“Has the OTA industry become a duopoly now that the US Justice Department has nodded through Expedia’s $1.3bn acquisition of Orbitz Worldwide? Certainly Wall Street has seen celebrations that only Expedia and Priceline among the monster groups are left standing. (Less research work to do!) The share prices of the two have been very upbeat since the head of the Justice Department’s Anti-Division, Bill Baer, announcement that “we concluded that the acquisition is unlikely to harm competitors and consumers”.
“A Skift take”
Booking.com’s participation in Book on TripAdvisor is a major win for TripAdvisor, which launched its Instant Booking product a couple of years ago and was slow to get hotels, and especially big online travel agencies to join. The U.S. Justice Department was correct, during the Expedia-Orbitz merger review, to see TripAdvisor Instant Booking as an emerging player to heighten competition.
By Dennis Schaal: Skift
Source & Read more: Booking.com Finally Joins Major Hotel Chains in Book on TripAdvisor – Skift
The prospect of massive online travel consolidation has been triggered after Expedia won approval from US competition authorities to take over rival Orbitz for $1.3 billion.
The US Justice Department said a six-month investigation had found no evidence that the merger would lessen options for consumers. It noted that Orbitz is a relatively small source of bookings for airlines, car rental companies and hotels. Hotwire and Hotels.com are owned by Expedia, which also purchased Travelocity in January for $280 million. That paved the way for the acquisition of Orbitz, which reported $10 billion in bookings last year for air fares and hotels. Orbitz Worldwide owns ebookers in the UK together with cheaptickets.com and hotelclub.com. Booking.com, OpenTable and Kayak are owned by Expedia’s rival Priceline.
The American Hotel and Lodging Association had argued that the merger would create a “duopoly” between Expedia and Priceline, which will now control 95% of the online travel-marketplace, a business that generates $152 billion a year, the Washington Post reported.
But Bill Baer, head of the Justice Department’s anti-trust division, said: “We know online travel booking is important to US consumers and to the airlines, car rental companies and hotels that serve those consumers.
Over the course of a six-month investigation, lawyers and economists from the antitrust division reviewed tens of thousands of business documents, analysed transactional data from the merging companies and from other industry players and interviewed over 60 industry participants of various types and sizes. “The antitrust division investigated the concerns that have been expressed about this transaction. We took those concerns seriously and factored into our analysis all of the information provided by third parties. At the end of this process, however, we concluded that the acquisition is unlikely to harm competition and consumers. “There are several reasons for this conclusion. First, we uncovered no evidence in our investigation that the merger is likely to result in new charges being imposed directly on consumers for using Expedia or Orbitz. So we focused our investigation on the commissions Expedia and Orbitz negotiate with airlines, car rental companies and hotels. “Second, we found that Orbitz is only a small source of bookings for most of these companies and thus has had no impact in recent years on the commissions Expedia charges. “Many independent hotel operators, for example, do not contract with Orbitz, and those hotels that do often obtain very few bookings from its site. In addition, beyond Expedia and Orbitz, travel service providers have alternative ways to attract customers and obtain bookings.
The world’s two largest OTAs are boosting spending on marketing while hotel lobbyists are calling for federal regulators to stop the proposed merger of two of the most popular OTAs in the U.S., reflecting a heightened battle between suppliers and intermediaries for a greater share of travel spending.
Expedia Inc. and Priceline Group each ratcheted up second-quarter marketing costs. Expedia did so as it made preparations for its pending acquisition of smaller competitor Orbitz Worldwide, a deal that is still being reviewed by the Justice Department. Orbitz also recorded higher second-quarter costs.
The Expedia-Orbitz deal has drawn fire from the American Hotel & Lodging Association (AH&LA). Earlier this month, the trade group publicly opposed the $1.34 billion deal, first announced in February, citing factors such as a narrowing choice of booking channels, higher costs for smaller hotel chains and the higher probability of deceptive practices from “rogue” OTAs.
A combined Expedia-Orbitz would control almost three-quarters of the U.S. online market, while the AH&LA estimated that Expedia, Orbitz and Priceline combines account for more than 95% of the OTA market.
Meanwhile, some hoteliers are drawing their own fire for their efforts to secure more bookings through direct channels.
Marriott International earlier this month launched a marketing campaign promoting Marriott’s website as having the best rates on the hotelier’s rooms. Ads concluded with the tagline “It pays to book direct.”
