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Google benefits from its entry into the online travel market

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Dec. 30 2014, Updated 3:52 p.m. ET

Google entered the online travel market in 2011

In the previous part of this series, we discussed how Amazon (AMZN) plans to enter the lucrative online travel market. Google (GOOG)(GOOGL) is another niche player in this market. It entered into this market after it acquired ITA Software in 2011. ITA software is a real-time database of flight details. It helps travelers find flight-related information online. Google then introduced its Hotel Finder service in 2012.

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Google benefits indirectly from the online travel market

Despite Google’s efforts to penetrate the online travel market, it hasn’t really taken business away from pure online travel players like Priceline (PCLN), Expedia (EXPE), and TripAdvisor (TRIP). However, what has happened is that these players have increased their marketing efforts in the form of online advertisements.

You’ll be surprised to learn that Priceline was the second-highest spender on Google search ads, after Amazon, in 2013. According to a report from Ad Age DataCenter’s first ranking based on data from Adgooroo, a Kantar Media company, Priceline spent $82 million on ads through Google’s search platform in 2013. Expedia also spent $72 million on Google search ads.

This goes to show that even though Google hasn’t made much inroads directly into the online travel market, it still benefits by increasing its advertising revenues through online travel players. These players had to increase their advertising spending in order to counter the threat of Google in this market. Google’s mere presence in the online travel market is enough to keep these players on their toes.

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