Google Travel Gains Levy Pain at TripAdvisor and Expedia
In an unintended duet, the CEOs of TripAdvisor and Expedia Group separately talked this week about how Google’s increasing practice of directing search traffic towards its own travel businesses has adversely impacted their companies in the third quarter.
For its part, Expedia Group intends to push direct booking — it mentioned fledgling Instagram and Facebook influencer campaigns, as well as spending more on brand advertising — and bolster its loyalty programs. TripAdvisor plans cost-containment, to build hotel and media products that aren’t based on click-based revenue, and to ramp up personalization efforts.
In prepared remarks Wednesday night, TripAdvisor addressed the fact that the revenue in the largest part of its business, officially known as Hotels, Media & Platform, declined 12 percent year over year in the third quarter to $238 million.
“We believe our most significant challenge remains Google pushing its own hotel products in search results and siphoning off quality traffic that would otherwise find TripAdvisor via free links and generate high-margin revenue in our hotel click-based auction,” TripAdvisor stated.
In an earnings call with analysts on Thursday, TripAdvisor CEO Steve Kaufer expanded on the theme. Kaufer said TripAdvisor saw “incremental SEO (Search Engine Optimization, i.e. Google) headwinds over the course of the quarter.”
“And I think you’re seeing this across the industry as Google has gotten more aggressive,” he said, adding “we know that this SEO piece is an ongoing trend, and we’re not predicting that this is going to turn around.”
Despite upbeat news about a new TripAdvisor joint venture with Trip.com Group in China, TripAdvisor stated, “We are dissatisfied with our Q3 results, which are particularly frustrating because we entered 2019 with such great momentum built on strong profit growth, improving auction trends, and a return to sustained Hotel revenue growth seemingly well within our sights.”
Instead, revenue fell 7 percent to $428 million, and net income dropped 28 percent to $50 million when measured against the third quarter of 2018.
Although what TripAdvisor described as “softer than expected revenue trends” can’t all be attributed to Google, its adverse impact has been material to TripAdvisor’s financial results.
EXPEDIA SAYS GOOGLE IS MORE ACTIVE THAN EVER
Across the country from Massachusetts, where TripAdvisor is based, Expedia Group CEO Mark Okerstrom in Bellevue, Washington, said Google is taking “more revenue per visitor, and I think it’s just the reality of where the world is in the Internet, and the importance of Google at the top of the funnel.”
Both Okerstrom and Kaufer complained that their organic, or free, links are ending up further down the page in Google search results as Google prioritizes its own travel businesses.