While that effort was likely geared to pull prospective guests away from OTAs, ASTA last week termed the language “misleading” and called for the hotelier to discontinue the campaign “immediately.”
Suppliers and their channels continue to battle over their respective shares of the U.S. online hotel sector, where annual spending is predicted to jump 55% between 2012 and 2016, to $58.1 billion, according to a Phocuswright report released in November. OTAs have been gradually pulling some of that spending away from hoteliers’ websites. Last year, OTAs accounted for 48% of online hotel spending in the U.S., up from 46% in 2012.
Hoteliers fear that a combined Expedia and Orbitz will result in a further loss of booking dollars.
“We believe this transaction and the resulting consolidation of the online travel marketplace will result in significant negative consequences, particularly for consumers, but also for the large number of our members who are small business owners and franchised properties,” AH&LA CEO Katherine Lugar wrote in an Aug. 6 statement.
Meanwhile, Priceline and Expedia continue to ramp up spending in their competition with each other, and those higher expenses were reflected in both companies’ second-quarter financial results.
Expedia’s second-quarter selling and marketing costs jumped 19% from a year earlier, while general and administrative expenses surged 38%. The company, which in May sold its 62.5% stake in China-based OTA eLong, also reported that gross bookings excluding eLong rose 20% to $15.1 billion, while room-night growth excluding eLong rose 35%.
Net income quadrupled from a year earlier, to $449.6 million, though that increase was largely the result of its $508.8 million gain on the eLong sales. Revenue increased 11%, to $1.66 billion.
Priceline’s online advertising spend rose 21%, while sales and marketing costs were up 26%, outpacing the company’s 7.4% revenue growth to $2.09 billion. Gross bookings advanced 11%, to $15 billion, with international bookings rising 30% while U.S. bookings remained flat.
Orbitz took a $4.25 million loss, compared with year-earlier net income of $6.88 million. Revenue fell 3.4%, to $239.6 million. The cost of revenue surged 34%, largely as a result of higher costs related to implementing systems to stem fraudulent transactions. Gross bookings fell 8%, to $3.09 billion, as standalone air and vacation-package revenue were both down 14%.
Financial analysts appeared to be unconcerned about Expedia’s higher spending, noting that it was appropriate for a company whose recent acquisitions included Travelocity and Australia-based Wotif.
In an Aug. 9 note to clients, Deutsche Bank analyst Lloyd Walmsley wrote, “We see a long runway for the company to continue to improve its operations across its legacy assets and acquired businesses, with better website conversion, increased hotel supply, deeper penetration of existing hotel partners and improved marketing optimization.” Walmsley maintained his “buy” rating on the stock.
And while Guggenheim Partners analyst Jake Fuller in an Aug. 6 note to clients classified Orbitz’s second-quarter performance as “weak,” he maintained that many of the challenges were short term and typical for a company on the verge of being acquired. He added that the recent performance of Travelocity could hint at a better future for Orbitz, as well.
“We note that Travelocity appears to be ramping revenue post acquisition as it benefits from a higher converting platform, access to more hotel inventory and better marketing support,” Fuller wrote. “A weak performance [by Orbitz] probably does not change the prospects for the deal.”
Ahead of StrategyEye’s Future of Travel event on Wednesday 2nd September, Stephen Tayor, vice president and managing director of travel ad platform Sojern, talks through the do’s and don’ts of targeting consumers in digital travel.
The Future of Travel, at The Escalator in East London, will feature keynote speeches from Expedia, Hostelworld and Sojern along with five-minute pitches from start-ups including Hostmaker, Tripster and Triptease. Click here for more information24.
What is Sojurn’s primary focus?
We place ourselves firmly in the middle of marketing, advertising and travel technology. We’re a business that specialises 100% in the travel sector. The digital environment for travel is huge. Making sense of it all and helping the big travel brands communicate with the right person at the right time, in the right way, is what we aim to do.
We collect and aggregate huge volumes of anonymous travel intent data by working with companies like airlines and meta search companies.
What is changing in the way consumers are doing their own research?
The power that has gone to consumers is incredible. There is such a proliferation of information available, which is the reason why we exist. Online travel agencies are appearing such as HotelTonight, TripAdviser and Airbnb. Where I book, how I book, when I book – if you’re a hotel, how on earth do they reach the right client? That’s the problem we try and help solve for the big travel brands. The proliferation just means it’s a very exciting time, and on the brand side of it, it all comes down to use of data. With our data you can see when people are booking their flight, this is when they are travelling, and using that data a brand can work out when the right time is to talk to them. The data is invaluable.
