
Google works with hotels to hurt travel competition - mudil
https://www.wsj.com/articles/google-hotel-travelopoly-1514419414
======
phsource
This seems to be a sour grapes article representing the grudges of online
travel agencies (OTAs) against Google. This quote really caught my attention:

"OTAs earn a roughly 20% commission from hotels for each reservation they
book, which covers their cost of marketing, inventory acquisition, customer
support and payment processing."

20% is a ton! Later in the editorial, the writers complain about how Google
takes "a 10% to 15% commission on net revenues from reservations booked
through its meta-search. Google thus gobbles up most of the profits that OTAs
earn".

But Google is taking on the marketing! To be fair, inventory acquisition and
payments are also costs, but from running travel sites before, travel truly is
a marketing game. As a result, their take makes sense given that they're
really taking the place of the traditional marketing channel.

Google's concentration of power definitely is concerning. But the OTAs (who
have been living off fat profits for years; see Priceline stock [1]) get none
of my sympathy.

[1]
[https://finance.yahoo.com/quote/PCLN/;](https://finance.yahoo.com/quote/PCLN/;)
has outperformed Google stock over the past 10 years

~~~
dragonwriter
> This seems to be a sour grapes article representing the grudges of online
> travel agencies (OTAs) against Google.

Superficially, but more deeply it's part of the propaganda war the WSJs
corporate parent has been carrying out against Google on all fronts for quite
a long time, which is in part partisan/ideological, and in part business over
similar issues in publishing.

~~~
mcny
I still don't get why we can't talk about banning "fake news" like wall street
journal on hn.

These are clearly hit pieces and as my parent mentioned, part of a coordinated
effort to undermine Google. They did the same thing with YouTube. Everyone is
worse off because of wsj.

~~~
pimmen
You absolutely can bring it up. Now, here's the issue though; "fake" implies
that they fabricated or exaggerated stuff, not just skewed the coverage. If
you can provide solid evidence that the WSJ fabricated this news piece you
could probably get this link off of HN.

------
ucaetano
Oh, wait, so Google competing with OTA is resulting in lower margins for
intermediaries and aggregators, and higher margins for those actually
providing the services: the hotels?

And the Editorial Board of the WSJ publishes this advertorial shamelessly
promoting OTAs?

"Online travel agencies like Expedia, Priceline and Travelocity have replaced
brick-and-mortar agents by offering consumers more choice and convenience at a
lower price."

"OTA websites let travelers sift through hotel offers based on price, brand,
location, amenities and guest rating, among other search filters"

------
thesumofall
This article is largely incomprehensible and seems strongly biased. Having
said that, I don’t quite see how consumers are being hurt. The issue only
seems to be with very targeted search queries such as “Hilton Houston” where
Expedia, etc. ageeed voluntarily not to show ads and smaller ones are
allegedly somehow blocked by Google. But: if one searches for such a specific
term, a customer will almost always be harmed by booking through an OTA. Most
hotel chains guarantee the lowest rates on their websites plus offer benefits
such as points that you wouldn’t receive when booking through an OTA. Someone
has to pay for the 20% cut - and it’s not the OTA

~~~
bkor
> Most hotel chains guarantee the lowest rates on their websites

To be clear: My response is not about OTA vs Google. It's OTA vs hotel.

Various OTAs used to have clauses in their contracts prohibiting this. See
e.g.
[https://www.lexology.com/library/detail.aspx?g=ad48f831-75c3...](https://www.lexology.com/library/detail.aspx?g=ad48f831-75c3-4832-960e-c378fe53e30a).
They made them switch terms. Before that it was pretty much impossible for a
hotel to offer a lower rate through their website.

Consumers were being hurt (by OTAs) due to not being able to offer lower rates
in their own website. It only changed after EU stepped in. Nowadays you see
that you can book directly with the hotel, immediately become a member for
free and immediately get a discount for that booking. Before the lowest rate
was usually via the OTA. Then obviously people will book via the OTA.

~~~
thesumofall
This is certainly correct except some little semantics: they were prohibited
to publish lower rates but could absolutely publish the lowest rate on their
website (basically the same as for the OTA with the highest leverage). By
bundling in benefits such as points, hotels are also stretching those clauses
to their limits.

Edit: ... and let me say: I’m absolutely in favor of the ruling you cited

------
autokill
[http://archive.is/ECDvi](http://archive.is/ECDvi)

------
BoiledCabbage
Yay anti-competition!

It's it impossible for any large company to simply make a better product any
more and use that to compete? Or must it always be bend the rules, bend the
law, lock people in to avoid competition?

Is there an alternative?

~~~
Zarath
At a certain level of complexity, it's easier to simply externalize costs than
to improve the product. Especially when you have organizations as large as
Google, it's hard for any single employee to make decisions in the best
interest of the user, as there are massive incentives all the way up the
ladder to maximize short term profits. It's really on small, agile companies
to innovate.

------
sitepodmatt
I was always of the impression that the 18%-22% commission charged to small
hotels using an OTA most of it went back into PPC and other online marketing
anyway, kind of like a slot machine winnings, hence you needed a lot of cash
to bootstrap competition. In this instance paying out to Google meta search is
probably no different than a PPC campaign for the OTA, you have to pay to get
the eyes. Slightly off topic, I remember a hotel manager bitching about how
much OTAs charge and then saying he was going to fund his own site and charge
hotels only 5% and make a killing, I'm not sure how far that Joomla project
got lol

Back on subject, I don't have too much sympathy if this is deemed unfair, as
OTAs are quite anti-competitive too, they force hotels to sign agreements that
disallow themselves from running their own promotions or advertising on other
sites for anything less than the best rate given to the OTA, and yes this is
enforced, in the old days via screen-scraping of competitors.

