Two guys who regularly commute to their companies' respective Norwalk, Conn., headquarters, Jeffery Boyd of Priceline and Steve Hafner of Kayak, aren't shy about expressing their concerns about what Google is cooking up in travel.
In discussing business risk factors in its just released annual report, Priceline points to Google City Tours, Bing Travel and Travelocity's opaque offering, Top Secret Hotels, as worrisome developments that took place in 2009.
Hafner, too, as well as other honchos in the travel-tech industry, are keen Google-watchers. Several months ago, Hafner argued that it is only a matter of time before Google starts posting hotel pricing -- and then anything might happen.
In the annual report, Priceline had this to say about Google City Tours and Microsoft's integration of Bing Travel:
"These initiatives, among others, illustrate Google’s and Bing’s clear intention to more directly appeal to travel consumers by showing consumers more detailed travel results, including specific information for travelers’ own itineraries, which could lead to suppliers or others gaining a larger share of Google’s or Bing’s traffic or may ultimately lead to search engines maintaining transactions within their own websites."
So, there's a double threat, as Priceline sees it. With Priceline reliant on traffic from Google and, to a lesser extent, Bing, the travel-tweaked search engines could become more of a supplier channel than they currently are, or Google and Bing might decide to get into the travel-transaction business themselves.
Priceline continues: "If Google, as the single largest search engine in the world, or Bing or other leading search engines refer significant traffic to these or other travel services that they develop in the future, it could result in, among other things, more competition from supplier websites and higher customer acquisition costs for third-party sites such as ours and could have a material adverse effect on our business, results of operations and financial condition."
It's a bit more surpising that Priceline points to Travelocity's opaque hotel offering -- although Priceline didn't mention Top Secret Hotels by name -- as a risk factor on the horizon.
Priceline notes that Travelocity's opaque-hotel offering has limited inventory, but Travelocity should be able to leverage its lastminute.com unit's ample European experience in building an opaque hotel business, and should be able to ramp up the number of rooms in its portfolio.
"If Travelocity is successful in growing its opaque hotel service, our share of the discount hotel market in the U.S. could decrease," Priceline states. "In addition, we would have to compete with Travelocity for access to hotel room supply and there is no guarantee that we would be able to maintain successfully the access to opaque hotel supply which we currently have."
When public companies cite risk factors that may impact their business, they often are informally viewed as worst-case scenarios.
It is noteworthy, however, that Priceline mentions the threats from Google City Tours and Microsoft's integration of Bing Travel into the Bing search engine both in the annual report's risk factors and management's discussion and analysis of financial condition sections.
The two search engines -- and their perceived intent -- clearly have Priceline's attention.
On a side note, Priceline also cites Yahoo's FareChase, and even Mobissimo, as potential risks.
But, Priceline probably need not have mentioned FareChase in Priceline's 2009 annual report, published Feb. 19 -- Yahoo shut down metasearch engine FareChase about a year ago.
In other news, Boyd, speaking at the Reuters Travel and Leisure Summit in New York today, says he expects consolidation among regional or niche online travel companies.
Boyd wouldn't rule out Priceline getting into the acquisition game, but says he believes mergers among smaller companies are more likely.