What’s the key to targeting the right customer?
It comes down to the quality of the data you use and how you deploy it. Generic retargeting to everybody, which goes on a lot, is the worst rule of data marketing. Trying to sell something to someone that they just chose not to buy is stupid, Bombarding people with ads is irritating. The key is better and better data. If someone hasn’t bought something there is a reason, so you need to use the next level of data.
For example, give them options – we know for example that a certain person was searching for Chicago as well as New York, so offer them that as a flight option. Retargeting can be incredibly powerful, but the vast majority is wasted. It’s not a trivial problem to solve.
What are the key trends you see emerging in digital travel in the different markets?
We are in the US and Europe and we are expanding because the majority of travel companies exist all over the world. We are being pulled by our European clients into the Middle East, so Dubai is incredibly important for us. Then there was a pull into Asia Pacific through Singapore – Singapore itself is a natural travel hub and gateway to the rest of Asia. Singapore and Dubai are investing huge amounts of their GDP into travel products.
There are big differences between markets. The US is a phenomenal business market for us, but the vast majority is domestic travel. London, however, is an international market. The data targeting therefore needs to be a lot more granular. Germany is a market where travel agents are still prominent and going strong. Asia Pacific, where we are still learning our way, it is a market that is changing the whole time, and everybody is adjusting there, there is a fast growing middle class, and many affluent customers to target. It used to be about Japan, but now China is driving growth. Each market has very distinct travel patterns and you need to suss them out.
Find out more and learn how to attend The Future of Travel here.
From last-minute summer road trips to a look at which destinations are trending right now, the week in travel stats provided a good glimpse into what’s hot in travel for the rest of the year.
U.S., Spain Top Most-Searched Destinations in Q2
This week travel marketing platform Sojern released a look at the most-searched destinations of the second quarter of 2015, an indicator of where travelers are looking to book at the moment.
The United States and Spain were the most-searched destinations, followed by Italy, the United Kingdom, Germany, France, Portugal, Turkey, Greece and Russia. The latter re-entered the list after a quarter’s hiatus, replacing Thailand.
Beyond the top 10, here are the destinations that captured the most traveler interest by region since summer 2014:
In North America, Haiti moved up 34 ranks since summer 2014, after experiencing a dramatic decline in tourism in the aftermath of the 2010 earthquake, followed by Iceland, up 11 spots.
For travelers from Western Europe, Cuba pushed up 12 places to position 41, thanks to a lot of media attention and the detente with the U.S. Czech Republic, Iceland and Romania each moved seven places up in the ranking.
In Latin America, Aruba’s appeal increased over last year, pushing it up 11 spots, followed, by Hungary, up 10 spots. The latter is one of the more affordable European destinations, as a non-Eurozone country.
In Southeast Asia, Bangladesh moved up eight spots and Qatar seven since summer 2014.
For travelers from the Middle East, Sudan gained the most popularity (up 24 spots), followed closely by Bosnia and Herzegovina (21 spots), a country which the World Tourism Organization estimates will have the third highest tourism growth rate in the world by 2020.
Top Restaurants for Last-Minute Summer Road Trips
Even as we head into August, clients could still be looking to take one last summer road trip. OpenTable has released its 2015 Summer Road Trip Restaurant Guide highlighting top eateries for your clients to visit.
Compiled by OpenTable insiders across the nation, the guide highlights culinary destinations along some of the country’s most popular road trip routes.
The OpenTable 2015 Summer Road Trip Restaurant Guide includes more than 100 restaurants, from Grace in Portland, Maine, to Meriwether’s Restaurant & Skyline Farm in Portland, Oregon. OpenTable’s regional teams around the United States curated the guide.
1 in 4 Business Travelers Can’t Use Ride Share Services
This week also saw a flurry of research into the world of business travel from the Global Business Travel Association (GBTA) Convention 2015.
As part of a panel discussion at the event, the GBTA Foundation released a new report on the future of ground transportation in the sharing economy. Key takeaway: With one in four business travelers barred from using new ride share services, rental cars and taxis remain the most commonly used methods of ground transportation among business travelers.
“Our research shows one in four (24 percent) travel buyers say their company does not allow their business travelers to use ride-sharing companies, by far the highest percentage for any form of ground transportation,” said GBTA Executive Director and COO Michael W. McCormick. “In addition, a large number of companies still have not adopted policies around ride-sharing companies, revealing a need for education about the benefits and the risks. GBTA hopes this study is the start to closing that knowledge gap and we welcome an open and constructive dialogue on this topic.”
