Expedia Acquires Travelocity From Sabre for $280 million

By: MARTIN BLANC

Sabre & TravelocityPublished: Jan 23, 2015 at 3:40 pm EST

The online tourism market was shaken today with the news of Expedia Inc. (NASDAQ:EXPE) acquiring the online travel agency, Travelocity, from Sabre Corp. (NASDAQ:SABR) for $280 million in cash. The deal is the continuation of a strategic marketing agreement between Expedia, Inc. and Travelocity, which enables the former to power the technology platforms for the latter’s websites in US and Canada. This agreement allows access to Expedia, Inc.’s supply as well its customer service and support program.

Expedia is one of the pioneers of online travel industry, which, over the years, has cemented its position and made an extensive brand portfolio, covering many aspects of the tourism and travel market. It provides travel information, and hotel and flight bookings, as well as localized websites in 31 countries to cater to local audiences, amid other services.

Expedia, Inc.’s President and CEO, Dara Khosrowshahi, commented on this development saying: “Travelocity is one of the most recognized travel brands in North America, offering thousands of travel destinations to more than 20 million travelers per month, The strategic marketing agreement we’ve had in place has been a marriage of Travelocity’s strong brand with our best-in-class booking platform, supply base, and customer service. Evolving this relationship strengthens the Expedia Inc. family’s ability to continue to innovate and deliver the very best travel experiences to the widest set of travelers, all over the world.”

Sabre is a leader in the global travel industry and provides technology, data, software, and distribution solutions. The company’s services are utilized by many players in the tourism and travel industry, from airlines to hotel management, in ensuring the success of operations such as reservations, revenue tracking, and flight and crew management. The President and CEO of the company, Tom Klein, acknowledged that Sabre and Expedia have had a successful partnership in boosting Travelocity’s business, and called today’s decision to be in the interest of the company.

Expedia, Inc. stock is up 2.16% today trading at $88.56, while Sabre stock is up 1.29% trading at $20.75 as of 3:25 PM EST.

via Expedia (EXPE) Acquires Travelocity From Sabre (SABR) For $280 million.

Expedia: Key Partnerships and Acquisitions in 2014 – Trefis

Expedia logoExpedia has experienced a healthy 2014.  The world’s second largest online travel services provider (in terms of gross booking volume of $39.2 billion) displayed a 22% year-on-year increase in revenues for the first nine months of 2014, to $4.4 billion. The key factors propelling this growth were the healthy performance of the hotel room nights and air tickets segments. The top line growth, combined with the disciplined investments in selling and marketing, led to a solid bottom line. Net Income for the first nine months of 2014 increased by 141% year-on-year to $332 million.

In this article, Trefis discuss the major acquisitions and partnerships undertaken by Expedia in 2014. They describe the strategic significance of the deals, and how these will lead to further growth in the future.

Extended Partnership With HomeAway: Expedia Forays Further Into The Vacation Rental Space

In September 2014, Expedia declared that it will continue its partnership (initiated in October 2013) with HomeAway, the world’s largest vacation rental website. HomeAway services account for approximately 15% of the U.S. and European vacation rental bookings market. [1] HomeAway’s website has more than one million live listings in 190 countries. [2]

Expedia would now be able to list 115,000 HomeAway vacation rental properties on its U.S. website. Vacation rentals are privately owned residential properties that property owners and managers rent to travelers on a nightly, weekly, or monthly basis. According to a study by PhoCusWright, the market for vacation rentals in the U.S. stood at $23 billion in 2012, lower than its levels prior to the recession. However, the share of online sales in vacation rentals doubled from 12% in 2007 to 24% in 2012, and this is expected to increase to 30% by 2014. [3]

Expedia believes that the vacation rentals listing will complement its existing business and will not undermine its hotel bookings, which currently accounts for more than 70% of its revenue. While the partnership will give HomeAway vacation rental owners and property managers exposure to more than 13.4 million monthly visitors on Expedia, Expedia users will get the benefit of being able to bundle home rentals with flights, cars and other travel bookings offered through the website.

