Google-ITA merger plan ignites online travel firestorm

ITA Software is hardly a household name for most consumers, yet this little-known company with fewer than 500 employees already plays an essential role in pricing and shopping for more than $25 billion in air travel annually. And ITA may soon be poised to capture an even larger portion of the air travel shopping and bookings business, if the U.S. Department of Justice (DOJ) approves a pending $700 million takeover bid by Google.

Founded in 1996 by a group of computer scientists from MIT, ITA currently powers air travel pricing for approximately 30 airlines and online travel shopping websites including American Airlines, United Airlines, Kayak, Orbitz, TripAdvisor and Microsoft's Bing search engine.

It was no easy task to convince the world's largest airlines and travel agencies that a fledgling computer company from outside the airline industry could actually develop an algorithm that was faster, superior in many ways and less expensive to operate than the big, clunky pricing systems the airlines invented and used for decades.

In 2001, Orbitz became the first travel booking site to use ITA software and America West (now US Airways) was the first airline to adopt the pricing/shopping software the following year. While Orbitz launched a brand new travel booking product including ITA software, most ITA airline customers had to find a way to weave this cutting edge software into their mainstay "legacy" mainframe computer systems.

Most air travelers lack familiarity with the ITA name because the software operates behind the scenes, but if you've ever searched for flights and fares on Orbitz, you've viewed ITA's innovative "matrix" display of airlines, flights and prices. This popular matrix display has been subsequently adopted or copied by many other travel commerce sites.

With the growing uptake of ITA's software by so many major travel industry players, it's no wonder they've attracted Google's attention. More than two out of three Internet searches begin with Google. A similar ratio of consumers commence their travel planning and purchase process using a search engine, and more than one in three travel-specific searches begin on Google.

Google and other Internet search engines already collect a substantial revenue stream from airlines and other travel suppliers for online advertising. This is why a number of online travel sites, like Expedia, Hotwire, Kayak, Travelocity and TripAdvisor, which are normally fierce competitors, have formed a coalition, called "Fair Search" (fairsearch.org/), to combat the perceived threat posed by a Google-ITA combination.

Although most Fair Search sponsors depend on the traffic Google brings to their sites, they also view Google as a potential competitor. The companies behind Fair Search fear that Google could redirect air travelers to its own travel pricing and booking engine if Google is allowed to acquire ITA, although Google claims it has no ambitions to compete for airline bookings with ITA software customers.

Not all Fair Search sponsors are ITA customers, but those who use the ITA software are also concerned that owning the ITA software will give Google an unfair advantage. These companies fear that Google could impose less favorable contractual conditions upon other ITA software users, or choose to retain the best ITA software upgrades and enhancements for its own travel business.

Perhaps the greatest concern for Fair Search ITA customers and non-customers alike is the leverage Google will gain in negotiating future contracts due to the sheer number of air travel inquiries and bookings passing through the combined Google-ITA pipeline.

To further complicate matters, one major ITA software user and Fair Search supporter is Microsoft's Bing search engine. Still a relative newcomer to the search engine business, Bing is currently Google's second biggest competitor behind Yahoo. Bing is not an online travel agency today, but it offers products to facilitate travel planning and shopping. Bing also maintains historical air fares and forecasts air fares for future travel, helping travelers determine the optimal time to purchase that airline ticket.

Even without launching a travel booking engine, Google could compete directly with Bing for shopping and travel planning traffic, while at the same time, the future of the Microsoft Bing travel business would depend exclusively on the use of Google's acquired fare search engine.

Add to this mix the likelihood that Google is not the only company with an interest in acquiring ITA and you can easily see why the acquisition of this otherwise obscure company has created such a tempest in the travel industry.

While this scrum for control of ITA plays out, it remains to be seen if the Google-ITA pairing will be good or bad for air travelers. On the one hand, integrating ITA's data with Google's existing search capabilities could yield innovative results. An influx of financial and technical resources from Google could expedite new product enhancements and upgrades to improve the air travel shopping experience. On the other hand, funneling such a large portion of travel inquiries through a single channel could ultimately reduce competition and increase booking costs that would most likely be borne by air travelers.

At this time we don't know how the DOJ will respond to the takeover bid. It is possible the acquisition will only pass muster if certain restrictions are imposed, such as a guarantee that Google will not become a travel reseller, and/or that all ITA airline shopping and pricing software will be made available to all customers on equal terms. Whatever the outcome, it is unlikely that a company with such a valuable product will remain an independent entity for long, and whoever acquires it will figure prominently in your travel activity.

Read previous columns

Send David your feedback: David Grossman is a veteran business traveler and former airline industry executive. He writes a column every other week on topics of interest and concern to business travelers. E-mail him at travel@usatoday.com.

