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What’s at Stake as Google Adds More Travel Planning Tools?

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Oct. 1 2018, Updated 3:10 p.m. ET

Online tools for travelers

Alphabet’s (GOOGL) Google has recently launched a new set of tools for online travel planning and hotel booking as it works to build its Search app into the one-stop shop for all sorts of travel and accommodation planning.

Making Google Search the go-to app for online travel planning is one way for the company to draw traffic to its platforms, which it then monetizes by showing advertisements to visitors. Brands including hotels, airlines, and car rental companies that cater to travel are slated to spend $227.1 billion on online advertisements globally in 2018, according to Zenith. This is the revenue opportunity Google is pursuing with these new tools. And the company is releasing these online travel planning tools just in time for holiday travel planning.

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Saving time and money planning travel

Google’s new travel tools let people save time and money when they plan their travel online. For example, the tools let people see when to book flights or hotel accommodations for the best rates. However, Google’s expansion in the online travel planning market means it is wading into the territory of online travel agencies such as Expedia (EXPE) and Tripadvisor (TRIP).

Google parent revenue up 25.6%

One of the ways online travel agencies like Expedia make money is by showing hotel or airline advertisements to people who visit their sites. At Google parent Alphabet, revenue increased 25.6% YoY (year-over-year) to $32.7 billion in the second quarter. Advertising accounted for 86% of Alphabet’s revenue in that period. Expedia and Tripadvisor grew their second quarter revenues by 11.4% and 2.1% YoY, respectively. Ctrip.com International (CTRP) and Booking Holdings (BKNG), other online travel planning providers, grew their revenues by 14.1% and 17% YoY, respectively, in the second quarter.

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