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Google licenses hotel-booking software as online travel ambitions grow

  • Google (GOOG -0.8%) has licensed hotel-booking software from Expedia-backed startup Room 77, according to a Room 77 shareholder letter obtained by Bloomberg. The startup now plans to distribute "tens of millions of excess cash" to investors.
  • Google's move points to an escalation of its efforts to compete against Priceline (PCLN -0.7%), Expedia (EXPE -2.1%), Orbitz (OWW -1.6%) and other online travel agencies. The Web giant has already launched Hotel Finder, a hotel room search engine, and Hotel Price Ads, an ad format that appears within Hotel Finder listings, Google Maps, and Google+.
  • Evercore recently argued Hotel Price Ads could be widely adopted by hoteliers looking to lower their dependence on travel agencies, and could benefit from their ability to leverage hotel customer data and opaque pricing.
  • Google's efforts risk upsetting some of its biggest search ad customers: Priceline alone spent $1.8B in 2013 (+41% Y/Y) on online ads, much of it undoubtedly with Google.
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