Over the past few months, Google has started to work with a handful of software providers in order to provide a more seamless search and reservation experience for customers wishing to book a vacation rental for their next trip.
The search giant has been relatively slow to move into the burgeoning alternative accommodation opportunity, in part due to the fragmentation of the industry (for example, the four largest property managers in the United States control only 1% of the property inventory), and also because vacation rentals just don’t typically fall into the easy categories of a hotel room.
The vacation rental market has been eagerly waiting for Google’s foray into the industry, which has traditionally been dominated by the Big 5: Booking.com, Expedia, Airbnb, HomeAway and TripAdvisor.
Now Google has successfully integrated vacation rentals into the Hotel Search function, with rental inventory coming up alongside hotels in Google Maps and Search results.
Presently, property managers (of which there are an estimated 115,000 worldwide) can’t access guests directly via Google Search and Google Maps but only through working with one of the preferred Google software partners, including Rentals United.
But what’s next for Google and short-term rentals? What future developments could potentially impact direct bookings, guest experience, customer ownership and the current ecosystem?
Search giant for a reason
There have been discussions recently regarding the concern that Google is a near-monopoly for travel searches, with Google execs being asked to explain their position recently by a U.S. House Judiciary Committee.
According to an Expedia study, cited by MDG Advertising, 69% of travelers turn to a search engine when starting to think about a trip. This ranks above all other sources, including family, friends, online travel agencies and travel brand websites. Difficult not to think that Google is going to be a big winner here.
Ownership of a reservation is a really big deal, and with Google, who owns the customer becomes an interesting question.
James Burrows
Currently, the way it works is that when a rental comes up in the search option and the guest clicks the preferred link, the customer then moves out of Google for the booking to be processed either by the OTA or directly by the property manager - depending on what ad was clicked.
But what will happen to the sales process if the guest could book directly on Google? This, I believe is something that is definitely on its way, although the property manager (or OTA) will still be the merchant of record.
Google is constantly improving its offering, so it wouldn’t be a stretch to imagine that Google could open up the Book on Google addition of Hotel Ads for rentals.
Why leave Google when customers can do their entire journey of inspiration, search, comparison and buying seamlessly within the search engine?
This option would certainly improve the customer experience (all of the information that they are looking for is in one place), and, according to Google, this option also increases booking conversion rates.
With the Book on Google model, Google in effect becomes more of the intermediary to facilitate bookings, rather than just a gatepost to provide information. It certainly isn’t an OTA either as it doesn’t become the merchant of record.
But, friction through the booking process would be avoided, as would possible customer leaks towards a different property or booking platform.
Importantly, however, is that payment is still made via the property manager or OTA, and therefore the property manager or OTA also remains the merchant of record. Vacation renters also have a lot of trust in a well-established and reputable OTA, so seeing their brand on Google is reassuring, and running a purchase with them is a natural decision.
Once the booking has been made on Google, all of the customer details would be passed to the supplier and effectively Google would then forget about it. Sale processed and job done!
Customers, assured of a seamless booking experience, thanks also to Google’s advanced personal knowledge of them, would remain loyal to Google and are likely to return again and again to the search engine for the entire fulfillment of their travel needs.
How will other players fare?
Given that the large OTAs like Expedia and Booking.com spend billions of dollars on Google advertising a year, it is most unlikely that Google will try to frighten them off by launching a fully blown Book on Google model (in fact, today you can spend hours trying to find a hotel that can be booked on Google).
Being focused on search, Google eating away at the metasearch business comes as no surprise, but to suddenly build a resource-intensive customer service model-type OTA seems farfetched.
Expedia, Booking.com and Ctrip are growing in double-digit figures, but they still only represent a fraction of the estimated $1.5 trillion travel industry. We believe Google will continue helping them penetrate the industry with a top search layer that will also strongly benefit the consumer.
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But where does this leave the property managers who are looking to build their brands, capture potential leads and have the ability to upsell? We should be cautious on relying on Google to facilitate the entire customer journey.
It might make sense in some ways (especially if you don’t intend to build a brand or invest in a website), but it could limit the property manager’s opportunity to develop its own online presence, brand awareness and the ability to attract traffic (and capture leads) to its own website.
As with all businesses, spreading risk and maximizing visibility should be part of your approach. If property managers have fully optimized websites that cover and nurture the whole customer experience, then they could minimize the incentive to elect the Book on Google feature.
As we look further at how the hotel search function works, there is now an option to select a brand. If vacation rentals follow the trajectory of hotels and this happens, then it will be imperative for property managers to strengthen their brand visibility, as well as maximize their revenue strategy by understanding and optimizing the ad bidding process.
As we all know, ownership of a reservation is a really big deal, and with Google, who owns the customer becomes an interesting question. The answer, I believe, is that both Google and the supplier (whether that be an OTA or the property manager, depending on where the booking is processed) owns the guest.
Google has all of the preference and booking information, and the supplier is then handed over all the reservation details including email and other contact details - allowing for the development of a customer loyalty process and superior guest experience.
Win-win for Google, property manager and guest (whose search experience is enhanced).
What we know is that travelers trust big brands like Booking.com, Expedia and Airbnb, which have proven their position in the travel domain. They offer tremendous choice and ease of usability which may deter consumers from shifting their purchasing habits.
The question remains open whether Google will be successful with this new experiment.