Too Many Online Travel Start-Ups?

How many web travel startups make a bubble? We’re not sure, but it’s starting to look like one.

Yesterday Groople said it has raised $6 million led by ArrowPath Venture Partners and FA Technology Ventures for its group-targeted travel. Every week we get news of online travel companies raising money, adding social and community features, and trying to diversify their sites in a variety of ways. Online travel is a relatively low capital business, a lot of investors and startups figure: why not try it out!

With Americans spending $78 billion on online travel this year, it is hard not to think about getting a piece of the action by focusing on small niches or offering special services. And if one of them actually works, the big boys, such as Expedia, could buy them. Expedia certainly has the money – this morning the Bellevue, Wash-based company reported second quarter revenues of $598.5 million, up slightly from $555 million for the same period last year. (Net income is up $95.5 million versus $73.4 million.)

Still, the recent geopolitical turmoil, bomb-plot arrests in UK and heightened security is bound to have a negative impact on the travel business, even the online travel business. Will the bubble pop because of that? Paul Kedrosky calls the recent events’ air travel tipping point and so does Seth Godin.

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