New research shows that Google is driving traffic away from online travel agent (OTA) giants in favour of direct bookings while earning billions through selling ad space to OTAs.
In a recent podcast, Pranavi Agarwal, a Senior Research Analyst at US travel industry news site Skift, discussed her findings on Google’s impact on the travel industry.
“I decided to create a proprietary database by web scraping thousands of hotels (over 20 000) that are listed on Google globally. For each hotel, I scraped which online travel agent (OTA) site and which direct site are bidding for bookings and at what prices,” said Agarwal.
Agarwal found that OTAs rely on Google for clicks, with sponsored search results dominated by two OTAs: Booking.com and Expedia. Expedia will most likely appear at the top of Google search results in all regions except Europe, where Booking.com has a stronger presence.
In addition to its sponsored results, Google launched its organic search results feature in 2021. The feature allows any site to list on Google free of charge if it has the technological capacity. Agarwal’s research found that Google pushes direct booking sites to the top of its organic search results.
“Google has said that organic results are ranked by their utility for users,” said Agarwal.
“After COVID, there has been a shift where customers want to book directly to enjoy the benefits of free cancellation and to have a stress-free experience knowing they will get their money back,” she explained.
Agarwal added that Google allows only four or five slots for sponsored results, forcing OTAs to bid large sums of money on these spots to stand out in a landscape pushing direct bookings.
“The relationship between Google and OTAs is symbiotic and complex. You could even say it’s a little bit abusive. Booking Holdings and Expedia can’t stop spending ad dollars on Google because they have to. Google is hurting these OTAs by shifting customers back to direct bookings, but Google is still reaping financial rewards from them (the OTAs). Direct sites and Google are winning in this scenario.
“So to answer the question, ‘Is google killing OTAs?’ I’d say so, yes.”
