Google-ITA Software deal: industry stays quiet, very quiet
Almost inevitable given the enormity of the deal and predicted consequences on the travel sector, but there is tumbleweed blowing through the dusty streets of the industry.
The three leading GDSs – any number of which were supposedly plotting with others to scupper the deal at the eleventh hour – have declined to comment on the ITA Software acquisition.
Other companies around the industry are also either staying unusually quiet (many who were happy to chat privately a few weeks ago about its consequences) or are simply issuing a “no comment” response.[We will add more reaction if and when it comes in]
Crucially, one of the companies tipped to be most affected by the deal, Kayak, was also first out of the blocks.
Chief marketing officer Robert Birge says:
“This is something we’ve been anticipating for some time. ITA is an important vendor of ours, but they are only one of several sources of data we use.
“We search multiple, redundant data sources including Amadeus’ metapricer, direct connections to airlines and several online travel agencies. We have also been testing and exploring additional sources as well, and we will continue to do that.
“We also employ proprietary technology to deliver the best search results which means best prices, speed, relevance, accuracy and bookability. We’ve received assurances that our agreement with ITA will be honored.
“Our focus has always been to build the best travel application in the world, and we’ll continue to innovate against that goal.”
Some are already suggesting privately that Everbread’s presence alongside the GDSs and Expedia’s is there simply to address anti-trust concerns, illustrating an apparent array of competition in the space.
Nevertheless the fledgling company had this to say:
“Everbread believes that when markets function properly and companies deliver innovation and convenience to consumers, then everyone wins.
“We see the Google-ITA Software deal as very good for the industry. Despite Google’s dominance in the online advertising business, other Google product lines have not squeezed or eliminated competition. Quite the opposite: they have increased the quality and experience of the consumers. And if there is an industry that needs shaking up, it is definitely travel.
“Everbread has developed a faster and better airfare search and pricing engine – Haystack. By integrating different sources of travel information and providing quick and accurate real time schedules, pricing and availability, Haystack helps users find more and cheaper ways to travel.
“One of Haystack’s strengths is its ability to search in multiple perspectives – answering questions like “Where might I fly within seven hours for a given fare?”. Haystack does this and other non-linear searches natively in real-time and provides more accurate results, with more options for convenience at an affordable cost. We believe that this is how to do business.
“What is good about the Google-ITA Software relationship is that it will encourage the industry to focus much more on improving technology and traveler experience as the key to market share growth, as opposed to backroom dealing, exclusive contracts, and closed-channel strategies that have been dominant for so long.
“When technological innovation and user experience replace data hording and exclusive contracts as the standard business practices in travel, the consumers will win, and so will the companies that innovate.”
Menawhile, Henry Harteveldt, Forrester Research’s principal analyst for travel, says because it is a vertical acquisition, he is not so sure it will face the anti-trust roadblocks that Google faced with the acquisition of AdMob.
After all, ITA has plenty of competitors in the likes of Expedia, Sabre, Amadeus and others.
Nevertheless, he believes airlines are very concerned in how how Google will present the information. Will airlines, for example, have to bid against online travel agencies to have their listings presented in flight search?
He concedes Google has never operated in this way in presenting organic results, but adds “there is always fear of the unknown”.
Harteveldt believes that Google-ITA is more a threat to metasearch companies than it is to OTAs. But one important question is how long will Bing Travel and Kayak stick with using ITA?
Harteveldt suspects over the long term Google will invest and take ITA into hotels and other travel industry sectors. “It is not its DNA,” Harteveldt says, referring to ITA and hotels, “but it is not far away.”
Google’s acquisition of ITA is both a defensive move to retain traffic, and offensive to regain the traffic it has lost to sites like Bing.
Harteveldt doesn’t believe the pending acquisition will lead to a domino effect with Bing buying Travelport, for example, or Expedia buying Kayak.
There will be the ongoing merger and acquisition activity in “digital travel, and maybe this will expedite it a little bit,” Harteveldt says. “There are only so many thoroughbred ponies out and one of the best just got acquired.”
Everbread is not an acquisition target because “Everbread right now is just starting up,” he says, although Imagini, a UK company involved in visual search, could be an attractive target.
Fellow research firm PhoCusWright believes the deal “opens up a new realm” for Google.
Vice president of research, Lorraine Sileo, says such a move creates “the ultimate starting point for destination searches but put in the back seat as the consumer gets closer to the actual booking”.
“On the surface we see Google’s play for better search a requirement in the air/travel space. But naturally it’s not what’s on the surface but the speculation of what the Google/ITA combo could lead to that makes this deal so interesting.”
Research director Carroll Rheem argues there is “little to be so worked up about” as the battle between airlines and OTAs will continue.
“But, it does show a serious commitment to making the Google search experience fundamentally better for air travelers – which today is clearly lacking. Ultimately, the more relevant search becomes (and the more reliant consumers become on it) the more power Google will have over advertisers.
What online travel retailer looks forward to that?”
Meanwhile, UK metasearch firm TravelSupermarket is the first organisation (and, indeed, potential victim of such a deal) to publicly question whether Google can have the type of impact many others are predicting.
Whilst welcoming the move as “healthy competition as it’s, theoretically, great for consumers”, Travelsupermarket’s Bob Atkinson adds:
“Google tried meta search with credit cards before and it didn’t really change the online landscape, so we will have to wait and see what product they may offer to travellers. Flights are just one element of travel and on short haul routes only a small percentage of travel spend; with sites like Travelsupermarket.com consumers are saving money across a vast range of travel-related items.”
Kevin is senior editor and a co-founder at Tnooz. He was previously editor of UK-based magazine Travolution and web editor of Media Week UK from 2003 to 2005.
He has worked in regional newspapers (Essex Enquirer) and started his career at the Police Gazette at New Scotland Yard in London. He has a degree in criminology, a postgraduate diploma in magazine journalism and publishes his first book - a biography about Depeche Mode - in late-2016.