WSJ says Google abusing its market power, working with hotels to squeeze OTAs
To appear in Google’s meta-search, businesses must pay a price per click that is often three times as much as for keyword searches.
More than 100 million Americans are expected to travel during the holidays, and many will search for lodging online. But travelers may unknowingly pay more and fail to see all of their options because some major hotels have ganged up with Google to undercut competition.
As hotels get squeezed by Airbnb and home rental sites, they have begun complaining that OTAs are eating into their profits. Several major hotels are now trying to use Google as a counterweight, while Google is exploiting its search dominance to steer consumers to its travel service.
Some 60% of travelers begin trip-planning on Google. The search giant’s travel business is worth an estimated $100 billion and will generate $14 billion in revenue this year, according to Skift Research.
The problem is that Google is working with hotels to stifle competition. Hotels want to drive travelers to their websites to avoid paying commissions to OTAs. They also know that travelers searching for “Houston Hilton” are more likely to book a room at a Hilton than those who query “Hotels in Houston.” Several hotels have inserted terms in their global agreements with large OTAs that prohibit the agencies from bidding on key word ads that include their brands or trademarks.
Restricting competition in branded keyword ad auctions means many consumers won’t see or receive the lowest price deals. Meanwhile, OTAs may have to seek higher commissions from hotels or reduce their discounts to offset the payments they must make to Google to appear in its meta-search. This would likely cause prices to rise. Mom-and-pop hotels would also suffer since they have smaller marketing budgets and may be unable to afford Google’s ad rates.
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