When is Google finally going to tie all of its travel products together and become an online travel agency to rival Expedia, the Priceline Group and, increasingly, Ctrip?
Not anytime soon or even in the foreseeable future. We’ve been saying this for awhile — for years, actually — but now we can use some dollar estimates to back our theory and fine-tune it with comments on the subject that a Google executive made at the Skift Global Forum in Manhattan in September.
Why would Google want to become an online travel agency when its existing travel-advertising business — including all of those paid links that dominate its search-results pages — likely produces more revenue than the Priceline Group, TripAdvisor, and Ctrip combined?
One investor group dissected publicly available information, made some educated guesses, and confidentially shared its rough estimates with Skift on the scope of Google’s existing travel-advertising business.
Google would probably generate at least about $12.2 billion in revenue from travel advertisers in 2016, with about $6.2 billion of that coming from just four travel advertisers, namely the Priceline Group, Expedia Inc., TripAdvisor and Airbnb.
To get an idea of the scope of Google’s projected $12.2 billion in travel revenue for 2016, you can compare it with the actual 2015 revenue of the four leading, publicly traded online travel companies: The Priceline Group ($9.2 billion), Expedia ($6.7 billion), Ctrip ($1.6 billion) and TripAdvisor ($1.5 billion)
So Google’s existing revenue from travel advertisers is already considerably larger than that of the Priceline Group; is roughly twice the size of Expedia’s, and Google generates more travel-advertising revenue than that of Expedia, Ctrip, and TripAdvisor combined, according to this analysis.
And Google undoubtedly takes that travel-advertising revenue and achieves a much higher profit margin on it than do the roster of its online travel, airline, hotel, car rental, and cruise partners, most of which are much more dependent on lower-margin transaction revenue.
So the next time people tell you that Google’s launch of a new travel app means the world’s largest search engine is finally getting into the travel business — you can laugh in their faces because Google’s travel business is bigger than online travel behemoth Priceline’s.
Read rest of the article at Skift
