Despite its controversial $700 million acquisition of travel software company ITA several years ago and the launch of Google’s Hotel Finder site, Google has yet to emerge as a force in online travel. That may all be about to change.
Bloomberg reported yesterday that Google “is licensing hotel-booking software from Room 77 Inc.” The news site also reported that “Room 77 co-founder and Chief Technology Officer Calvin Yang and many of its engineers are joining Google.”
Room 77 is a travel metasearch site like Kayak, only better in my experience. It only focuses on lodging however.
The Bloomberg report also says that Room 77 will distribute “tens of millions of excess cash” to investors while still “maintaining its ‘brand, websites, mobile applications, patents’ and other technology in the deal.” It’s therefore not an acquisition but it seems as a practical matter very much like one.
My guess is that Room 77 didn’t want to formally sell itself (just yet) to Google. I would imagine that the terms of the deal (which I haven’t seen) include a Google right of first refusal or similar clause should someone be interested in buying Room 77. Expedia is a Room 77 investor.
Room 77 is reportedly now going to focus on its CheckMate business, which it acquired late in 2013 and which helps hotels implement and manage mobile booking.
According to the US Commerce Department, total US travel industry revenues were approximately $1.3 trillion in 2010 (the most recent year for which the data are available). Lodging represented 16 percent of that total or roughly $208 billion. By comparison, travel industry monitor PhoCusWright estimated 31 percent of all US hotel room reservations in 2012 were made online.
That’s a lot of money at stake. Google’s 2013 total revenues were $58.7 billion.
According to a 2010 survey by Frommers, 65 percent of Americans use at least six websites when doing travel planning. A substantial minority of users (20 percent) say they use 16 or more sites to plan a trip.
Google has not been able to breakthrough with its home-grown travel efforts. However Room 77’s data and platform should/could enable Google to become a formidable competitor in hotel search and booking in a relatively short period of time.