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Google to control travel industry with ITA acquisition

Google shook up the property industry in February 2009 when it released an update to its Google maps product which enabled people to add a real-estate layer to show properties for sale and rent.  The changes were enough for Real Estate portals to threaten to block Google and cut AdWords budgets, but the travel industry didn’t make as much noise last week when Google bought ITA Software.

Google Travel AgentsIt’s likely that it was more a mix of shock and disbelief that Google would be able to control the whole vertical for Travel in a single purchase of ITA Software and no-one else thought of it before them.

The importance to the travel industry is that ITA Software is a management system for airfare pricing and comparison shopping used on a number of leading travel websites such as Cheap Flights,Kayak, Orbitz, Hotwire and Bing Travel.  Because of the scale of the ITA deal it will also cause concern among a number of travel affiliate websites who might be using Kayak as their booking platform, so in the past you might have visited a site like Las Vegas Flights to purchase your airline tickets you could be buying direct from Google in the future.

The big concern is after Bing bought Farecast for $115 million, it only bought the Farecast technology and not the ITA Software platform that powers the Farecast technology.  The Farecast technology allows visitors to Bing to do quick analysis on Airfare & Hotel prices for consumers so they know if they should buy now or wait for the best price on an airfare. The bigger issue is that Bing’s Travel platform is now powered by software owned by search competitor Google.

While Google has said it has no plans to sell airline tickets directly to consumers and will honour ITA agreements it does put companies like Bing and Kayak in an interesting position with their competitor having access to their backend data, including margins, conversion rates, and revenue.  This data allows Google engineers a massive insight into the travel sector including how, when and what people are searching for who are not using Google search and potentially alter its algorithm to give it a competitive advantage.

[Next: What about Travel Agents?]

The ITA software product is focused around airline bookings and reservations but it’s easy to see how this could be expanded by Google to include other verticals such as Tours, Car Rental and Hotel bookings.  These verticals will likely not be covered under existing agreements which can allow Google to build a new travel portal directly into its search results.

What about Travel Agents?

The travel industry is one of the biggest spenders on Google AdWords so it seems strange that they would risk scaring off the golden goose, unless they have very big plans ahead for their travel product so be warned.

What can business learn from this experience? The first is buy more than just the software platform if its going to be a main part of your future business examine the costs of buying the whole technology and make sure you are entitled to ownership of relevant patents.

It will be surprising if Google does not experience some issues with getting the purchase approved as its far too much data about its competitors business, but if Google doesn’t get the purchase approved to buy ITA Software, will it be Bing, Expedia or even Facebook that swoops it up?

So next time you are searching for your trip to Las Vegas you might not have to ever leave Google to book the entire trip as it is likely that no matter which way the deal goes stay tuned for Google Travel Store opening soon.