Meet Your New Travel Partner: Google

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We're used to visiting Google's (GOOG) (GOOGL) search engine to hunt for information about nearly everything -- how to say "thank you" in Mongolian, the latest happenings with the Kardashians, the marital status of our first girlfriend or boyfriend, etc.

But with a recent revamp to one of its sites, the Internet giant is fast becoming part of the conversation about another busy corner of the online world -- travel.


Google took the wraps off its new Flights site this past February, revealing a spiffy offering loaded with features for would-be travelers.

Among other things, there's an expandable map tagged with a series of ticket prices, which change when dates in a pair of calendar dropdowns above are modified. Once you choose a destination, clicking on a calendar itself displays the lowest-priced ticket for that destination on every day in the selected month.

Once destination and dates are selected, Google's engine often displays tips on how to get a lower price.

On the home screen, bordering the map, is a series of attractively-priced deals on tickets for popular destinations from the user's nearest airport (assuming you have location sharing turned on).

The usual filters for trip searches (number of stops, price limit, duration of trip, etc.) are readily available. All in all, Google has done a good job with Flights; it's clean and uncluttered, very intuitive, and quick to provide the needed information.

An Expensive Ticket

Google Flights has been evolving for quite a while. In 2010, Google inked a $700 million deal to acquire ITA Software. The company's flagship software solution QPX, in ITA's words, allows clients to "quickly, consistently and accurately identify the best available airfares."

The acquisition was controversial at the time, not least because Google already had an irritating tendency to feature its own ITA-powered results at the top of searches for flights made through its famous search engine. At least, that was the contention of several big players in the online travel industry, including Expedia (EXPE), Kayak -- now owned by Priceline Group (PCLN) -- and Sabre Holdings (SABR). These companies formed a lobbying group,, in part to fight the acquisition.

Although they didn't win the battle, they might have influenced the Department of Justice's ruling on the matter. The DOJ approved the merger, but required Google to continue to license ITA's software to rivals "on commercially reasonable terms," and mandated that the Internet giant put safeguards in place to prevent it from accessing competitors' "sensitive information."

These days, Kayak is still listed as a client on the rechristened ITA Software by Google's website, as is Orbitz Worldwide (OWW) -- soon to be a unit of Expedia if a recent buyout clears antitrust approval by the DOJ. Carriers such as Alaska Airlines (ALK), American Airlines (AAL), United (UAL), and Delta (DAL) are also ITA customers.

Crowded Skies

Google's new and improved Flights is yet another competitive hurdle that competing online travel agencies will have to clear.

At the moment, the two big companies are Priceline and Expedia, both of which have been busy acquiring assets. Expedia's aforementioned deal to acquire Orbitz -- announced earlier this year -- will cost it a princely $1.6 billion, while Priceline paid $2.6 billion to acquire restaurant reservation site OpenTable last year in the latest of a series of buys.

The shopping sprees are due to recent developments in the market. Over the past few years, it's come under pressure from the very suppliers the agencies use to provide the flights, hotel rooms, and travel packages they offer. The suppliers have become adept at getting customers to book directly on their websites, luring them with exclusive deals and promotions not available through the agencies. Effectively, they're cutting out the middlemen.

At the same time, every week seems to witness the birth of a new niche travel website or mobile app. Look at the success of slick DIY lodging booker AirBnB, for example, or state-of-the-art online agency Hipmunk.

Billions in the Air

Companies like Google are spending a great deal of time, effort and money on their online travel efforts because there's a lot at stake. According to comScore, the overall e-travel industry now brings in over $100 billion annually. Even a small increase in market share can be worth billions.

The new Google Flights site is very clearly designed with the end user in mind. It isn't perfect -- its alert system for price changes is fairly clunky, for instance -- but it's fast, powerful, and convenient. And it will certainly give the Pricelines, Expedias, and smaller agencies in the online travel business a real run for their money.

Motley Fool contributor Eric Volkman has no position in any stocks mentioned, and misses the days when he traveled frequently. The Motley Fool recommends and owns both Google (A and C shares) and Priceline Group. Try any of our Foolish newsletter services free for 30 days. Check out our free report on one great stock to buy for 2015 and beyond.
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