Elliott Ng

Google’s pending $700 mm acquisition of ITA Software is probably the most important deal of the year in travel distribution.

I have friends at Google and have eaten lunch at their campus.  In order to get a visitor badge, you have to sign a Non-Disclosure Agreement.  TANSTAAFL.  Since I’ve casually chatted about this topic with some of my friends at Google I need to be careful not to share insights derived from those conversations.

But I can share that I’m thinking a lot about this and if you’re involved in online travel or travel distribution, you should be too!

ITA Software’s QPX product provides flight availability and fares to virtually all the American online travel agencies (OTAs) and metasearch sites (e.g. Kayak, Bing).  Google had to be after something that it couldn’t get with just a commercial deal with ITA.  What is it?  Hmmm.

Here’s what I think:

1. Google wants to create a new travel search experience that will consume massive volume of QPX queries
2. Google wants to invest heavily in performance (speed) at scale
3. Google wants direct access to data that ITA doesn’t usually share, maybe historical
4. Google wants to tackle international and hotels faster.

Imagine a world where the marginal cost of flight queries are free, and mining historical flight data can also be free.  I think we can all imagine that some great customer experiences that can come out of this.

Flight metasearch players are at risk.  Kayak and Bing need to build a brand fast, get direct sources of traffic, and continue to innovate faster than Google.  The global GDS (Sabre, Travelport, and Amadeus) will be forced to price more aggressively.  No one will want to single source from Google/ITA, so Expedia will invest in its own Best Fares Search capability, and startups like Everbread and Vayant will get some deals done.  To compete with Google’s own offering, Kayak and Bing will need to consume more queries, and ITA will need to honor “most favored nations” status with existing customers, so price/query is likely to go down, but total cost might go up for flight metasearch players.

Some other insightful people on this topic:

• More on this subject on Tnooz (including some insightful comments from Forrester’s Henry Harteveldt and PhoCusWright’s Lorraine Sileo)
• Analysis from my fellow Tnooz nodes (Stephen Joyce, Timothy O’Neill-Dunne, Tim Hughes, Glenn Gruber, and Alex Bainbridge) and Rick Seaney of FareCompare
• Exceptional analysis by Henry Harteveldt
• A strategic travel technology perspective from Norm Rose.

I’m not a flight expert, but I hear ITA doesn’t have global coverage and there could be opportunities to tackle emerging regions well as ITA is bogged down in merger integration.