Travolution Summit: Former Expedia president downplays Google’s travel move

Former Expedia president Simon Breakwell downplayed the potential for Google to move further into travel by becoming an agent itself.

Former Expedia president Simon Breakwell downplayed the potential for Google to move further into travel by becoming an agent itself.

But he advised travel firms to minimise their reliance on the dominant search engine saying the rising cost of advertising has changed the economics of travel.

Breakwell, one of the original founding team at Expedia, gave the keynote address at this week’s eighth Travolution Summit on Monday.

He said with Google costs rising at 20% to 25%, it is now very difficult for firms to compete with the “super-scale” OTAs like Expedia and Booking.com.

Booking.com parent Priceline Group alone has an annual marketing budget £3.2 billion, claimed Breakwell. “Competing against that requires different approaches,” he added.

Breakwell, who has worked with Hipmunk, Uber, HomeAway and Thomas Cook, said successful companies will either have a unique proposition or be unique in their geographical market.

He praised Hipmunk for its “fantastic design sensibility in terms of user interface” it’s great team and technology, saying it was a great opportunity to bet on.

But he said the difficulty it has is the economics of the business have changed in terms of growing share and customers without a huge marketing budget.

Breakwell added: “You’ve got to try to work with Google as little as you can. “Once you’ve got involved it’s kind of difficult to pull out because you get committed to that growth, it’s kind of addictive.

“You are seeing a lot of above the line TV campaigns which previously not many companies thought seriously about because they want to drive as much organic traffic as they can.

“The great thing about that is if you do it properly all your metrics rise, across the business things start happening quickly. It’s high risk because it’s expensive but if you do it right it’s a manageable.”

Asked about Google’s dominant position, Breakwell said it was nonsense to suggest it could be broken up, something the European Parliament is due to vote on week.

“They [Google] do have a tremendous amount of power and influence although for a company that’s got 90% dominance over search, I’m not saying they’re angels, but they behave remarkably well.

“Google is getting deeper and deeper into travel but I don’t think that’s going to be as profound as people think.

“All Google wants is to serve up really relevant search results for advertisers because consumers like that and Google likes it because they can charge more to advertisers.

“It’s not like at some point in the future you’re going to pick up the phone and someone’s going to say Google Travel. Google’s great at many things but it’s not a fantastic product company.”

Another of Breakwell’s travel interests is the visual discovery website Trover, which plays heavily in the mobile space.

He said rising to the challenge of mobile was absolutely essential, as the channel becomes the dominant source of traffic for most companies.

“The great irony of mobile is that it’s the easiest platform to build for in the sense of how many developers you need to get your app out there.

“The hardest thing is because it’s such a small screen it’s a tremendous product challenge getting your app right and pushing out anything that’s not absolutely essential.

“The other issue you hear all the time is we can’t get advertising revenues. That’s absolutely the wrong way to think about it.

“You are just farting against thunder, you’ve just got to do it because most of your traffic by the end of next year will be coming from mobile.

“Just think about it as a marketing lead. You are acquiring customers on mobile and they are booking on other devices. Tying device experiences together is becoming more important.”

Tie-ups with other non-travel companies using API connectivity is also something Breakwell expects to see more of, although he expressed surprise this has not already happened.

“One of things we might see in the next few years is these companies operating a significant scale opening up an API so that other companies can plug into it.

“If I’m staying at a Onefinestay property it might be useful for instance to know that there’s a dry cleaners nearby I could use.

“If you’re operating at super-scale you’ve really got an interesting proposition to a whole raft of small service related companies.

“It’s surprising how that hasn’t happened more quickly than it has, particularly with reference to what I was saying about holding on to the customer, being more relevant. Booking.com and Expedia are doing that.”

And finally Breakwell warned against hubris in business citing airbnb’s claim that one day it should be considered for a Nobel Peace Prize for promoting world peace.

“One thing that’s very important when you are growing is not to confuse great execution with greatness. Be humble, constantly worry about not doing a great job.

“If you are a leader please try to lead as you would like to be led. It’s always better to be bigger than smaller. But a lot of it depends on what you want to get from your business.

“If you want your business just to be a great business and it does not go beyond £30 million revenue but you’re happy with your business, you like what you are doing and the people in the organisation like what they are doing, that’s a great place to be.

“Running a business that large is an enormous achievement in itself. The issue comes when the expectations get out of whack with what’s going on and that’s where it gets nasty and awkward.

“There’s nothing wrong with being small or medium sized as long as you are happy with being that size.”