Google works with hotels to hurt travel competition | Hacker News Reader

Google works with hotels to hurt travel competition

wsj.com

103 pointsmudil64 comments

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/; has outperformed Google stock over the past 10 years

Seems like almost every hotel chain nowadays pitches booking through their own Web site, often throwing some extra perks for direct bookings. They also try to rope the customers in with fairly generous loyalty programs, “unpublished” rates and credit card marketing tie-ins.

So yeah, seems like OTAs were okay with this as long as it was IHG, Hilton, Marriott, Accor, Choice Hotels and Best Western doing this on their own (or through fairly low-traffic sites like roomkey.com or pointshound.com), but now that Google actively promotes direct bookings, they’re feeling the effect.

This. I book quite a few hotel stays throughout the year and you will definitely get perks and resort credits when booking directly. Just ask for it. They don't want you hanging up the phone and going back to Kayak which may lead you to another property while deciding.

I’ve tried to book directly through the hotel site. And when I’ve informed the reservation desk the rate is cheaper through an OTA they tell me to book using the OTA. That was a 20% commission they could have kept or given to me as a discount.

I guess I don’t know how agreements work. Seems like OTAs are more flexible with pricing compared to the hotel staff.

I think the difference is in mainly in booking conditions.

For instance a lot of OTA will push non cancellable rooms for lower prices. The hotel probably doesn’t want to deal with these customer issues directly, while the guaranteed benefit is attractive.

Because the rate is not released by the hotel. Some agents undercut the rates, or floates a rate that is supposed to be marked up, naked (without mark-up) to the web. Asking the guest to book from the OTA is to see what voucher the hotel receives, and catch that agent as the culprit who undercut the rate without hotel's consent. The agreement with hotel and agent is that hotel can refuse to honour the voucher. In this case, the agent has floated a rate not discussed with the hotel. Hotel asked the guest to go ahead and book if there's a lower rate in OTA. Guest books, hotel has the right to refuse to honour the voucher.

The OTA can buy & manage it's own stock of hotel rooms in advance for hotel X and then sell them on for $whatever, $whenever.

Not every OTA is just a proxy. Some maintain their own stock and do forecasting/yield management etc..

> But the OTAs (who have been living off fat profits for years; see Priceline stock [1]) get none of my sympathy.

Any move that hurts Booking.com's revenues is a good move, by me.

I don't have an issue with them taking 20% commission, but I loathe all of the dark patterns they employ to make that commission.

'... but I loathe all of the dark patterns they employ to make that commission.'

I tried to leave a negative review for a hotel on booking.com and the overall result was 3.5 out 5!

At least with google reviews I can get a fair picture of what the place is actually like.

And, all that 'just one room left at this price' is basically fraud.

It does annoy me though when I try to book direct and get charged the exact same price. I know with chains you get loyalty discounts and such but a there are still a lot of independents where you don't.

> I tried to leave a negative review for a hotel on booking.com and the overall result was 3.5 out 5!

Do you mean tripadvisor? Booking.com works on a scale of 1-10.

Possibly.

And that pretty much explains why even the worst hotels are rated the same as the high end places. Well besides the obvious paid reviews. It’s becoming a real hassle to find places that are not rundown messes that don’t cost 200+ a night (and even then...)

This to me still seems like a net loss.

   old: OTA makes a $20 commission on a $100 rate through them

   new 1: Google makes an ~$20 commission on a $140 room rate (15%) through Hotel

   new 2: Google makes a $17 commission on the $117 room the OTA now has to sell it. 
   Or the OTA tries to still sell at ~$100 and only makes a $3-$5 commission.

And this lovely quote:

> Google also requires OTAs to give its webcrawlers access to proprietary information including room availability, descriptions, pricing and custom bundles and other data—information that OTAs typically keep closely held from competitors.

Great, the amazon model of "to run on our platform we get all the data of what's profitable for you, how profitable it is, and what buyer interest is, and we then use that to power our competing product which also runs on our platform to take all the profit out of the marketplace and force you out."

Nope this isn't illegal, but again seems like an abuse of position. It's like running a competing restaurant, but also being the city's auditer and gathering all financials as well as the food inspector who is required to inspect (watch) every recipe and dish get made to be able add it to their own menu if it's a hit.

And finally regardless of all of the above, does noone else see it as a problem the general idea of looking for a percentage of revenue of every link a user follows from google? For example next them move into newspapers, and want a percentage of subscription ad-revenue for users forwarded. "Yeah we own adwords, but it's not anti-competitive. You can always run ads on your site and just not be indexed by us. [And not get referral traffic]. If you want us to accurately spider your site and refer to pages, we take a percentage".

So hotels, car rentals, flights, shopping, movie tickets, (and any other search that google productizes)... The end game of this is have any transaction that happens on the web that came from a google referral, they get a cut. It's obviously not there yet, but that's the direction they keep moving: Turn search into an app store / amazon style platform and get 20% of everything on the internet.

> Great, the amazon model of

Apple does pretty much the same thing with its suppliers, no? They even work out what profit and costs a supplier is supposed to have (meaning: if your costs are higher it's the fault of the supplier).

A "others do it too" might not be too good of an argument, but I do wonder why heavily looking into your suppliers (costs, etc) is that bad.

