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GOOGL's Growing Travel Initiatives to Hurt TRIP, EXPE & BKNG

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A radical shift in consumer preference has been driving demand for online travel booking sites, which enable seamless travel planning in this fast-paced world. Moreover, increasing proliferation of smartphones and Internet are aiding adoption of these sites.

Per a report from TechSci Research, the global online travel booking market is expected to see a CAGR of 12% over a period of 2020-2024.

Quick flight and hotel bookings, great discounts, price comparison and genuine hotel reviews by travelers offered by online travel sites are key growth drivers. Additionally, these sites have now started offering rental car services, which make intercity travel easier.

All these facilities prevent travelers from misguidance, frauds and help them in cost savings.

Given this upbeat scenario, Alphabet’s (GOOGL - Free Report) division Google has been leaving no stone unturned to capitalize on prospects of the online travel space.
Google’s Aggressive Stance

Google Travel, which combines Google Flights, Google Hotels, vacation packages and a variety of trip-planning tools and recommendations under one umbrella, was launched last year. It remains a breakthrough move for the company in this market.

All the travel-related queries from Google Search, saved places from Google Maps, and flagged flights and hotels get automatically synchronized with the Trips page when user signs in using a Google account.

Thereby, Google Travel allows the company to deliver personalized travel experience to users, which is a major positive.

Apart from this, the search giant is banking on integration of AI into its travel tools. Google Flights suggests on departing a day or two earlier to enable price savings via AI-powered smart booking systems. Further, the tool will inform passengers of a flight delay even before the airlines announce it.

Further, Google has recently made improvements in travel site. Notably, the company has now come up with a tab, which offers three options upon searching for any destination.

The options — Where to stay, When to visit and What you’ll pay — eases the process of finding accommodations, comparing prices and booking trips.

“Where to stay” will recommend hotels, “When to visit” will provide key information about the destination like weather conditions, peak months and less-expensive periods for visit, and “What you’ll pay” will notify about the prices of hotels.

We believe all the above mentioned strong endeavors by Google are likely to hurt the sentiments of the online travel agencies (OTA) further.

Notably, Google’s parent Alphabet currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


One-Year Price Performance

3 OTA Stocks to Suffer

TripAdvisor TRIP is an online travel research company which provides a platform for users to share reviews, ratings and opinions on hotels, destinations, attractions and restaurants. However, it is hurt by the weakness in its Hotels, Media & Platform segment, which is the largest contributor to the company’s total revenues.

This downside can primarily be attributed to strengthening search engine optimization (SEO) initiatives by Google.

Moreover, Google’s increasing practice of directing search traffic toward its own travel businesses and strong endeavors toward enhancing the search results with innovative search tools are anticipated to continue hurting TripAdvisor in the near term.

We note that TripAdvisor carries a Zacks Rank #5 (Strong Sell).

Expedia Group EXPE is an online travel company whose web portals focuses on travel planning, travel purchases and travel experience sharing. However, it is facing challenges in the online travel booking space from Google’s search engine. Moreover, changes in the Google search algorithm is a major negative.

Further, Google is installing new modules into Google search results that are directing consumers to Google Hotel Ads or Google Flights. This is causing traffic shift from Expedia to Google. This is likely to continue impacting Expedia, due to Google’s increasing search initiatives.

Expedia Group carries a Zacks Rank #4 (Sell).

Booking Holdings BKNG offers travel-related services that cover hotel rooms, airline tickets, rental cars, vacation packages, cruises, “things to do” at customer destinations and travel insurance.

The company also faces strong competition from Google’s SEO and advertisement initiatives. Further, expanding travel tools portfolio of Google does not bode well for the company.

Currently, Booking Holdings carries a Zacks Rank #3 (Hold).

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