Until now, online travel site Expedia (EXPE) has had meager mobile offerings. But that is about to change. This week, Expedia agreed to buy Mobiata, which sells best-selling travel applications.
The price tag of the deal was not disclosed. But the transaction is likely to give Expedia a nice boost. Simply put, mobile is now becoming a key strategic business for online travel operators.
Inspiration at the Airport
A couple years ago, 20-something Ben Kazez was waiting at an airport and had to continually look at the arrival/departure screens to check on the status of his flight. It was a nuisance. Couldn't there be a better way?
Well, his frustration became the inspiration for a mobile app called FlightTrack. It turned out to be a big hit. In fact, within a year, FlightTrack generated roughly $1 million in revenues. And the growth rate was running at 100% or so.
While FlightTrack continues to be a hot seller, Mobiata has continued to innovate. The company launched TripDeck (an itinerary manager) and HotelPal (to book hotels reservations). At the same time, Mobiata has also built its apps for platforms other than Apple's (AAPL) iPhone, such as the BlackBerry (RIMM) and Google's (GOOG) Android.
True, there are several thousand travel apps on the market, but many of them are lacking in useful features. The fact remains that it is difficult to design effective interfaces. It often means focusing only on key features, as well as sending data quickly to the user.
A Smart Move When Speed Is Crucial
Currently, mobile business accounts for roughly 4% of Expedia's traffic. But of course, the growth is strong (up five times over the past year). Consider that 61% of the world's population uses a mobile device, and that base is expected to grow by about one billion near the end of 2011.
Mobile advertising is also on the verge of a breakout. Spending came to $733 million last year -- and the forecast for 2014 is $4.7 billion. It's inevitable that a sizable amount of this will go to travel apps.
No doubt, Expedia could have hired programmers to bulk up its own mobile efforts. But this would have been time-consuming. Why not lower the risk by purchasing a top player in the space?
It's definitely a smart move -- and speed is critical. After all, just look at rival Kayak, which filed to go public this week. The company's mobile app has already seen four million downloads and has been a key driver for growth.
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