Hoping to book a last-minute summer vacation? If so, there's an increasing chance you'll at least be researching your destination with Google
Cheap for the price
It seems Google scored a pretty good deal, considering how big the Frommer's name is in the travel guidebooks market. Reports have it that the Internet company is to pay in the range of $23 million to $25 million for its new subsidiary from current owner John Wiley & Sons
The online travel business is a big and attractive one for Internet companies -- the American tourism industry spent $2.6 billion on online advertising in 2011. It's no wonder, since travel agents have faded so far into the background as to be invisible, and a great deal of travel research and booking takes place online these days. When was the last time, for example, any of us bought a plane ticket through any source other than a website?
If Google can secure an additional 1% of that $2.6 billion, it will already come close to breaking even on the Frommer's buy, even if a decent level of investment is pumped into the guidebook's operations (most notably its rather bland website).
The ever-ambitious Google certainly won't have it easy if it wants to use Frommer's to move beyond banner ads on the e-Web pages of its guidebooks. The online tourism industry is fragmented and competitive, with several dominant companies fighting among themselves and against small rivals for the traveler dollar.
One operator in the former camp sure to provide tough competition for any Google travel effort is Expedia
This market is also well serviced with the likes of priceline.com
Frommer's has always offered a rather middle-ground series of books, catering generally to older travelers with some money to spend and a lingering curiosity to see the world. Google has a habit of keeping its acquisitions more or less intact, so don't expect anything to change too radically with this one. The middle market is where the competition is heaviest, and where Google will have to win some business from the Expedias and the Pricelines if it's to establish itself as a travel booker to any extent.
These days, Google is one of the most buyout-happy big companies out there. It's been a serial acquirer for years, picking up a host of smaller assets in addition to big-ticket items like YouTube and phone maker Motorola Mobility.
The company's had varying degrees of success with these buys, but all of them are complimentary in some way to its existing business. Frommer's is no different; following last year's acquisition of leisure services review company Zagat Survey, Google has an offering that the guidebooks and their data can be well combined with. The Zagat reviews and its famous scoring system are now prominently featured in Google search results and embedded in the tech firm's popular online maps.
There are many ways the Frommer's content can be leveraged with Google's ever-growing universe of offerings. A top search result could return a Frommer's page accompanied by a Google map, for example, with a plane ticket booking or a hotel reservation a click or two away.
However they decide to leverage the content, this latest acquisition is an interesting one with potential for Google. It gives the company a bigger footprint in a lucrative market, no matter which direction it elects to go in squeezing money from the new asset. Frommer's was an opportunistic buy, and Google is to be commended for taking advantage of the chance. And for getting a good deal while it was at it.
With its raft of buyouts in the content space, Google continues to spread its business outside the borders of technology and, some might say, impartiality. There's certainly a ton of potential for the search giant in the travel vertical, and time will tell how well it can capture additional share. In the meantime, make sure you read up on another company loaded with huge potential for the future. We have a sharp analysis of it in our free report "The Only Stock You Need to Profit From the NEW Technology Revolution." You can download the report right now.
Fool contributor Eric Volkman owns no stocks mentioned in the story above. The Motley Fool owns shares of priceline.com and Google. Motley Fool newsletter services have recommended buying shares of priceline.com and Google. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.