It was a little hard to tell yesterday whether the rumors of a Google offer for my former employer, Expedia.com, where true or just an April Fool's Day joke.
As Rich Barton has pointed out, Google already does a pretty good job monetizing travel, by getting each competing vendor to pay for clicks during the search process.
But Google is doing a pretty poor job right now actually answering people's travel-related queries. Type in "Maui condo spring break", and you'll be given the usual 10 Blue Links as search results, plus some pay-per-click ads. That experience is quite a hassle for consumers.
What you really want when you type in "Maui condo spring break" is for Google to ask you if you know your dates, what price range you want to pay, and what amenities you might want, then present the results on the following page.
Instead of buying a travel intermediary, Google should immediately embrace and/or publish a set of microformats or more detailed specs for travel availability and resource search. When someone goes to Google and wants to do an airfare search, Google should syndicate out this search to a series of subscriber-services that have registered with it. The structured data that returns can be ordered in whatever way Google wants (yes, probably including promotional billing and/or things like paying for a thumbnail image or embedded video).
In this way, Google could make lots of consumers happy and take the economic rents that are currently owned by many travel intermediaries, whether it's Expedia, Priceline, Travelocity, Sidestep, or others.
Suppliers too benefit tremendously when this happens, since the connection to searching consumers is much more direct.