EXPE: Expedia Has More to Fear Than the Google Penalty Box

Getting dinged on search won't help EXPE in the short run, but a bigger bogeyman awaits down the road

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EXPE: Expedia Has More to Fear Than the Google Penalty Box

Indeed, for a company like Expedia that operates almost exclusively online, not appearing in Google’s top-10 search results for a given term (the first page of the query’s results) can be devastating … forever.

Sure, Google restored the search rankings for JCPenney and Rap Genius, and likely will do the same for EXPE once some things are corrected. There’s no guarantee it’s going to be so friendly in the future, however — especially when Google wades deeper into running more online businesses that compete with the very same companies that are jockeying for the top position via the search engine’s results.

Indeed, it’s more than a little interesting that an online travel-booking site is in the penalty box just a few days after it was strongly implied that Google is considering throwing its own hat deeper into the travel ticketing ring.

It’s true. Although not readily to many users, Google has been booking flights for visitors to the United Kingdom for almost a year now. A new partnership with Ryanair (RYAAY) will also funnel more flyers to the airline — directly from a search query — beginning in March of this year. More and more such relationships with airlines make sites like Priceline (PCLN) and Expedia less and less important to travelers, who are accomplishing all they need to accomplish directly through Google.

You’re not alone in thinking what you’re probably thinking right now:

“What if the algorithm changed for certain terms like “cheap flights” to favor Google’s partners’ deals a little more, and favored non-partner flights like Expedia’s or Priceline’s a little less?”

While the search engine’s stated mission is to return the most relevant results for any particular query, it’s interesting that searches for “gaming apps” and “music apps” both return Google Play as the first organic, non-ad result, while Apple (AAPL) has to pay to appear at the top (sometimes solely) of the ad results right above those two queries.

While Google’s apps have become numerous as well as popular, there’s no way to deny that Apple’s iOS app universe is still at least a relevant as Google’s. Yet, Apple somehow ranks No. 2 for the term “music apps” with a Google search, and ranks only No. 10 for “gaming apps.”

Something’s clearly not quite right.

That, or Google has used its knowledge of its own search engine with tremendous proficiency, while somehow its biggest competitor and the maker of the world’s most popular smartphone has missed the SEO mark.

Bottom Line

If Google really wanted to get into the travel game, it’s not unreasonable to suspect Expedia and/or Priceline could have the same amazingly bad luck Apple did once it started to compete with the search engine giant.

If you hold PCLN or EXPE stock, that’s a consideration you might want to tuck away for a later date.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/2014/01/expe-stock-expedia/.

©2014 InvestorPlace Media, LLC

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