On July 1, 2010, Google officially—and finally—announced the acquisition of ITA Software, a leading provider of airfare shopping technology, for US$700 million. Subject to regulatory approval, the acquisition has raised a multitude of questions—and opposition—across the travel industry.

What form will Google and ITA take, and what does this mean for online travel? Will this be another metasearch, competing head-to-head with Kayak and Bing Travel? Does Google plan to enter the OTA fray and get transactional? Is this the end of travel SEM and SEO as we know it? How will travel search change? And what scenarios should travel companies be planning for?

To answer these and other questions, PhoCusWright analysts Ram Badrinathan, Douglas Quinby, Carroll Rheem, and Norm Rose, as well as Dennis Schaal, North American editor for Tnooz, gathered for an Online Event earlier in July, Google Seals the Deal with ITA. That conversation yielded projections about eight things that will (and won’t) happen:

Google will not get transactional
Despite widespread industry fears of Google becoming an online travel agency (OTA), the world’s leading search engine will not get transactional. Handling transactions is not the business Google is in, and why would the company risk all that higher-margin advertising revenue from online travel companies and suppliers, which invest heavily in keyword marketing?

Redefining travel search
Eric Schmidt, chairman and CEO of Google, has stated clearly that the product developed through the Google-ITA merger would be “different from anything available today.” So expect a lot more than just another metasearch a la Kayak or Bing.

Google could redefine the existing model and introduce a new approach to airline search and distribution. Google’s existing indexing system, together with ITA’s technology, could lead to a product that displays relevant airfare and destination results based on the consumer’s budget and holiday preference. Search could evolve into a more personalized experience, and suppliers and intermediaries can strategize private sales through use of tools like Google Analytics. Providers can target sales against specific travel budgets (and destination options within those budgets) at the planning stage.

Integrated Google experience
The Google ecosystem is both expansive and tightly knit, and includes search, email, maps, street views, chats, blogs, and a host of other tools for personal and professional use. Through the ITA acquisition, Google has an opportunity to refine searches by integrating real-time fares at the most relevant points in its ecosystem and on other websites supporting AdSense. And, as Google begins to creep further down the travel shopping funnel, it could become a bigger competitive threat for travel websites focused on planning—traveler reviews sites, deal sites, even OTAs—which generate revenue somewhere between travel search and the final transaction.

Limited impact for corporate travel, but uncertainty for the GDSs
Google is predominantly a consumer-centric company, and the ITA acquisition will only improve the browsing and searching functionalities for those researching and shopping for travel online. Corporate travelers and travel management companies will continue to rely on global distribution systems (GDSs) for their queries and bookings, and are unlikely to be directly affected by this deal in the near to midterm.

But a threat to the GDSs is also a threat to the OTAs. Should an implementation of ITA within Google result in a significant shift in share from OTAs to airline websites, OTAs would suffer—as would GDSs, which process the vast majority of OTA air bookings. Press reports prior to Google’s acquisition of ITA Software indicated that Travelport, Amadeus, Expedia, Microsoft, and Kayak were seeking to form a consortium to keep ITA independent of Google, fearing that the latter could entertain such a new model.

(Some) ITA customers go shopping
Many in online travel use ITA Software, but the ideal of relying on technology now owned by Google will be unsettling for the likes of Kayak, TripAdvisor Flight Search, Bing Travel, and other metasearch players. And no doubt others—from OTAs to airlines—must plan for worst-case scenarios. There are alternatives to ITA’s shopping platform—from, for example, Sabre, Travelport, Amadeus, and new entrants Everbread and Vayant. Clearly a new market opportunity has emerged. Only time will tell if it will be captured, and by whom.

Android vs. iTravel
Google’s acquisition of ITA Software will fuel the search engine’s mobile ambitions, enabling rich travel planning tools in smartphones and tablets operating on the Android platform. Expect this to be a key focus for Google, as the industry continues to contemplate the implications of Apple’s iTravel patent application for the iPhone and iOS-operated handheld devices.

Opening up the ITA API
What would be possible if Google made an API to ITA available to the broader developer community, as it did for Google Maps or Analytics? What would be possible if developers and websites had open access to ITA? Pretty much anything.

Unlocking hotels
Hotel distribution is a big revenue generator for online travel intermediaries, and industry press reports suggest ITA has already been at work developing tools for the hotel space. How similar or different this will be from its air shopping systems is still unknown. Google, however, does not need to wait for ITA to figure out the complex lodging issue and has already begun testing hotel price listings in Google Maps. Hoteliers are no doubt eager to get in the game with the OTAs currently listed, but inconsistencies across brands and properties present a major challenge. This is an area where ITA may be able to provide a critical solution. Ultimately, a rich Google hotel search product has the potential to be more disruptive to the travel distribution ecosystem than an air search product—the advertising/margin revenue is much higher, and hotel shoppers around the world already rely heavily on search.

We are at the onset of a powerful paradigm shift in travel. As expansive as Google’s impact across the industry already is, its long-term vision for its role in travel may only now be unfolding. The ITA acquisition heralds a new era of innovation in travel search. Regardless of which direction Google takes, it will have to find the right balance for its partners and take care not to alienate the industry players that ultimately fund it.