It actually is illegal if Google is a monopoly in some sense and using that monopoly as leverage in other areas.

Once a company has a monopoly, the rules change.

> 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.

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.

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.

I don’t think it should be banned even though I agree with yo that the WSJ editorial is wrong more often than not. I feel this way because it is (inexplicably) widely read. Far better to know what a lot of people hear and believe than to live in a bubble.

My criteria are all about size and reach. For example I wold consider a flat earth discussion (99% parody, 1% wtf I assume) a waste of HN attention bandwidth.

It’s not news, it is an editiorial. Although I consider the modern WSJ editorial board to be pretty loathsome, it isn’t fake news.

Surely it's better to discuss these stories publicly and make errors / biases known than to just pretend they don't exist?

Can you elaborate on the WSJ's agenda against Google ?

News Corp owns WSJ, and a lot of other newspapers and media brands. News Corp's competition is not other publishers, it is Facebook and Google.

The owner of WSJ is News Corp whose executive co-chairman is Rupert Murdoch. Murdoch's views about Google are well known, Example : https://www.forbes.com/2009/04/03/rupert-murdoch-google-busi...

Yeah, it's not a new spat and definitely not limited to just the WSJ. See also this, starting from the title and finishing with the zinger at the end: https://europe.googleblog.com/2014/09/dear-rupert_25.html

There's two parts two News Corp’s war on Google, the narrow business part concerns Google being key to reach but squeezing out profits of online publishers (especially in the news arena) exactly the way this article complains it does to travel agencies, the broader political part has to do with Google's perceived alignment with the Democratic Party and how that conflicts with News Corp’s broader partisan political agenda.

Thanks. This makes sense.

thank you for introducing this idea to HN even if this is not provable at this moment.

the percentage of people who take stories at face value is way too high.

i'll keep my words kind and limit this comment to just that....

I was actually surprised (some) online booking agencies actually vet the locations they sell. So there is significant cost to scouting and vetting the hotels, i.e. to protect the customer. They also offer some various guarantees which have to be factored into the commission.

I'm fairly certain Google skips all of this, so I would say their profit is effectively (much) higher.

What sucks about the former approach is that booking portals make sort of an exclusive deal, where the price they advertise (with their cut) is as low as a direct sell.

What I find interesting is that I've seen cases where you don't even find a matching price from the hotels own booking system.

I understand they can't go lower than booking site due to contracts, but it would make sense to offer at least similar rates in order to attract direct bookings.

They'll pick up direct bookings from people who aren't interested in price comparisons and "special offer, only three rooms left, no refund" though. Same as few service providers choose to match their Groupon price on their own website.

They'll have done some sort of estimate that the revenue they lose from charging direct bookers lower prices is greater than the revenue they lose from people comparing their price with the OTA price, even if that estimation is on the back of an envelope.

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"

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

> 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.... 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.

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

Why are customers helped by driving OTAs out of business?

Try to use that rate guarantee. Most exclude “aggregators” and other deal sites.

http://archive.is/ECDvi

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?

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.

Dunno first-hand about hotels, but at least for flights google's interface is VASTLY better than any alternative I've found. It's like they actually let me find the information I'm looking for.

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.

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.

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.

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?

What do you mean by wholesaler? You can certainly negotiate special rates directly with the hotels if you have the leverage. Wouldn’t be surprised if OTAs do the same. Same for Amex and the likes

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/

wow, thank you so much. Great site. If anyone has any other tips/hacks etc, would love to hear about it.

I am not associated with the site below, but I find it useful to book itineraries that show up in Matrix (but you cannot book from them).

https://bookwithmatrix.com/

Also the original WSJ article is written by its Editorial Board (as opposed to their reporting arm). Editorial board can and does operate with its the owner's mandate, in most newspapers.

> 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).

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.)

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?)

'Presumably this is because most AirBnB hosts are non professional and don’t manage their availability calendar correctly (I suppose..)'

Most likely this, in my experience. I sometimes see some listings are crazy low prices (compared to similar properties) and would rather check they haven't made a mistake rather than go through the hassle of booking and being rejected.

As an aside to above, crazy low price doesn't always indicate poor quality on AirBnB - more often it's a switched on owner rather than a fool who thinks people are going to pay high-season prices in low-season.

It's not a dumb question, try to travel with airbnb and you will find that a lot of hosts do not update their calendar, when they get a booking via other avenue. It's especially frustrating, when the host enabled the instant booking.

As OTAs charge about 15-20% you should be able to get a better rate from the hotel directly. This could be via their website (recent development) or by just calling them (annoying). Further, the lowest rate at an OTA might be non-refundable while the hotel rate could be flexible.

Source for suggesting to call: Often mentioned by front desk staff at https://www.reddit.com/r/TalesFromTheFrontDesk/

Wholesalers are not supposed sell below the hotel’s rates. If they do, they’re likely violating their contract with the hotel.

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

in Chrome you paste window.location='https://facebook.com/l.php?u='+window.location in the Console.

Also you can follow the link https://facebook.com/l.php?u=https://www.wsj.com/articles/go...

great tip, thanks

Do you not need encodeURIComponent?

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

Try this bookmarklet instead...

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

It successfully bypassed the paywall for me.

paywall.

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

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