Powered By WizardRSS.com | Full Text RSS Feed | Amazon Plugin | Hud Settlement Statement

Some hotels don't live up to online hype, disappointed guests say

Frequent traveler Andrew Wolfe says he booked a room in the Comfort Inn By the Bay in San Francisco in February because the hotel's website photos made it "look like a modern, clean, beautiful city hotel."

• 

  By Alejandro Gonzalez, USA TODAY

By Alejandro Gonzalez, USA TODAY

Wolfe, a sales manager for a California vineyard, says the hotel's inexpensive rates and downtown location brought him back two more times in March. But each visit was a disappointment.

"This place is a run-down, filthy flophouse with one of two elevators broken, a dirty stairwell that leads down to the parking garage and noisy ice machines on each floor," says Wolfe of Newport Beach, Calif., who stayed in hotels 110 nights last year. "There are small, dirty old rooms, and rust stains in the sinks and showers. Needless to say, I will not be staying there again."

The hotel's general manager did not return USA TODAY's phone calls. But Rocco Loverro, a spokesman for Choice International, which owns the Comfort Inn brand, says Choice apologizes "for any inconvenience" and will address the matter with the hotel. The company's goal, he says, "is to provide consistent, high-quality photography that highlights the hotel's features."

With the rapid growth of the Internet, many travelers rely on hotel photos and marketing descriptions — as well as consumer reviews on TripAdvisor and other travel websites — to select a hotel. Too frequently, they say, photos and marketing information do not accurately portray the hotels and lead to disappointing stays.

The hotel industry and the Federal Trade Commission say that hotels must be truthful in their marketing and cannot mislead people. Large hotel chains do a "pretty good job" policing their franchises, says Joe McInerney, president of the American Hotel & Lodging Association.

But one hotel-booking website, Oyster.com, posts what it says are misleading photos that hotels show online customers. And some frequent travelers say they've come across lodging that hasn't lived up to its online billing.

Frequent business traveler Tony Goddard of Tully, N.Y., says the marketing claims and photos of new hotels may often be accurate. But "more often than not," he says, they're inaccurate at older hotels.

"Sometimes I have found myself going back and looking at the advertising media while I am at the hotel to try and figure out how the heck they took a photo or photos to make a particular feature look so grand when it really wasn't in real life," says Goddard, executive vice president and COO of a company that sells fastening systems to aerospace companies.

In February, Goddard stayed at the Traders Hotel in Beijing.

The hotel's website photos "made the place look great and just as impressive as its higher-level Shangri-La brand, so I thought, 'What the heck, go for it,'" Goddard says. "When I got there and spent a few nights, it was obvious the photos had been taken many years before when the hotel was much newer and nicer."

Shangri-La Hotels and Resorts "strives to present accurate marketing materials" on its website and in brochures, says Judy Reeves, a spokeswoman for Shangri-La International Hotel Management.

"We are sorry to hear that this traveler's experience did not reflect our desired goal of representing our brands in an accurate manner," she says. "We will review the hotel's written and visual materials to ensure there is clear communication of our brand and brand promise in the future."

Photos vs. reality 

Complaints from disappointed guests are similar: Online photos and marketing claims can make hotels appear and sound better than they are. And hotels, when asked about specific complaints, say that they're sorry and that they strive to portray their properties accurately.

But business traveler Brian Sannicandro of Philadelphia says "it's hit or miss" whether marketing descriptions and photos on hotel websites accurately portray hotels. "I've seen instances where the photos that are used are taken with special lenses or at angles that make the space look larger than it really is," says Sannicandro, who works for an interactive marketing company and spent about 30 nights in hotels last year.

Scott Riggs of Lee's Summit, Mo., who spent 96 nights in hotels last year, says most chain hotels "show better in photos than in person," He says "the most disappointing chain" is Crowne Plaza, because its hotels "are usually not as nice or up to date as the photos imply."

Riggs says the chain's hotels are "clearly using some stock photos" showing modern rooms and flat-screen TVs. The photos haven't depicted rooms he has stayed in that are old and lack flat-screen TVs, he says.

Caroline Counihan, a spokeswoman for InterContinental Hotels Group, which owns the Crowne Plaza and Holiday Inn brands, says the two brands "are committed to delivering detailed and accurate information" about all of their properties.

"In order to showcase our hotels, our websites include photography to help consumers make an informed hotel choice when booking," Counihan says. "We welcome guest feedback in order to improve on the information provided via our websites."

Frequent business traveler Bill Johnson of Bloomingdale, Ill., says the Best Western in LaPlace, La., looked "OK" when he checked the hotel website's photos and information, but it was quite different when he arrived in January. He says the hotel is older than it appears in photos, but its age wasn't the problem.

