Google Inc.’s share price down, strikes a licensing deal with Room 77 Inc. to expand its reach in hotel-booking software segment

According to a letter that was sent on Monday to the shareholders of Room 77, Google Inc., currently the largest Internet-search company, is going to license the hotel-booking software from Room 77 Inc. The deal will expand Google Inc.s reach and provide it with access to technology from Room 77, a company supported by Expedia Inc.

Currently Room 77 offers hotel search compatible with both stationary and mobile devices. If licensed by Google, it will provide it with the opportunity to modify its search results and start looking like some of the biggest travel websites such as TripAdvisor Inc. and Priceline Group Inc.

The deal emerges as one of the last steps made by Google in order to improve its hotel-search results. Making a breakthrough in this segment of the cash-cow advertising business is usually considered quite a challenge, but it is also known as very profitable, if successful. Recently Google Inc. has been focused on signing a number of contracts in order to add more hotel-related content to its search results.

Google Inc. has invested in this segment in order to obtain a larger profit by hotels and plane tickets booked online. In 2011 the company acquired flight information provider ITA Software Inc. in a deal estimated to 700 million dollars.

Still, the company now is in possession of tools of its own that provide similar services. As reported for the Wall Street Journal by one of the people with knowledge on Googles issues: “You might infer that Room 77 was further along than Google. Theres a lot of stuff that Room 77 has worked on, some launched, some not launched, that Google believes will improve the quality of its [hotel] search.”

One of Room 77s spokeswomen – Ms. Dawn Lyon, confirmed the rumours of the agreement between the two companies. Tim Drinan, a spokesman of Google Inc., did the same.

According to Financial Times, shares of Google Inc. lost 0.85% to close at 540.63 USD on NASDAQ yesterday, while companys one-year return rate was 37.95%. According to data published by CNN Money, the 41 analysts offering 12-month price forecasts for Google Inc. have a median target of 1,325.00, with a high estimate of 1,500.00 and a low estimate of 675.00. The median estimate represents a +145.08% increase from the last price of 540.63.