German travel start-ups ask Google to wait for ad payments as coronavirus hits them hard

Key Points
  • The German Start-ups Association sent a letter on behalf of Germany's travel start-ups to Google's chief business officer Philipp Schindler on Wednesday. 
  • Signatories include GetYourGuide, Omio, HomeToGo, Homelike, FlixBus, Dreamlines, Tourlane and Trivago. 
  • The start-ups are concerned that Google will siphon off taxpayer money if they commit to paying their advertising bills. 
Prakash Singh | AFP | Getty Images

German travel start-ups have called on Google to share the burden they're currently experiencing, according to a letter seen by CNBC.  

The start-ups pay Google millions every year in advertising fees so that they feature high up in Google search results, in banner ads, and on Google's own Hotel Finder platform. 

But like others in the travel sector, coronavirus has hit them hard; they're having to issue refunds to travelers and new bookings have slowed down significantly.  

In a letter to Google's chief business officer, Philipp Schindler, the start-up's leaders call on Google to wait for the ad money it's owed. Specifically, the companies want Google to pause the enforcement of payments on companies that have received taxpayer-funded government financial aid.

They also want Google to offer a consistent and flexible way for them to restructure and postpone payment terms for ad services other fees incurred in the first quarter. 

"Unless greater flexibility is exercised by Google, many of its advertising partners will be forced to use government loans to pay their debts," the letter reads. "Badly-needed funding will flow into Google's coffers on the backs of taxpayers in Germany and around the world."

The letter was authored by the German Start-ups Association (The Bundesverband Deutsche Start-ups) and signed by eight travel start-ups including activity booking platform GetYourGuide and hotel finder Trivago.

Between them, the companies booked over $80 million worth of Google ads for the first quarter. 

"With over $41 billion in Q1 2020 revenue, Google is the leading player in the global digital economy," the letter reads. "As a consortium of businesses that contributes to the health and diversity of that economy, we call on Google to demonstrate the leadership and solidarity necessary to navigate us all through this challenging time."

The letter was sent to Schindler on Wednesday and he is yet to respond. 

It's unclear at this stage if similar letters have been sent by other sectors at this stage. 

A Google spokesperson said the company's teams are working "day and night" to support partners going through difficult times. "We're committed to doing even more to help our users and our customers through this crisis, and are in continued communication with our partners, including the travel industry," they said.

Google has created an $800 million crisis support package that small businesses can access. It includes $340 million in advertising credits. However, CNBC understands that none of the German travel start-ups have been able to access any of those credits.

"Despite doing the right thing in issuing refunds for holidays cancelled by coronavirus, the companies represented by the German Startups Association have not been offered a penny of credit from Google toward their advertising bills," said Christian Miele, president of the German Start-ups Association. 

"Instead of paying us lip service by touting these support packages, Google should offer a consistent and flexible repayment policy toward its partners, regardless of their size or capitalization."