acquisition, Agoda, Book on TripAdvisor, Booking.com, competitive landscape, economies of scale, Expedia, FlipKey, Google, HomeAway, Instant Booking, Orbitz, OTA, partnership, Priceline, The Priceline Group, TripAdvisor, Trivago, Viator
Online travel industry is one of the most competitive, highly dynamic, and fast-moving industries. There are a lot of M&A activities of the big players to increase their market shares and strengthen their brands.
OTA (Online Travel Agencies): For online travel, this is the game of 3 superpowers – Expedia, Priceline, and TripAdvisor. Google considers being a new but deep-pocketed player. Competition is fierce in this industry and scale matters. Let’s list down their key moves in the past year.
- 6 primary brands: Booking.com, Priceline.com, Agoda.com, Kayak.com, Rentalcars.com, Open Table
- Operations: 200 countries
- Share price (NASDAQ: PCLN): US$ 1,244.99 (Nov 27, 2015)
- Market cap: US$ 61.97B (Nov 27, 2015)
- CEO: Darren Huston
Key acquisitions: The Priceline Group purchased Booking.com (a global online hotel agent with strong foothold in Europe, HQ in Amsterdam) in 2005, acquired Agoda.com (an Asian-based online hotel agent) in 2007, TravelJigsaw (a rental care service company, now changed name to rentalcars.com) in 2010, KAYAK (the meta travel search company that focuses on flights) in 2013, and OpenTable (online real-time restaurant reservation service) in 2014 for US$ 2.6B. Priceline also bought a minority stake in Ctrip.com (the largest OTA in China) in 2014.
The most exciting news of 2015: TripAdvisor and The Priceline Group announce Instant Booking partnership on Oct 14, 2015. Booking.com joins major hotel chains in Book on TripAdvisor to enable users to book hotels right on TripAdvisor. With instant booking, travelers will be able to see Booking.com-branded hotel listings and can simply click on the “Book Now” button to book on TripAdvisor directly. TripAdvisor and The Priceline Group’s partnership could hurt Expedia’s volumes from TripAdvisor.
- Brands: Expedia.com (full-service OTA), Hotels.com (hotel-only OTA), Hotwire.com, Trivago (hotel metasearch company), Egencia (corporate travel management company – TMC), Venere, CarRentals.com, Expedia Affiliate Network, eLong, Travelocity, wotif.com, Orbitz, HomeAway, etc.
- Operations: 60 countries
- Share price (NASDAQ: EXPE): US$ 123.62 (Nov 27, 2015)
- Market cap: US$ 16.15B (Nov 27, 2015)
- CEO: Dara Khosrowshahi
Key acquisitions: Expedia bought Wotif.com (Australian OTA) in Oct 2014, acquired Travelocity from Sabre in Jan 2015, purchased Orbitz in Feb 2015, took majority stake (75%) in Expedia’s AirAsia joint venture (AAE Travel Pte Ltd) in Jun 2015, and acquired HomeAway (vacation rentals service) in Nov 2014 for US$ 3.9B (biggest purchase till date)
The most exciting news of 2015:
- Expedia bought Orbitz on Feb 12, 2015 to take on Priceline, seeking to reclaim the lead in global online travel bookings from Priceline Group and fend off new competitors such as Google. This move also continues the M&A trend in the travel industry. But while Priceline has made only a few acquisitions, Expedia has shown more willingness to buy up brands to gain market share and scale (Expedia’s market share will move up to 6% after Orbitz acquisition, according to Euromonitor International).
- Expedia announces acquisition of HomeAway for US$ 3.9B on Nov 4, 2015 (the transaction would close in Q1 2016). The Expedia – HomeAway combination would displace Booking.com as the world’s largest lodging seller in terms of numbers of hotels, vacation rentals and apartments. Expedia would offer at least 1.5M properties (officials said), compared with Booking.com’s 821,400.
To answer to TripAdvisor’s booking partnership with the Priceline Group on Oct 14, 2015, Expedia-owned Trivago (a meta travel search company) has launched hotel bookings on its site and app in Germany, and plans to expand it into English-speaking countries. Expedia also plans to test the Book on Google feature (as Google intends to have hotel bookings on its search pages and Google Maps).
- A travel review and meta travel search company, with 290 million reviews and opinions covering 5.3 million accommodations, restaurants, and attractions
- Brands: Viator, FlipKey (US), Holiday Letting (UK)
- Operations: 45 countries
- Share price (NASDAQ: TRIP): US$ 82.79 (Nov 27, 2015)
- Market cap: US$ 11.94B (Nov 27, 2015)
- CEO: Stephen Kaufer
- Expedia spun off TripAdvisor in 2013
Key acquisitions: TripAdvisor acquired a majority stake in FlipKey.com (a vacation-rental website) in 2008, purchased holidaylettings.co.uk (UK’s largest independent vacation rental site) in 2010, and bought Viator in Jul 2014
The most exciting news of 2015: TripAdvisor launched its instant booking platform in June 2014. Book on TripAdvisor enables consumer to book hotels on TripAdvisor sites and apps instead of their having to navigate to third-party websites and possibly getting lost in the switch. Since launch Book on TripAdvisor is a marketing channel used primarily by major hotel chains such as Marriott, Accor, Best Western, Mandarin Oriental, Choice Hotels, Carlson Rezidor, and Preferred Hotels Group. Thus Booking.com’s participation in Book on TripAdvisor on Oct 14, 2015 is a major win for TripAdvisor as Booking.com is the first major OTA to do so, likewise sister brands Priceline.com and Agoda.com will subsequently join in. This will give TripAdvisor a much wider hotel coverage and on the way to become a quasi-OTA.
What does this mean for travelers and consumers?
With the M&A booms that happen in the online travel industry, travelers and consumers will be able to buy everything they need through one platform as travel companies have become more diversified. In addition, alternative lodging sector, i.e. sharing economy – apartment and vacation rentals has become an increasingly important lodging sector that gives travelers a much wider choice of accommodation options. We will see more consolidation in the overall online travel category as the big will get bigger and the game is all about scale.
My next post will focus on: The competitive landscape in the apartment and vacation rentals market – The race with Airbnb