As the pandemic crashes the economy worldwide, more businesses file for bankruptcy. The pandemic hard hits the tourism industry. While Google vowed to help these enterprises, travel CEOs claim the help is not enough.
About two months ago, Google promised to extend an $800 million package to help companies ailing because of the pandemic, allocating $340 million for advertising credits for small and medium-sized businesses with active Google Ads accounts. These credits must be redeemed before the end of the year.
3D printed coronavirus model and Google logo are placed near an Apple Macbook Pro in this illustration taken April 12, 2020.
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However, tourism agency Walks CEO Stephen Oddo has seen his sales vanish as his daily guided tours in Milan and Italy were shut down to prevent the spread of COVID-19. Thus, the Texas-based company looked for ways to cut costs. Walks reached out to Google, where it spends around $1 million a year on ads.
As the two parties did not reach an agreement, Oddo laid off more than half his staff, reducing his team to about 45 people from over 100.
"Everyone is still kind of in shock," said Oddo. "The wind gets knocked out of you."
Google cash rebates
Travel CEOs aired the same sentiments as Odd's saying Google's aid is not enough. Other CEOs ask for cash rebates for first-quarter advertising, which did not yield much after people canceled their trips.
A Google spokesman said in an email that they acknowledge the "unprecedented challenges" the travel industry faces, but it did not discuss specific requests from travel CEOs. "We treat payment terms with our customers or partners as confidential, and we're not able to disclose details," he said.
The relationship between Google and the travel industry is mutual. Google's normal advertising operation slumped in the first quarter because of the disappearance of travel ads. Nevertheless, Google's well-oiled ad machine managed to beat revenue expectations.
Still, the search giant reported that revenue dropped sharply in March as the coronavirus crisis began to take hold while it warned of a "difficult" second quarter. Google has also slowed hiring for the rest of the year and reportedly slashed its marketing budget by as much as half for the second part of 2020.
Meanwhile, Expedia spends $5 billion a year in ads, but this year, its capital outlay may not even reach 1 billion years. Last week, Airbnb confirmed it was laying off its 1,900 employees.
For smaller companies like Walks, the situation is tighter. Essentially, the spending for the first quarter was wasted. "That money was essentially burned," said Oddo.
"The best antidote we have is to restart the economic engine," said Oddo. "Revenue will breathe life into the industry again."
Just a fair request
Helping out the travel industry and providing more flexible terms could be good business for Google, said Professor V.G. Narayanan of the Harvard Business School, who studies financial incentives and management.
Since a lot of travel is postponed, they might attract new customers if they say no payment is due for six months. Thus, Google should also consider giving rebates to select companies.
"If they believe, as they have said, that they would like to do no evil, this is a moment to bring people together," Ann Skeet, senior director of leadership ethics at Santa Clara University's Markkula Center for Applied Ethics, said.
"A rebate is a reasonable request. If I were Google, I'd be thinking about the long-term outcome."
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