The frame for his room door "had been reinforced," and it "looked like it had been broken into and badly repaired," Johnson says. Other problems he says he encountered: a noisy air conditioner, an old bathroom with a tub that "was badly caulked," a TV remote without batteries and no milk for breakfast cereal.

"Needless to say, I will never stay at that Best Western again," says Johnson, a manager in the food and beverage engineering industry who stayed in hotels 120 days last year.

General manager Vikas Patel says photos on the hotel's website accurately show the current condition of the hotel and its rooms. Improvements were made to the pool area, which is nicer than in photos, he says. Door frames must be replaced, but the project was postponed because it would be too noisy for guests who sleep during the day, Patel says.

Oyster.com lists 36 hotels with misleading photos in a section of its website called Photo Fakeouts.

A website photo of a room at The Ritz-Carlton Coconut Grove in Miami, for example, includes plants and a "beautiful floral blanket" in a deluxe room, Oyster.com says. There were no plants and no floral blanket when Oyster.com visited the hotel, the website says.

Hotel spokeswoman Michelle Payer says Oyster.com visited the hotel when it was being renovated. "The general look of the room is what travelers can expect" from the hotel photos, Payer says. She says the hotel may "take creative license" and "move plants to add beauty to shots."

Oyster.com editor Jennifer Garfinkel says Oyster.com's aim is to help consumers find the perfect hotel, and its Photo Fakeouts are "the crux of what we're all about — the truth behind what you book." Oyster.com is also an online travel agent that books hotel rooms for consumers.

"We're not a website that's out to get hotels, but if we find marketing pictures that are dishonest, we believe in honesty and transparency," Garfinkel says. "Photo Fakeouts are deceptive to consumers spending their hard-earned money on their vacation."

Hotels cited in Photo Fakeouts do not mean guests staying at them will have a bad experience, Garfinkel says. Many of the hotels cited in Photo Fakeouts are highly rated upscale hotels.

"It's not just low-end, budget hotels using Photo Fakeouts," Garfinkel says. "A luxury hotel can provide a nice hotel experience and partake in deceptive marketing. Marketing deception is a tale as old as time."

FTC: Hotels must be honest 

The trade group that represents hotels says that the Internet is an easy search tool, so it's important that hotel websites be honest with people.

"If a customer is willing to make a reservation after reading what was on a hotel website, the information needs to be factual," says McInerney of the American Hotel & Lodging Association.

Hotels must be truthful and not misleading in their marketing materials and photos, says Mary Engle, the Federal Trade Commission's associate director for advertising practices.

"If it's not a beachfront or beachside hotel, it shouldn't say it is," Engle says.

Rick Kupcunas of Double Oak, Texas, says he thought he would be staying on the beach when he booked the L'Auberge in Del Mar, Calif. The hotel, named one of the country's best by Condé Nast Traveler magazine, is on a hill overlooking the Pacific.

To get to the beach from the hotel, Kupcunas says, he walked through a parking lot, went down a long path, crossed train tracks and a road and then was at a cliff above the beach. He estimates it took five to 10 minutes to walk to the beach.

"The hotel's website looked very impressive, and it looked like the beach was close," says Kupcunas, a computer systems engineer who spent more than 125 nights in hotels last year.

Francine Rivera, L'Auberge's director of sales and marketing, says the website tries to portray "a very accurate description" of the hotel, "so guests don't have false expectations." Photos and room descriptions are accurate, she says.

After hearing Kupcunas' concerns, a hotel employee walked to the beach, and it took 343 steps and four minutes and 17 seconds to get there, Rivera says.

USA TODAY pointed out that the hotel's website and summary on Google's search page say the hotel is "beachfront" and "beachside." Rivera says the hotel will change the wording.

About that construction 

Many travelers complain they weren't warned on websites that hotels were under construction, so on arrival, they received an unwelcome surprise.

Frequent business traveler DaWane Wanek of Sugar Land, Texas, remembers taking his wife on a "partial business trip" to the Hyatt Key West Resort in Key West, Fla., in June 2006. When he booked the hotel, the website didn't say it was under construction and the pool was closed, he says.

Wanek says he was upgraded after arrival to a room with a pool view and awakened the next morning to the sound of jackhammers. He says his wife pulled back the drapes to see what was happening, and construction workers atop a nearby gazebo waved to her. "Thank God our marriage was strong," he says.

The Hyatt Key West Resort says its current general manager wasn't there in June 2006 and the hotel always informs travelers on its website about construction work.

McInerney says hotels should post information about construction and renovation on their websites.

"You don't want to disappoint the customer," he says. "You want them to walk out of the building and say they had a great experience."

Contributing: Julie Schmit in San Francisco

Powered By WizardRSS.com | Full Text RSS Feed | Amazon Plugin | Hud Settlement Statement