Invite colleagues
Back in July, we saw Google spend $700 million on a purchase of travel software company ITA Software. At the time I was saying this will certainly be putting the wind up a few Chinese online travel firms such as Ctrip, eLong, Qunar.com, Kuxun.com and Daodao.com et al (predominately, those providing a travel meta-search solution). Although, ITA is focused on flight information, it certainly signaled that Google was interested in this travel space.
It is a space that should have their interest. According to PhoCusWright’s Emerging Online Travel Marketplace in China, online travel channels will drive US$13 billion in bookings in 2011.
From what is being put forward in the western press is that Google is currently experimenting with technology that will allow it to provide much richer search results, eliminating the need for consumers to trawl through multiple sources or cross-reference information from several sites. This sounds remarkably like the value proposition of our Chinese online travel companies.
So what does this mean for them? Does this mean Qunar or Kuxun.cn will no longer be relevant or is this just another Google venture that is unlikely to succeed here in China?
From what I understand about the Google solution is that US travellers will be able to look at a map and see actual prices for hotels in a given area (along with images and information on facilities and nearby attractions), with the ability to click through to make a reservation via a third-party booking site.
The Google solution will scour the Internet for the best deals and presenting the data in a way that is easier for consumers to view and compare. The ITA software element pulls fares from the Airline Tariff Publishing Company, which collects prices from 500 airlines worldwide. In all, a nice online travel solution.
Here is a summary slide showing the online travel ecosystem.
There are a number of existing meta-search sites such in the West such as Kayak, Bing Travel, Bravofly and Skyscanner and here in China we have Qunar, Kuxun.cn and elong, which basically search across multiple websites for fares and other travel deals. It is these firms that appear to be the most likely in the cross hairs of Google but I would argue the Chinese firms have the least to worry about given the recent battering Google had in China this year.
Where are the areas of greatest change?
1. I would say the sector under threat is the traditional travel agency's who's role is becoming more that of an advisor or working on specialized "non-routine" bookings.
2. The introduction of social media engagements into the buying cycles of online travel sites
3. Technology that allows much more automation for end to end bookings/payment
These are a few of my ideas and thoughts... Please share any you may have.
Written on Wednesday, 20 October 2010 17:12 by Matt McDougall