Web traffic is where the real money lies

Our latest column in Travel Weekly:

Outsiders often accuse dot-coms of operating in some kind of la-la land. So here are some interesting figures.

Microsoft has offered £24.2 billion for Yahoo!; Google paid a reported £840 million for YouTube; Kayak paid £90 million for rival travel search company Sidestep; and microblogging system Twitter, is valued at £47 million.

In the case of YouTube, many believe the deal was actually a sound investment. In fact, listen to anyone from Google and they admit online video is growing quicker than search, its core business.

While all this is going on, Stella Travel Services is rumoured to be lining up a bid for Advantage Travel Centres, a deal that would see the consortium trouser between £6 million and £8 million. Stella denies the rumours.

Now, it would be unfair to compare a global search company to a group representing bricks-and- mortar travel agencies in the UK. However, the frighteningly simple Twitter is valued as high as it is because it has large numbers of people using the service.

Kayak boss Steve Hafner admitted at a Travolution conference that his company bought Sidestep for the web traffic.

As recently suggested on the Travolution Blog, people see more value investing in something with scale.

And web traffic is where the growth is for the keen prospectors, simply because it can be monetised quickly through both advertising and the sheer amount of volume running through a business. Now there is no moral to the story here.

The reality is investors are prepared to pay more if a business is online-based and, as they say in the US, “has the numbers”.

Kevin May, editor, Travolution