Recently, Alphabet Inc.’s subsidiary Google GOOGL introduced “Google Trips” – a mobile app intended to reduce travel related hassles by aggregating all trip information relating to day plans, reservations, things to do, etc., bundles within the app. The company has also ensured that the “download” button for each trip can save this information on the users phone offline. This launch comes nearly six years after Google acquired flight information firm ITA software and indicates the Google is finally ready to foray into the travel segment. In 2015, direct leisure travel spending by domestic and international travelers in the U.S. was more than $ 650 billion and nearly four out of five domestic trips were taken for leisure purpose. This indicates the strong potential of the market for leisure travel – the segment which Google Trips targets. We believe the company can generate significant revenues from this segment, given that its Maps app is already a hugely popular product among travelers, with more than a billion active users globally. The potential power of the platform is considerable. Google Trips leverages both Gmail and Google Maps to combine information relating to flight information and hotel reservations (via Gmail); and it additionally generates customized itineraries, based on a desired locations pinned on Google Maps via the address and location information therein. Given these breadth of these offerings, Google Trips has huge potential to capture a significant share in the online travel market.
Differentiated Travel Tool Can Create Huge Competitive Advantage
Google is hopeful that Google Trips will become the default way for travelers to organize trip information ahead of the travel and use it during the trip. This app can be compelling for the billion users of Gmail and Google Maps, since it leverages Google’s ability to tap into the data stored in Gmail to automatically gather reservation information and organize it into trips. Similarly the app leverages Google Maps to show the user nearby destinations if a planned sight-seeing destination is added – creating a customized itinerary for the day. Users of Gmail and Google Maps might automatically transition to Google Trips, giving it a competitive advantage. Google Trips is aimed at providing help to consumers when they are actually in their destination. The company has also pre-populated the app with popular itineraries based on historic visits by other travelers. This is similar to how Google leverages user data to populate Google Maps with timely traffic data. Google has the competitive advantage of utilizing data recorded by an enormous base of users. Reviews on Google Trips will be based on the actual usage of the app and experts believe that this might be the truly differentiated tool for consumers. Competition in this segment is limited, with a similar service called Tripit being mainly used by business travelers. Also, Google Trips offers more features and is being termed as the combination of TripIt, Yelp YELP and TripAdvisor TRIP, given its wide features.
In-app search tools are a big threat to Google’s mobile search market share and this is accounted for in our model by an estimated decline in Google’s share. However, Google’s ability to provide conveniences to consumers through its own apps such as Google Trips can ensure that the company retains and grows its market share in the mobile search market. Google Trips holds strong advertising potential as well, as consumers look for restaurants, places of tourist interest and shopping destinations while traveling using this app. As Google looks to make this the default app for travelers we believe it can be instrumental for the company to grow its market share in the mobile search segment. The app also holds strong advertising potential and can be a key revenue driver for the company in the long term.