Google's partnerships with hotel chains worry travel sector

(REUTERS) - Recent partnerships by Google Inc with hotel chains have raised concern among others in the travel industry that the search giant is trying to grab more advertising dollars.

"To the extent that the travel industry is spending advertising dollars with Priceline or Expedia or TripAdvisor, Google is well aware of that and they'd like to steal some of that," said Douglas Quinby, vice president of research at PhoCusWright, a travel industry research firm.

Google already owns ITA software, a flight information provider, and has a hotel price ad program that routes consumers to hotel websites for booking.

In recent months, hotels have agreed to test Google products, and last month, Google reached a licencing agreement with a startup called Room 77 that lets guests compare hotel prices and book rooms.

While many analysts don't think Google is a big threat to online travel agencies in the immediate future, such agreements have sparked buzz about what it could eventually do in the travel sector.

Industry researchers don't believe Google is looking to get into the business of processing purchases done by online travel agencies, which are some of its biggest advertisers.

They add the transaction business would require certain capabilities that would bring new overhead and fixed costs. But Google would like to court more travel advertising revenue, they said.

Carlson Rezidor Hotel Group, which includes the Radisson and Country Inns & Suites chains, announced a pilot program late last year allowing guests to search, shop and pay for hotel stays using Google Hotel Finder, Google Business Photos and Google Wallet payment applications.

The Best Western chain also signed up to have interactive photos appear in Google search results.

On its earnings conference call last month, Google said its travel efforts were meant to provide "more and more detailed information when people do searches" for hotel bookings or tickets.

PhoCusWright's Quinby said after its recent moves, Google is directly competing with hotel search companies like TripAdvisor inc, Priceline Group Inc and Expedia Inc's trivago.

Of the US$4.7 billion (S$5.87 billion) spent on US travel advertising last year, 52 per cent went to websites and other digital channels, according to PhoCusWright data. Of that, hotels spent the most, followed by online travel agencies and airlines.

While Google's moves could put some ad revenue from online travel agencies at risk, Quinby said the online agencies won't cut ties with the company. "Google is just a huge source of traffic," he said. "It's not like some of these big (online travel companies) are suddenly going to stop advertising on Google."