How Google Became the Biggest Travel Company

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For decades, travel agents had a “lock” on vacations. Before the Internet, it was almost impossible to find cheap rates on your own. And choosing the perfect hotel involved a lot of flipping through glossy brochures.

The “do it yourself” approach was a huge problem. It was much easier to hire a knowledgeable travel agent. Then disruptive stocks like Booking.com (BKNG) and Expedia (EXPE) blows up the old model forever. With just a few clicks, you can compare any flight or hotel in the world.

For the very first time, you could find all the specials and hidden gems that only travel agents knew about. Meanwhile, Priceline (now Booking.com) has made investors richer. Its stock has climbed 25,000% in two decades, as you can see here:

Booking.com and Expedia have received a helping hand from an “ultimate disruptor”

How often “Google” something? If you’re like me, you use Google (GOOG) search dozens of times a day. In fact, for every 100 searches typed on the Internet, 88 go through Google.

When our children are sick, we “Google” their symptoms. If we are heading somewhere, we ask Google for directions. And when you book a vacation, chances are you’ll start by typing “Flights to London” or “Alpine Skiing” into the Google search bar.

As the home page of the Internet, Google is the “keeper” of vacations

When you search for a flight or a hotel, Google controls what appears on your screen. For years, websites like TripAdvisor, Expedia, and Booking.com have paid Google billions of dollars to get their websites to the top of search results.

Appearing near the top of the page is extremely important. People are 10 times more likely to click on the first link than the one at the bottom of the page. Ten times! In other words, a website’s ranking on Google can make or break a business.

So online travel sites are paying Google huge sums of money to rent this “prime real estate” and get clicks from travel planners. Here is what came out when I searched for “hotels in Melbourne”.

As you can see, Booking.com holds the coveted top spot, for which it has surely paid millions. Last year, online travel agents spent around $ 18 billion on Internet advertising. Booking.com redirected a third of its revenue to online ads in 2018.

But Google is a wolf in disguise, and he just took off his sheep costume

Think about what made online travel agencies so successful. They’ve gathered data on thousands of hotels and flights and created an easy-to-use website where you can book your own vacation.

Well, when it comes to sorting through huge piles of information, no one can compete with Google. And now he’s using those skills to conquer online travel.

Earlier this year, Google launched “Google Travel”. It allows you to filter the best and cheapest flights and hotels on Google. In other words, it does exactly what Booking.com and Expedia do.

I typed “flights” into Google and this is what appeared:

The high-end real estate that gets 10 times the attention now belongs to Google Flights. You have to scroll down to find Expedia.

Google Travel is choking customer flow to other travel websites

Expedia CEO Mark Okerstrom said last month that Google’s traffic is “Shrinking all the time. “

The online review site TripAdvisor is also under pressure. In its last call for results, management announced: “Our biggest challenge remains for Google to push its own hotel products into search and siphon off quality traffic that TripAdvisor would otherwise find. “

These companies are attached to a conveyor belt, directed towards the Google buzzsaw. And the recent income hasn’t been pretty. TripAdvisor sales have fallen three-quarters in a row.

Meanwhile, Expedia and Booking are growing at their slowest pace in several years. Damn, the board of directors of Expedia has just ousted its CEO for poor performance. All three stocks trade as if they were going bankrupt.

here is TripAdvisor (TRAVEL):

Expedia:

And Reservation:

Google disrupts disruptors

Its travel site already generates more revenue than any other travel site. Google earned around $ 18 billion from online travel agents last year. The largest online travel agent, Booking.com, had revenue of $ 14.5 billion!

Keep in mind that these online travel companies are still paying Google billions of dollars a year. Google is therefore unlikely to kill them completely right away.

Instead, I expect Google to sell them enough leads to keep them, while slowly siphoning more and more from their businesses.

In addition, Google is now charging these companies more and more money to appear at the top of its search results. Talk about a kick in the teeth!

Needless to say, I wouldn’t touch these online travel stocks. The last place you want to be as a business is at the mercy of Google.

I recommended buying Google stocks at $ 1,070 / share a few months ago. Today, it is selling for $ 1,320 / share. I see it will reach $ 2,000 in the next two years.

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