Comments on: Google’s Acquires ITA: Will Deeper Vertical Integration Lead to Higher Revenues?

By: Google’s Acquires ITA: Will Deeper Vertical Integration Lead to Higher Revenues? | My Blog

Wed, 26 Oct 2011 13:49:01 +0000

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By: Murat Ozsu

Murat Ozsu — Sun, 05 Jun 2011 02:45:56 +0000

I’m a little late to the discussion, so I apologize.

Over 1 billion hotel rooms will be sold this year in the US alone, and globally 6x that. The average OTA 20% of the revenue of a hotel booking and OTAs in total account for about 30% of all bookings. That leaves about $7b of value to be unlocked for hotel suppliers in the US market alone by finding a way to pass the OTAs.

I suggest that Google & Bing can find a way to make more money in this and other verticals, by cutting out the middle men. Of course, this will just end up in creating all new middle men and the circle of life will continue, just faster.

By: Satish Mummareddy

Satish Mummareddy — Fri, 08 Apr 2011 18:21:53 +0000

My post on why google needs to build a vertical search experience and acquire ITA. http://www.thoughtsonconsumerweb.com/why-google-needs-to-build-a-vertical-experience-in-travel-and-also-acquire-ita/

By: Thoughts On Consumer Web » Why Google needs to build a vertical experience in Travel and also acquire ITA

Fri, 08 Apr 2011 18:19:38 +0000

[...] Gurley’s post “Google Acquires ITA: Will Deeper Vertical Integration Lead to Higher Revenues?” got me thinking about Google’s [...]

By: Steve Lewis

Steve Lewis — Sun, 26 Dec 2010 18:45:34 +0000

Bill
At what point does Google threaten it’s own top line when it’s actions become clearly detrimental to the very interests of those businesses who are paying Google to drive revenue their way? In this case why would Bing Travel et al continue to use ITA when they know full well that Google will utilize their new vantage point to competitively advantage themselves at the expense of their customer. Great piece by the way.
Steve

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赞助邮编：垂直搜索，消费者剩余与逆向选择 « My China – 我的中国 — Tue, 12 Oct 2010 18:05:18 +0000

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By: Glenn Kelman

Glenn Kelman — Wed, 08 Sep 2010 04:13:22 +0000

Great essay. If Google’s revenues are irrationally high, how long can that last and don’t you think the company needs to cannibalize itself anyway?

By: Iggy

Iggy — Thu, 22 Jul 2010 16:16:54 +0000

Boy… this analysis brings back memories

By: aaron wall

aaron wall — Mon, 12 Jul 2010 04:23:16 +0000

Great post!

One thing that offsets the above stated losses is the disappearance of organic search results. So if paid search results were capturing 50% of the search generated traffic, but now the organic results quite literally disappear as they are replaced by a vertical experience … then Google only needs to generate half as much revenue per click to have the same overall revenue *while* increasing their dominance/control over the channel & collecting more data.

Further, Google can still sprinkle the CPA experience with CPC or CPM brand targeted ads around the perimeter of the page…thus effectively still having AdWords ads on the page & just replacing the free/organic search results with the new CPA results.

It is a way for Google to avoid the paid inclusion debate while requiring paid inclusion.

By: Vik M

Vik M — Mon, 12 Jul 2010 01:38:39 +0000

Great Analysis — Isn’t Google simply going after the OTA space in a slightly more technology oriented Google manner? In 5 years, 99% of retail reservations will be done online and the suppliers could hope that 90% is done on their web sites. Google’s role is simple – provide the consumer all the information they need to make an intelligent decision before they end up at the supplier site. Paying $700m to enter the OTA space is inexpensive. Its unclear to me why the OTAs have such fat % of gross revenue margins (hotel) and also high operating margins considering they don’t really take inventory risk… Google’s entry should change that landscape.

I’m sure bankers are already working on OTA consolidation and proforma models in their pitch books