Business Travel Spending to Hit Record High of $1.25 Trillion in 2015
Another report from the GBTA Convention brought some good news for business travel. Driven by a surge in China, business travel spending is expected to hit a record high of $1.25 trillion in 2015.
Despite recent economic turbulence, China business travel will increase by 61 percent over the next five years, from $261 billion in 2014 to $420 billion in 2019. That increase is greater than the increases in business travel growth in the next 8 largest countries combined, including the U.S., Germany, India, U.K., Indonesia, France, Turkey and Japan.
“Despite recent economic speedbumps, China will pull away as the global leader in business travel over the next five years,” said McCormick. “On the horizon, we’ve identified five nations that are also seeing extraordinary growth and could very well turn into the business travel markets of the future. Another market to watch is India, which is statistically where China was 15 years ago.”
Premium DIY travel site for Chinese going overseas smashes equity crowdfunding goal, Paul Bischoff
Up until a few years ago, most travellers from China were relegated to group tours – packed onto planes and buses with at least a dozen other tourists, led around on a strict schedule by a guide with a flag and loudspeaker.
But China’s younger generations, with their growing incomes and fewer travel restrictions, are quickly shifting to DIY travel, which offers more flexibility and freedom than group tours. As a result, a huge wave of startups have cropped up to serve their needs. Now the highly-fragmented market is nearing its saturation point.
“It is true that China’s DIY market is already very hot and is trending towards over-saturation,” says Robin Shao, CEO and founder of Directions Travel. “But we believe that this is more of a ‘quantity’ over-saturation, rather than a ‘quality’ saturation. There are a lot of companies out there doing this, but they are not necessarily meeting the needs of consumers.”
Directions has two core competitive strengths, Shao says. The first is that the start-up reaches out to people who have unique experiences and hobbyists in certain fields to introduce unique attractions, restaurants, and accommodation. “We source our trip ideas from individuals who have on the ground experience,” he explains. “On our site, users can learn about these people and their background to pick out the one that best matches their interests.”
Secondly, Directions uses these human resources to cater to customers who want unique experiences. “Though the independent travel market is hot, there are very few companies that are willing to put in the effort to create products that meet specific needs,” Shao says.
But what constitutes a “unique” experience is rather subjective, and Directions doesn’t seem to tackle the most empirical deciding factor for most travellers: cost. Whether the promise of quality can outweigh customers’ budget concerns in this highly competitive market will be critical to the startup’s success.
The company focuses on mid- to high-end customers travelling overseas. Some of Directions’ destinations include the US, Bhutan, Myanmar, and Latin America. Competing travel sites include Lvmama, LY.com, ByeCity, Ctrip, Qunar, Aoliday, Woqu, Tuniu, and many, many more.
An invested crowd
Directions was chosen as one of the 11 inaugural startups to raise funding through ecommerce site JD’s new equity crowdfunding platform. In equity crowdfunding, backers actually take a slice of equity in the company they support in contrast to the rewards-based Kickstarter model. The crowdinvesting site just launched earlier this week, and Directions has already doubled its RMB 2.5 million (US$403,000) goal, surpassing it within the first 24 hours.
“We believed that it would be a fast, efficient way to raise money,” Shao says. “For an early startup, the first fund is the most important one, but you cannot spend too much time raising it or you might run out of money before you make it.”
Venture capital is no longer the exclusive right of big organizations, Shao says. The equity crowdfunding model also helps attract early supporters. ” If they are willing to invest some funds into us, then they will certainly be willing to help us promote and improve our products.”
On top of that, it also just announced an RMB 1.5 million (US$242,000) seed investment from Gobi VC. Gobi’s Shanghai-based venture partner Michael Zhu says the firm is enthusiastic about the equity crowdfunding model. “As an early stage VC, Gobi believes that the industry should embrace this type of innovative crowdfunding model. It empowers society, it helps startups grow and improves transparency within the VC industry.”
Gobi also invested in another startup that successfully raised funds on JD, spicy seafood delivery company Jacky’s Shrimp. Zhu says the exposure a startup gets through this sort of platform is a huge bonus.
“Usually, a seed stage investment may experience difficulty in getting the word out, especially with how active China’s early stage investment scene is these days. It really builds momentum,” he says. “We are also able to raise more money for the company than we would normally be able to at this stage of growth.”
