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"Google’s big advantages over other travel content aggregators is its already-huge user base and its ability to target consumers across the entire travel funnel."
Report OverviewGoogle has always played a pivotal role in travel, since the early days of search. Now, travel ad spend accounts for a significant portion of the company’s total ad revenue, about 12 percent according to Skift estimates. More recently, the company has upped its sophistication in facilitating various travel functions including hotel and air search (and book) but also in-destination activities, reviews, and ground transport. Numerous successful pivots to mobile proved crucial in positioning the company as an all-purpose travel platform. This transition over to product has also put Google in more direct competition with OTAs, other metasearch players, as well as the suppliers all vying for ownership of the customer. While we expect Google to capture significant market share, this shift will prove gradual. Currently, global hotel chains acquire under 10 percent of their bookings through Google AdWords and Hotel Ads. The rest comes from OTAs, direct marketing, and other channels including group bookings and rates negotiated over the phone. Hotel spend on Google is expected to increase through 2018. Some see the company as an OTA killer. Our sensitivity tests show that it makes little business sense for Google to proactively seek to displace its largest advertising partners. Short of completely upending them, Google’s position will continue to push existing players to evolve new and blended business models that combine distribution with other value-add functions for suppliers.
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