Friday, 17 July 2009

Google finally starts a travel guide service, sort of

Travel was one of the first, and is one of the largest, sectors of e-commerce. Almost all of Google’s revenues come from the sale of online advertising.

Not surprisingly, that has meant that sales of ads for online travel services are one of Google’s largest revenue and profit centers, and that Google makes more money from travel services than from almost any other product or service. Not only that, but Google’s business model is such that it makes money — on the closely-held secret spread between what advertisers pay Google to have their ads displayed, and what Google pays to Web sites to display those ads — even when the travel companies placing those ads are losing money.

So if Google is the largest, best capitalized, and most powerful single company in the online travel industry, why should it be content to capture only a small cut of advertising revenue on each transaction, rather than competing directly with providers and distributors of travel products and services? I would ask the opposite question: Having found a niche where they can make a huge profit even in a down market in a cyclical and in general unprofitable industry, why would Google want to start churning its money competing in what has been, long term, the losing business of actually providing travel services? But many travel companies have been living in fear that Google would eventually start competing with them by start its own online travel agency or travel information service.

That finally happened this week, sort of, but the threat posed to the initial competitors — publishers of travel guidebooks and Web sites of destination advice — seems underwhelming.

On Wednesday, Google launched a destination advice feature it is calling Favorite Places :

Explore the favorite places of local experts from cities around the world. Find out where they like to go, and why, from their own perspectives.

Some news reports on the launch party at San Francisco City Hall described it as a “collection of online city guides”.

Google’s so-called “experts” turn out to be celebrities and politicians, however, not people with any apparent credentials as “experts” in what places people will enjoy. Mayor Gavin Newsome, for example, raised some eyebrows by including San Francisco General Hospital among his “favorite places” in our city. It’s just a few blocks from my house, but I’d only recommend S.F. General as a place you’d want to visit if you needed treatment for some sort of trauma.

San Francisco is a world center of travel writing and travel publishing, but none of the Bay Area’s many major travel publishers (including my publlisher, Avalon Travel ) and none of the local community of travel experts I know through the Bay Area Travel Writers and other professional networks, seem to have been invited to contribute to “Favorite Places”, or to the launch party.

For now, “Favorite Places” seems more likely to appeal to celebrity groupies wanting to learn about the tastes of the stars than to people looking for travel advice for their own trips.

Google’s future plans, however, remain as closely held as ever. “Favorite Places” seems significant mainly as a proof-of-concept of Google’s ability to manage an aggregated database of destination recommendations. I don’t think much of the initial sources of that data, but the platform could eventually prove interesting as a vehicle for more genuinely “expert” travel data. It’s not a competitive threat to anyone yet, but travel guide publishers and professional travel experts will probably keep watching for Google over their shoulders — as well they should.

Link | Posted by Edward on Friday, 17 July 2009, 22:31 (10:31 PM)
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