) could be facing a very serious threat to its business, although
not from the usual suspects like Priceline (
) or Kayak. This time, it comes in the form of a new social
network for travelers, Gogobot.. Still in the Beta phase, Gogobot
combines social networking and online travel research and bookings
into one seamless platform. Backed by $4 million in funding from
Battery Ventures, Gogobot is poised to elbow its way into the
online travel space.
Expedia, the world leading online travel portal does not just
make money from travel bookings but also through advertising on its
websites. Expedia's Tripadvisor is the #1 online travel community
operating in North America, Europe and Asia-Pacific. The site
aggregates opinions and offers rich user-generated travel-related
content including millions of reviews on destinations, hotels,
restaurants. The sheer number of reviews adds to its credibility
and draws traffic to tripadvisor.com, which Expedia then monetizes
in the form of revenue from advertising placements on the
Our price estimate for Expedia stock stands at
, roughly 30% ahead of market price.
How does Gogobot threaten Expedia?
1) Absence of Social Networking at Tripadvisor
Tripadvisor lacks real social networking functionality. Gogobot
offers to fill this gap by providing users with travel advice from
their personal social network connections on Facebook and Twitter.
The reasoning for this is obvious - people care much more about
their friends' opinions than those of the endless stream of
anonymous reviewers. We're much more likely to act on a tip from a
friend than a stranger.
2) Gogobot to Offer Bookings on its Own Website
Gogobot announced partnerships with established online travel
agencies like Priceline, Orbitz, Kayak and even Expedia to allow
users to book flights and hotels from these sites without actually
being directed to the sites. Expedia doesn't really have a choice
here. The company has to partner with Gogobot or risk losing
booking volumes to other agencies that do. This, unfortunately,
reduces the number of visitors that would otherwise find their way
onto Expedia's site. Reduced traffic will likely put a dent in
advertising revenues for Expedia as well as other online travel
3) A More User-Friendly and Interactive Interface at
Gogobot was awarded the 2010 Techcrunch Crunchie award for best
design. The site comes with integrated maps and a Yahoo
Answers-style question-and-advice feature. The user-friendly
interface at Gogobot could help attract and retain more traffic to
its website. This could be a serious blow to Expedia's advertising
revenues from its Tripadvisor network.
What is the Potential Impact on Expedia?
Gogobot poses a real threat to Tripadvisor's visitation, and
could cause the sites revenue from advertising to slip. Although
Gogobot is nowhere near the millions of reviews for hotels and
destinations that Tripadvisor currently boasts, the social
networking element could spur a rapid surge in Gogobot's content.
Facebook's over half a billion users could quickly turn the tide in
So how important is Tripadvisor to Expedia? We estimate that
this site's operations represent 23% of the company's stock value,
which we peg at $29.12
. This is a good chunk of Expedia's value, so don't expect the
company to give up it's position atop the online travel community
hill without a fight.
See our complete analysis of Expedia's stock