>Most hotel chains guarantee the lowest rates on their websites.

I've never seen this to be true, even though nearly all big chains litter
their website with it, it's always marginally more expensive (with other
surcharges etc..) and massively more annoying due to clumsy UI and harsher
terms & conditions.

------
aglionby
Google's products are at least free of the dark patterns which pervade other
sites. I can't believe how unpleasant the experience of booking travel online
is -- it's so hard to get a clear picture of price anywhere with all the
hidden fees.

Google Flights/Hotels are somewhat nicer than other experiences, but you then
lose out on the combo discounts that OTAs offer. With it being such an
expensive market to enter I'm not convinced we'll see much changing soon.

------
londons_explore
In my view, the contracts between hotels and OTAs which preclude the hotel
from offering lower prices to the public are at fault here.

Contracts which sell some goods from person A to person B, but then apply
conditions on person A selling similar goods to person C should be outlawed.

------
electic
Question to anyone here who is familiar with this industry. Would one be able
to save even more by just going to a wholesaler? I mean, with the right know
how, can someone just buy from a wholesaler directly?

~~~
lowpro
I don't know about hotels since airbnb is almost always cheaper, but with
flying you will almost always find cheaper flights going directly to the
airline or using something like The Matrix [1] than using kayak, expedia etc.
These companies used to be cheaper than going directly with an airline, but
since they were so easy to use everyone uses them now and they charge high
margins for that convenience, so the position has switched in the last 20
years.

I also use secretflying.com which is like skyscanner but better imho. Using
these flight websites I normally get flights from Chicago to east asia in the
lower $400 range roundtrip, the cheapest I've seen was $300 roundtrip from
ORD>SIN!

[1] [https://matrix.itasoftware.com/](https://matrix.itasoftware.com/)

~~~
bkor
> I don't know about hotels since airbnb is almost always cheaper

AirBNB is super annoying. You have to agree to meet at a certain time. You
have to hope they accept your booking. While booking you cannot sort by price,
etc. AirBNB informs about demand causing prices to go up in popular periods.
Then for most places you basically have to put in writing if you could pretty
please rent the place. This while on any hotel you're accepted as long as the
credit card check goes through.

I often book by first searching via Booking.com, then trying to book directly
or searching for best rate.

I don't travel too often, but AirBNB being cheapest is not my experience.
Maybe cheapest no matter the quality and convenience? A shared room is not the
same as a hotel for instance. I don't want to feel bad about coming back at
e.g. 3am. In a hotel that's pretty much fine. With AirBNB I stick to renting
out the whole apartment and for those the prices are slightly above hotels
prices (these apartments are often tiny btw).

~~~
briandear
I have a property in France and we use a combination of AirBnB and until now,
Booking.com; on AirBnB we have it set to instant book— we essentially have a
small hotel type property so we don’t go through the that whole “approval”
theater. However I agree AirBnB IS annoying because most people trying to book
us always want to ask dumb questions like “is your property still available” —
well yes, that’s why you can instantly book. If it weren’t available then why
would it be bookable? Presumably this is because most AirBnB hosts are non
professional and don’t manage their availability calendar correctly (I
suppose..)

For us, AirBnB is just another booking source but it’s fairly annoying.. I can
definitely agree with you — just on the opposite site of the table (the
property owner.)

~~~
Pyxl101
It sounds like AirBnB would benefit from a feature where you can personally
and automatically contact the booking customer to confirm the reservation. A
sort of automatic email with your brand confirming the dates and other
information. Or maybe do so by pressing a button. Or maybe just a status on
the reservation: "Host has seen reservation and confirmed".

I have never used AirBnB, but I am loathe to rely too much on entirely
electronic information, without a real human confirming it. Case in point:
several restaurants claimed they'd be open on Christmas day on their websites,
so we planned to pick up food for a gathering. When we arrived at the
restaurant on the day, they were closed, at a time which was at least 2 hours
before their posted closing time (which did include holiday hours). This
caused a last-minute scramble to arrange food for people at short notice on
Christmas day. If we had tried to reach an actual person on the phone,
presumably this mixup would have been avoided.

If my travel arrangements depended upon the availability of an AirBnB, then
I'd probably want to confirm with the host too. A major hotel isn't going to
lose my reservation, but with AirBnB who knows. Maybe the host will be "out of
town" that day and forgot to mark their property unavailable, just like the
restaurants that "forget" to mention when they'll be closed.

(Have I mentioned how much I hate hate hate when businesses don't keep to
their posted hours?)

------
alpb
Protip: you can just paste the following to the address bar to bypass the
paywall:

    
    
        javascript:window.location='https://facebook.com/l.php?u='+window.location

~~~
lordgrenville
Still paywalled for me. Maybe FB users have a metered paywall?

~~~
arthurfm
Try this bookmarklet instead...

    
    
        javascript:location.href='https://facebook.com/l.php?u='+encodeURIComponent(location.href)
    

It successfully bypassed the paywall for me.

------
em3rgent0rdr
paywall.

~~~
ocdtrekkie
[http://archive.is/](http://archive.is/) almost always has the full version of
any WSJ article cached. Feel free to make use of it. :)

