Excerpt from CNBC

Mark Mahaney, an analyst at RBC Capital Markets, expects Booking.com’s spending on Google ads to drop from $4 billion last year to $1 billion to $2 billion in 2020.

When Alphabet reports first-quarter earnings Tuesday afternoon, the coronavirus-induced crash in tourism and travel will likely weigh heavily on the results.

Booking Holdings, the parent of Booking.com, Priceline and Kayak, will slash its ad spending on Google from about $4 billion in 2019 to $1 billion to $2 billion this year, according to Mark Mahaney, an analyst at RBC Capital Markets. "This is highly contingent on when COVID lockdowns end," he said in an email to CNBC. Travelers use Booking's sites to reserve flights, hotels, resorts, vacation homes and rental cars.

Expedia Chairman Barry Diller told CNBC's "Squawk Box" earlier this month that his online travel agency, which also promotes heavily on Google, would spend less than $1 billion on advertising this year, down from $5 billion in 2019. Airbnb last month suspended marketing as it copes with plummeting vacation home visits.

In a note to clients on April 26, Stifel analysts said they expect "near-term economic impacts" at Alphabet, highlighting Google and YouTube's "particular exposure to travel, media & entertainment, retail, finance, and, automotive verticals." The firm said search spending on travel is down by 50% from before the pandemic struck.

Although it has many experimental and new businesses that generate publicity, Alphabet is overwhelmingly dependent on advertising for actual revenue. Google is the only financially material company under the Alphabet umbrella, generating more than 99% of its revenue last year, while the other Alphabet companies, like Verily (health tech) and Waymo (self-driving cars) are long-term investments. Within Google itself, 84% of its revenue last year came from advertising, with the remainder from cloud computing, hardware and other businesses.

Now, Google's dominant ad business is facing its biggest test since the Great Recession. The stock has fallen 17% since closing at a record on Feb. 19, a steeper drop than the S&P 500 over that stretch and the biggest decline among the five most valuable U.S. tech companies. With consumers in many of the biggest U.S. markets locked down, investors are left to ponder how long it will be before airlines, hotels, cruise companies and concert venues are back in business and promoting their products. 

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