Zhu says the the results exceeded his expectations as both companies surpassed their investment goals by over 150 percent in under 24 hours, each with a couple months remaining.
Directions will put the fresh funds toward new products, optimizing existing products, and conducting on-the-ground inspections of its trip packages. It will also spend some cash on improving its IT system and on marketing.
Editing by Malavika Velayanikal
You’ll Never Guess Which Travel Site Americans Are Most Loyal To (Hint: It’s Not Priceline) Steve Symington
With the advent of online travel sites, it’s never been easier to book a quick vacation, business trip, or even a spontaneous jaunt for almost anywhere in the world. Though the online travel industry is relatively young, it’s still growing quickly, with dozens of viable sites ready to make your trip happen.
The sites with the most loyal customers stand to grab the biggest share of this market as Internet usage increases around the world. But maintaining customer loyalty is even more challenging in markets like the United States, where online travel is becoming second nature as nearly 90% of the population is already online.
Thanks to online travel sites, resorts like this are just a click away.
This of course begs the question, which travel site are Americans the most loyal to?
Thanks to prominent advertising campaigns, several incorrect names might immediately come to mind. Take the various sites operated by Priceline Group (NASDAQ: PCLN), for example, which notably include priceline.com, KAYAK, booking.com, rentalcars.com, and — thanks to a $2.6 billion acquisition last year — even restaurant reservations specialist OpenTable. Since it was founded in 1997, Priceline has enjoyed the charisma of spokesman William Shatner talking up its negotiating skills, while KAYAK earns business by comparing the prices of “hundreds” of travel sites at once.
Collectively, these businesses helped Priceline Group achieve $50.3 billion in total gross bookings last year alone. And with a market capitalization higher than $61 billion as of this writing, it’s no surprise Priceline regularly calls itself the “world leader in online accommodation reservations.” But “world leader” or not, none of Priceline’s sites are tops in customer loyalty.
Or how about Hotwire? Specific financial details are scarce for the privately held site, but Hotwire earns customers by selling off unsold travel inventory at a huge discount, saving people planeloads of cash on all their travel needs from airfare to hotels, rental cars, and comprehensive travel packages.
Unfortunately, though, even Hotwire’s approach doesn’t translate to the most loyal users. It’s not Expedia (NASDAQ: EXPE), either — though we’re getting closer.
Travelocity’s roaming gnome, Credit: Travelocity
Love for the Roaming Gnome
According to the 19th annual Brand Keys Customer Loyalty Engagement Index, American consumers are most loyal to a travel site acquired by Expedia less than two months ago: Travelocity.com. On January 23, 2015, Expedia paid $280 million in cash to buy Travelocity from travel-technology specialist Sabre (NASDAQ: SABR), which itself was a subsidiary of American Airlines until being spun off in 2000.
According to Brand Keys president Robert Passikoff, 2015 was Travelocity’s first year atop its category in loyalty. And this year’s results were driven by the brands’ abilities to “identify customers’ expectations and address them via authentic emotional values.” So why do Americans specifically love Travelocity so much?
A little focus goes a long way
First, keep in mind that Travelocity signed a strategic marketing agreement with Expedia in mid-2013. Per the terms of that deal, Expedia agreed to take the reins of the technology platform powering Travelocity’s U.S. and Canadian websites. In exchange, Expedia received performance-based marketing fees that varied based on the amount of travel booked through those Travelocity-branded sites.
Travelocity’s #IWannaGo campaign was wildly successful, Credit: Travelocity.
While this meant less revenue for Travelocity at the time, it also greatly improved the site’s profitability by drastically lowering operating costs. In its most recently reported quarter as part of Sabre, for instance, Travelocity’s adjusted revenue fell nearly 45% year over year, to $89 million, while adjusted EBITDA skyrocketed 116% to $16 million. Without the need to focus on maintaining its technology platform, Travelocity was free to redirect those resources toward promoting its brand — something it arguably did more effectively than any of its deep-pocketed rivals, anyway.
Take Travelocity’s “Roaming Gnome” mascot, for example, whose offbeat TV spots have been at the heart of its viral advertising efforts for more than a decade. But starting in 2013, Travelocity also began using the gnome to engage consumers on a personal level with a wildly successful social media campaign centered around the hashtag #IWannaGo.
By following the @roaminggnome handle on Twitter or Instagram, then using the hashtag to tell Travelocity where you wanted to go, you were automatically entered to win a chance to make your travel dreams come true. Then. last year, Travelocity built on that momentum by combining the hashtag with its new “Go & Smell the Roses” tag line.
