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Alphabet Inc – Google Destinations Could Disrupt Online Travel (GOOG, GOOGL)

The online travel industry is wildly profitable. And wildly profitable industries tend to attract heavy competition. Well, today’s leaders in online travel — Expedia (EXPE), Priceline (PCLN) and TripAdvisor (TRIP) — can welcome a new serious rival to the fray: Alphabet Inc (GOOG, GOOGL).

Google Destinations Could Disrupt Online Travel (GOOG, GOOGL)Google’s been peripherally involved in the travel industry for years, but it’s making a far more serious push with a new initiative, dubbed “Destinations“.

Now, before getting too dramatic, it’s important to note that GOOG isn’t directly infringing on the business model of EXPE, PCLN and TRIP. In other words, Google Destinations isn’t a standalone travel site.

But it could still take serious business away from the heavyweights. Here’s how it works:

Google Has What PCLN, Others Don’t

Destinations on Google is a feature of Google’s search engine. When victims of wanderlust search for certain travel-related terms, the results will generally show them two tabs. The first tab will display a range of informative videos, reviews, descriptions and photos about areas you’re searching about. More importantly, GOOG will also show you a list of curated itineraries, ideal dates and routes to travel.

What’s crazy about the recommended routes is that they’ll be informed by Google Maps — the search giant will use data about where it sees people travelling and how long they’re staying there to suggest a personalized trip for you. This is something that Expedia, Priceline AND TripAdvisor can never dream of doing.

[youtube https://www.youtube.com/watch?v=EnlsEyN7qmw]

Those companies also don’t have access to the most widely used search engine in the world, and the incredible volume of people that use it as the first step in travel research.

Anyhow, merely recommending certain travel itineraries wouldn’t really threaten the likes of Priceline and Expedia. That’s where tab number two comes in, the tab in which GOOG displays the cost of each itinerary, lets you filter by the lowest cost and provides links to let you book the flights and hotels involved.

It’s true that unlike the Priceline and its peers, Destinations won’t let you actually book the entire trip in one location. You still have to click on the airline or hotel provider, navigate to their website, and make your reservations there. That said, Destinations is a useful tool for travelers, and it could negatively impact the likes of EXPE and PCLN merely by taking away customers that would have otherwise used mainstream travel-booking sites.

There’s another major objection to how GOOG’s travel tool will work: It’s only on mobile. (At least for now). Google justifies this by noting that most destination searches already occur on mobile, and mobile searches are growing far more rapidly than desktop-based searches.

Regardless, the mobile-only aspect of Destinations may limit its immediate impact, especially since older travelers are less comfortable with mobile than their younger counterparts. And since older people and retirees have more money and time to spend on vacations, that’s an important limitation on the service as it stands now.

Bottom Line on Google Destinations

So, will Google’s Destinations feature ruin the economics for the big three travel sites? Not by a longshot. But it shows that Google is starting to use its one-of-a-kind advantages (Google Maps data and Google Search scale) to take aim at the industry.

Google has done this before, flexing its search muscles to take on Yelp (YELP) with its own local reviews. And while by no means did that ruin the consumer reviews site, Yelp was angry enough to file a lawsuit, and its business isn’t exactly thriving today.

So watch out, Priceline and peers. Shots have been fired.

As of this writing, John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/03/google-destinations-goog-googl/.

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