Report: Google Working with Hotels to Stifle Competition, Raise Prices for Consumers

Vacancy sign
Flickr/ Jeremy Brooks

Google is working with select hotels to stifle competition, which is making travel more expensive for consumers, according to a report.

In their report, the Wall Street Journal explained how consumers are being stopped by Google from seeing “the lowest price deals.”

“More than 100 million Americans are expected to travel during the holidays, and many will search for lodging online. But travelers may unknowingly pay more and fail to see all of their options because some major hotels have ganged up with Google to undercut competition,” reported the Wall Street Journal on Wednesday, adding that online travel agencies (OTAs) “like Expedia, Priceline and Travelocity have replaced brick-and-mortar agents by offering consumers more choice and convenience at a lower price.”

“As hotels get squeezed by Airbnb and home rental sites, they have begun complaining that OTAs are eating into their profits. Several major hotels are now trying to use Google as a counterweight, while Google is exploiting its search dominance to steer consumers to its travel service,” they declared. “The problem is that Google is working with hotels to stifle competition. Hotels want to drive travelers to their websites to avoid paying commissions to OTAs. They also know that travelers searching for ‘Houston Hilton’ are more likely to book a room at a Hilton than those who query ‘Hotels in Houston.’ Several hotels have inserted terms in their global agreements with large OTAs that prohibit the agencies from bidding on key word ads that include their brands or trademarks.”

“But these agreements aren’t binding on small OTAs, and earlier this year two major hotels complained to Google about small OTAs bidding on branded key words in advertising search auctions,” the Wall Street Journal proclaimed. “Several hotels have also threatened to sue for violating trademark protections, though their conduct is protected by well-established copyright law. After receiving complaints from hotels, Google began to pressure small OTAs to submit to hotel demands.”

Despite this, the Journal reported that a Google spokesman refuted claims that the company restricts keyword ad bids, however, they claimed, “we’ve been told by a small OTA that Google applies rules in a way that restricts trademarks in their hotel ad titles and URLs.”

According to the report, “Some 60% of travelers begin trip-planning on Google,” while the company’s “travel business is worth an estimated $100 billion and will generate $14 billion in revenue this year,” which the Journal claimed makes the company a “travelopoly.”

As Google is the go-to website online to find flights and travel packages, they concluded that by “restricting competition in branded keyword ad auctions,” it means consumers “won’t see or receive the lowest price deals.”

You can read the full report at the Wall Street Journal.

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