, sometimes they just can’t due to limitations posed by antiquated technology systems. i love that everyone is so into the development of “direct-connect” technology. who and what are they connecting to directly? the GDS sits there because it is a massive switch, translating all kinds of code and languages across multiple platforms. how that flight gets reserved isn’t the same system as the one that handles how that flight get paid for. so, what exactly are we connecting to directly? inventory? fares? schedules? payment systems? travel agencies? As much as I’d like to see it get updated, i think the world of travel sales is just too complex to do away with the traditional GDS. ITA is awesome and i love it…. but it can’t issue tickets; it can only find ticket prices…..
      now, who it serves THAT data up to, i suppose, could include a link to where to book it….. directly connecting the consumer to a tertiary level of middleware that can process the booking through the secondary layer of the GDS… who can send the data to the primary middleware, SITA, who can translate the data to send back out to all the other middlewares that price, ticket, and provide financial settlement on air fare bookings. Even if a link is provided to the airlines’ own website, there is still a whole lot of middleware going on before that air fare price you see online turns into a plane ticket in your name.

       
  16. Joe Buhler

    From a consumer perspective the last item seems to me the most important: Search Relevance, which in too many cases today is still as elusive as ever, hence the disappointment with the process.

     
  17. Craig Hewett

    Interesting dilemma for General Catalyst and Sequoia … who have apples in both the ITA and Kayak carts.

     
  18. James Penman

    In the shopping engine space, Google launched Froogle years back. I remember everyone having a tremble at the time but it didn’t have much effect on that sector and they later pulled the product back into the main site. Clearly, travel is a different space and many years have passed but would be interesting to see what they’ve learnt from that.

     
  19. Happy Hotelier

    The first time I land here by Blackberry. Verry good readable. What mobile plugin do you use?
    Yes! Why not let rumors fly when so many planes are grounded:-)

     
    • Martin Rusteberg

      guido – if i’m not mistaken it’s the carrington mobile theme…

       
  20. Jim Kovarik

    One thing they could do with the content (outside of the obvious integration in search results) is to integrate it with Google maps like we do on Cost2Drive.com (we surface airfare information in driving directions for routes over 200 miles). Its the most clicked on feature on our site, so consumers definitely are interested in that content.

     
  21. Edward Hasbrouck

    Enforcement has been lax to nonexistent with respect to online distribution channels… but at least for airlines, dynamic pricing would clearly violate statutory and treaty requirements in most countries for them to operate as “common carriers”, that is, to charge the same price to everyone complying with the same rules in a published tariff. Dynamic pricing based on search results might be what would finally bring down enforcement action against off-tariff ticket sales and failure to operate as common carriers.

     
  22. uberVU - social comments

    Social comments and analytics for this post…

    This post was mentioned on Twitter by kevinlukemay: ANALYSIS: Panic for most, joy for a few as rumour of Google-ITA Software deal intensifies http://bit.ly/b3QZbX [Tnooz]…

     
 
 

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