The company plans to launch the site later this summer, using the UK as a testing ground before rolling out the service in the rest of Europe, according to press reports.
The site will feature content and travel offers from third-party providers, and it is considering including a booking option. Analysts believe that Yahoo! will partner with another travel site, such as Travelocity, to launch the site.
Lastminute.com, easyJet.com, Expedia.co.uk and Britishairways.com are the UK's leading travel sites, according to figures from internet audience measurement firm Jupiter MMXI.
Like many internet companies, Yahoo! has been forced to look for alternative sources of revenue in the face of declining advertising spending. In April, the company posted a first-quarter loss of $11.5m (£8.3m), cut 12% of its workforce and its CEO Tim Koogle resigned. He was replaced by Terry Semel, former co-chief executive of Warner Brothers.
This week, Yahoo! is expected to launch a music section on its site, offering an e-commerce section alongside news and reviews.
www.yahoo.com
www.Travelocity.com
www.lastminute.com
www.ebookers.com
www.easyJet.com
www.expedia.co.uk
www.BritishAirways.com