According to Travelocity chief marketing officer Bradley Wilson: “‘Go & Smell the Roses’ is more than a tag line in an advertising campaign, it’s a rally cry. […] We are using our most powerful asset, the iconic Roaming Gnome, to inspire and instigate people to get off the couch, to go and smell the roses.”
If Brand Keys’ latest Loyalty Index is any indication, Travelocity’s efforts to connect to customers on an emotional level are obviously proving effective in its core American market. If it can translate that good work under Expedia’s wing to inspire people around the world, something tells me Expedia’s $280 million purchase price will look brilliant in the end.
Expedia’s Orbitz deal sends travel stocks flying
When Online travel service Expedia (EXPE) announced plans to buy smaller rival Orbitz Worldwide (OWW) for $1.3 billion, it became the latest consolidation in the $444 billion online travel industry. Shares of both companies surged on the news. In afternoon trading Expedia was up nearly 17 percent, and Orbitz had shot almost 22 percent higher.
On the takeover news, shares of other travel sites also took off. TripAdvisor (TRIP) rose nearly 24 percent, and Home Away (AWAY) was trading 7 percent higher, indicating that investors see more industry deals on the horizon. Even industry giant Priceline (PCLN) was up more than 3 percent. Companies outside the U.S. are especially attractive to the larger players, analysts say.
Bellevue, Washington-based Expedia will pay $12 per share in cash for Orbitz, which is headquartered in Chicago. That’s a 29 percent increase over Orbitz’ average trading price during the previous five days. The deal would add Orbitz to Expedia’s already-formidable lineup of online travel brands, which include Hotels.com, Trivago and Hotwire, and promises to ratchet up competition in an industry where it’s already intense.
“It was just a matter of who would buy Orbitz and when,” said Henry H. Harteveldt, founder and travel industry analyst at Atmosphere Research Group, in an interview. “Orbitz just really didn’t have a clear marketing direction. They have just been kind of an aimless brand for the past three or four years. ”
Orbitz CEO Barney Harford, a former Expedia executive, could remain with the company after the sale is completed, according to Harteveldt. An Orbitz spokesperson told CBS MoneyWatch that no announcements about personnel have been made and declined to provide a timeline about when the deal might close.
“Barney came from Expedia, and I think he’d be comfortable returning to the fold,” Harteveldt said. “However, Expedia will have to give him a meaty-enough role, and he’ll want the opportunity for further advancement.”
A larger Expedia should be good news for consumers because it will keep the power of airlines in check, according to the Business Travel Coalition, which represents corporate travel departments.
“Strong, independent distributors are necessary to keep the airlines honest on their websites and in their offerings to consumers,” wrote Kevin Mitchell, the organization’s chair, in an email to CBS MoneyWatch. “These distributors provide consumers with the comparison-shopping tools that keep pricing discipline in the system. In the alternative, consumers would have to go to the Walled Gardens of each airline website and spend hours trying to determine the best deal. Of course, often, they would not.”
Expedia’s growing strength in the travel market, however, is bound to worry suppliers of travel services, according to Harteveldt. He added that the impact on consumers remains to be seen, though most won’t notice any changes, at least at first.
“The hotels and airlines in particular will be greatly concerned about the juggernaut that Expedia has become,” he said. “Right now, Orbitz and Expedia compete to offer access to inventory and prices. If the merger is approved, eventually Orbitz will be powered by the same back-end system as Expedia, with the same prices as a result. The only difference will be the web page’s design.”
Investors expecting more deals are probably on the right track, considering how active the industry has been consolidating recently. Priceline acquired rival Kayak Software in 2013 for $522.4 million. A year later, the Connecticut-based company branched out a bit and bought restaurant reservation service Open Table for $2.6 billion.
In July, Expedia said it was buying Australian booking site Wotif.com for $658 million. And barely a month ago, it announced plans to buy rival Travelocity for $280 million. In fact, just a week ago, Expedia Chief Financial Officer Mark Okerstrom shot down speculation that his company would be doing more acquisitions, telling The Wall Street Journal, “we’ve got our hands full right now.”
According to research firm Phocuswright, online travel agencies account for about 16 percent of the total U.S. travel market, or about $51.4 billion, a sign that the industry has plenty of room to grow.
“It has become a two-horse race between Expedia and Priceline globally.” Said Phocuswright Vice President Douglas Quinby