Google is accused of using its search engine to capture market share from its travel rivals, foreign media reported. Expedia and TripAdvisor executives seem almost frustrated with the whole thing. The chief executives of TripAdvisor and Expedia Group spoke this week about Google’s growing practice of directing search traffic to its travel business, which adversely affected their company in the third quarter.
For its part, Expedia Group intends to promote direct booking – it mentions the fledgling Instagram and Facebook influencers campaign, and will spend more on brand advertising – and boosts its loyalty program. TriPadvisor plans cost control, builds hotel and media products that aren’t based on click revenue, and increases personalization.
In a prepared speech on Wednesday night, TripAdvisor pointed to the fact that revenue from its largest segment of the business, officially known as hotels, media and platforms, fell 12 per cent year-on-year to $238 m in the third quarter.
“We believe that the biggest challenge remains Google’s ability to promote its hotel products in search results and attract high-quality traffic that would otherwise be available through free links to TripAdvisor and generate high margins in our hotel click-through auctions,” TripAdvisor said.
In a earnings conference call with analysts on Thursday, TripAdvisor CHIEF Executive Steve Kaufer further elaborated on the topic. ThroughAdvisor sees “growth in SEO (search engine optimization, or Google) gradually hampered throughout the quarter,” Says ufer said. “
“And I think you’re going to see that across the industry because Google is becoming more aggressive,” he says. He added, “We know that this trend in SEO is a continuing trend, and we didn’t expect that to improve.” “
Despite the good news about TripAdvisor’s upcoming joint venture with Ctrip in China, TripAdvisor said: “We are not satisfied with our third-quarter results, which is particularly frustrating as we enter 2019 with strong profit growth and improved bidding trends. And it seems that hotel revenue sits back to continued growth. “
In contrast, revenue fell 7 percent to $428 million and net income fell 28 percent to $50 million compared to the third quarter of 2018.
While tripAdvisor’s description of “worse than expected revenue trends” cannot be attributed to Google, its adverse effects have had a significant impact on TripAdvisor’s financial performance.
EXPEDIA SAYS GOOGLE IS MORE ACTIVE THAN EVER
Mark Okerstrom, chief executive of Expedia Group, said Google had “received more revenue per visitor, and I think that’s just the reality of the internet in the world, and it’s important for Google at the top of the channel.” “
Both Okerstrom and Kaufer complain that because Google prioritizes its travel business, their organic or free links end up below the Google search results page.
What’s going on?
Over the past year, Google has been bringing more of its travel business into search results, directing more traffic to its combined travel pages, and integrating more travel products into Google Maps.
About a month ago, for example, Google introduced four new features, including showing its nightly rate on a map and being higher than all natural search results on the search results page. Click on one of the lists and the user will eventually go to Google’s travel page.
Asked about Google’s impact on Expedia, Okerstrom told analysts on a third earnings call Wednesday night that Google is installing new modules in Google’s search results and attracting more consumers to Google hotel ads or Google flights than ever before. He added that the moves had led to a “traffic diversion” at Expedia. This is forcing Expedia to spend more on advertising in more expensive channels.
“And because of our prominent position in Google’s hotel advertising products, we are the recipients of traffic,” says Okerstrom. Again, we’re very happy with the returns we see in this channel, but (they) are not as good as the returns from traffic sources. “In other words, Expedia has to spend more on Google, and its free search links aren’t as effective as they used to be.”
In response to a disappointing quarter, TripAdvisor announced a “comprehensive cost structure assessment,” a $100 million share buyback program and a $3.50 cash dividend per share.
TripAdvisor plans to prioritize business-to-business hotel services and more media products that are not suitable for click-based hotel bidding. Ernst Teunissen, tripAdvisor’s chief financial officer, said he expected the company’s main hotel business to continue to grow negatively in the fourth quarter.
Experience and dining
Interestingly, Kaufer said the company would reduce its investment in its experience and catering division, and that “we have invested quite heavily in catering over the past few years”. Instead of focusing on building supplies, he said, the company will take advantage of consumer demand that the company already owns.
“What I’m saying is that the leadership of the business, the excellent connectivity, the rebuilding technology system in many different parts, we can say that we have a good internal team, and now we can work on the demand side, the conversion has been on trip, which has been done on Viator, has been circulated through our third party, Find the right product for the right individual,” says Kaufer.
In other news, TripAdvisor said it now mixes short-term rentals with hotels “to better meet the changing needs of consumers and drive conversion and improved monetization.” “