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Disintermediation

Javier Delgado Muerza
Former Head of Google Travel Vertical Search

Learning outcomes

  • How Google is brining supply and demand to HotelAds
  • The opportunity and challenges of independent hotels to outbid larger OTA’s
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Executive Bio

Javier Delgado Muerza

Former Head of Google Travel Vertical Search

Javier is a leading travel executive with experience across the whole travel value chain. He started his career at Iberia, the flag carrier of Spain, before moving to Expedia in 2003 where he spent 8 years leading the Southern European Affiliate Network. Javier then joined Google as Head of Travel in Spain before moving to Lead Travel within the Vertical Search team where he was in the team building Google Flights and HotelAds. Javier is now the Chief Commercial Officer at Iberostar, a Spanish chain with over 1,200 hotels globally, where he is responsible for marketing and distribution. Read more

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Interview Transcript

What is your view of the opinion that Google is looking to disintermediate the OTAs with this product? How would you respond to that?

I don’t think Google has a disintermediation agenda. With that said, it is true that Google allows for those suppliers, that wish to go direct, to do so if they wish. Again, Google wants to bring supply and demand as close as possible, but it doesn’t mean that demand has to come through an intermediary. If the user wants to go direct, so be it and Google is not going to prevent that from happening. There is a great analogy with wine. For the last 20 years, I’ve been working in travel and I was part of an intermediator and then part of Google and I’m now part of a supplier, which has given me a good perspective of how things are evolving. I happen to love wine and, the other day, I looked on a website of a winery, here in Spain, which I normally drink. I have always bought it through the retail channel, like the different OTAs for wine that exist, like in every other country. Then I realized that this winery was selling direct, on the website, at a cheaper rate than the electronic distribution. This is starting to happen now, in other areas. They dynamics of consumption are very different, but it’s starting to happen.

The point is, if Google wants to bring supply and demand as close as possible, if the supply wants to go direct and talk to William Barnes or Javier Delgado, individually and specifically, because these two individuals want to buy directly, from this supplier, be it wine, be it hotels, be it flights, Google is not going to prevent that. If the intermediaries, in between, for travel or for wine, are adding value from a price perspective, from a shopping perspective, from a logistics perspective, from an insurance perspective, then so be it. Actually, what clearly draws the line, is the transaction. Look at how Google Hotel Ads has evolved. Google needs someone to fulfil that transaction, in all cases. If it’s an intermediary, so be it. In many cases, the intermediaries are far ahead of the suppliers, because they have better digital assets, better know-how, better customer service, more payment methods; you name it. If you do a search for ‘hotel New York’ you end up on the map, in Google Maps and you see the Hilton Times Square and all the different properties. When you click, and you get your results, sometimes up to 10 results, you’re going to see Hilton, Booking, Expedia. For those cases, Hilton has decided they want to participate and they want to fight for that click and fight for that demand, versus the intermediaries. Google is saying, I’m bringing everyone to this auction; I’m bringing everyone to this meeting between supply and demand and let the user decide, based on their preference or based on the different proposals that Hilton may have, versus Booking or Expedia. Again, from price, usability, or whatever perspective it is.

Google does not want to disintermediate. Google is putting a level playing field, for everyone to participate. Actually, if you think about it, in the past, it was impossible for an independent hotel or even a bigger hotel chain, to reach that particular client, so that particular demand. I understand that, sometimes, Booking or Expedia might be concerned about Google’s movements and there’s a whole wave of people, such as the FairSearch movement, that took place a few years back, saying that it was unfair. I think that Google has brought a lot of fairness, because in many industries, think about insurance or banking, they have been heavily intermediated. The internet – not Google – as a global infrastructure, has brought a lot of democracy or revisited the rules of the game and has allowed supply to meet demand, in way it wasn’t possible in the past.

So I don’t think there is a disintermediation agenda, but it is true that those players, who wish to disintermediate, by choice, they might have a level playing field, or more tools available than they had in the past, because Google is democratizing a lot of the technology. Once again, this is my own, humble opinion. I’m not talking as a former Google executive or as a wholesale executive now.

What I think is interesting is, Google is bringing the battle to, let’s say, Hotel Ads. It’s democratizing access to demand, effectively, for the supply but it’s bringing the battle to one place, on Hotel Ads. The question then becomes, can the smaller, independent hotel outbid the OTA? What is the dynamics there, that even enables the smaller hotels – forget the Hiltons or the Marriotts – to actually compete on that product?

The answer is yes. The mom and pop hotel, the William Barnes hostel, can participate in Google Hotel Ads, if they want to. I don’t want to get too technical, but you can participate via an integration partner. Pull up a browser and put in integration partners and you get a list of about 80 different companies, which are not Google companies. These are independent, separate entities, that do a one-to-many integration. They put one pipe with Google and they send the hotel ad and then they resell that to the independents. It’s like an agency.

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