Nomura Securities on Online Travel Agencies: Update on Google (GOOG) Places

Nomura Securities on Online Travel Agencies by Brian Nowak:

Nowak said, "An update on Google (Nasdaq: GOOG) Places, hotel feedback and a latest traffic report. We recently initiated coverage of the U.S. OTAs with an overall Bearish sector view. One of our primary concerns for the OTAs is the disintermediation risk from Google. Through a recent industry interview, we were surprised to learn that Google Places and Hotel Finder are pay-per-click, rather than cost-per-click, models. Our analysis indicates that Google could charge up to 1.5% and the hotels would still be roughly breakeven with the OTA model. In addition, hotels on Google Places and Hotel Finder are seeing high impression rates on the hotel landing pages but lower-than-expected click-thru rates to the hotels’ websites. Hotel website conversion rates from travelers that came through Google Places/Hotel Finder are reportedly 7–8%, slightly below Expedia’s (Nasdaq: EXPE) historical 8–9% conversion rate."

Other stocks of note include: Yahoo! (Nasdaq: YHOO), Microsoft (Nasdaq: MSFT), Orbitz (NYSE: OWW), priceline.com (Nasdaq: PCLN), and Travelzoo (Nasdaq: TZOO).

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