Expedia’s Wotif Acquisition: Ensuring Market Dominance In Australia And New Zealand

In November 2014, Expedia completed its acquisition of Australia-based Wotif Group for $612 million. Wotif Group is a prominent player in the Asia Pacific market with a host of travel brands under its umbrella, including Wotif.com, lastminute.com.au, travel.com.au, Asia Web Direct, LateStays.com, GoDo.com.au and Arnold Travel Technology. Wotif’s portfolio focuses on hotel and air, offering consumers more than 29,000 bookable properties across the globe. The group currently operates from Australia, China, Indonesia, Malaysia, New Zealand, Singapore, Thailand, UK and Vietnam. [4]

Wotif was Expedia’s major rival in Australia and New Zealand. With 1.3 million hotel reviews on its platform, Wotif had a market leadership in hotel reviews in the Australia New Zealand (ANZ) market. According to September 2013 data from Experian Hitwise, among top travel websites in Australia, Wotif held the second position and Expedia, the third position. Also, among top New Zealand travel websites, Expedia enjoyed the first position and Wotif, the second. [5]

According to a report by PhoCusWright, the Asia Pacific (APAC) market overtook Europe to become the global leader in regional travel in 2012. The Australia-New Zealand market accounted for 17% of APAC’s online travel market and earned $13.7 billion in online gross bookings. For 2015, the market size is estimated to be around $126.6 billion. [6]

Hence, both now and in the future, Asia Pacific will be a strategically important sector for online travel companies. The ANZ market is the third largest market in the APAC region, and Wotif is a prominent player in the ANZ market. Hence, we expect the acquisition to propel Expedia’s growth in the ANZ market and this in turn would be a contributing factor in establishing Expedia’s dominance in the APAC market.

Expedia’s Auto Escape Acquisition: Boosting The Car Rental Service Segment

Expedia acquired French car rental company, Auto Escape, in June 2014. The acquisition increased its exposure to the $36.9 billion global car rental industry, which is expected to grow at a compounded rate of 13.6% to reach $79.5 billion by 2019, according to Transparency Market Research. [7]

Auto Escape offers car rental services from over 300 car rental suppliers in 125 countries, and has a fleet of over 800,000 vehicles. It is estimated that Auto Escape’s revenues increased fivefold in the last five years to €120 million ($160 million). [8] Auto Escape became a part of the CarRentals.com brand, a business unit managed by Expedia’s Hotwire Group.

Although the contribution of car rentals and cruises to the valuation of Expedia is in low single-digits, we believe that the Auto Escape acquisition will help it sell more vacation packages and destination services since car rental is an integral part of such offerings.

via Expedia: Key Partnerships and Acquisitions in 2014 — Trefis.

The Online Travel Industry: Investing Essentials

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The Online Travel Industry: Investing EssentialsBy Asit Sharma | More Articles August 25, 2014 | Comments 0Barajas Airport, Madrid. Source: Jean-Pierre Dalbera under Creative Commons license.The speed at which the Internet evolves can make milestones from 10 or 15 years ago seem worthy of encasement in a glass museum display. Take this quote from Priceline Group’s first annual report after its 1999 IPO:

Priceline.com commenced its service with the sale of leisure airline tickets. The number of airlines participating in priceline.com’s airline ticket service has increased to a total of 10 domestic airlines and 20 international airlines.

The online travel industry has grown exponentially since those heady days when Priceline managed to sign up 20 international carriers, not to mention pitchman William Shatner. While traditional travel agencies, especially those that cater to business travelers, haven’t disappeared, most of us now find it second nature to book travel on our desktop computers, laptops, and mobile devices.

What is the online travel industry?

Companies that facilitate purchases of flights, hotel rooms, rental cars, and travel-related activity over the web comprise the online travel industry. The industry includes well known travel services such as ExpediaTravelocityTripAdvisor, and Orbitz Worldwide. It also encompasses newer, smaller companies, often competing on the basis of incremental innovations. For example, travel site Hipmunk.com presents airline query results in a visual format, ranking results not only by price but also by travel length. 

How big is the online travel industry?

The online travel industry is a subset of the global travel and tourism industry, which, according to Statista.com, had a direct impact of $2.2 trillion on global GDP in 2013. U.S. revenues of online travel companies were estimated at $157 billion in 2013. Revenues of the global online travel industry, sometimes referred to as the global “digital travel industry,” are estimated to be between $400 billion-$500 billion annually. With increasing Internet usage worldwide, we can expect this market to continue to expand, especially in developing markets such as Latin America.

How does the online travel industry work?

Corfu, Greece. Source: iwiseguy71 under Creative Commons license.

The online travel industry is divided into three primary categories: suppliers, online travel agencies (or OTAs), and aggregators. Suppliers are the airlines, hotels, and rental car companies offering their services to businesses and individuals. Suppliers sell services directly to consumers via their own websites, but also widely utilize OTAs and aggregators to market their inventories. OTAs provide suppliers’ pricing to consumers and fulfill online orders. Aggregators provide a means for web users to compare prices of OTAs and suppliers for specific travel queries, routing users to back to these organizations for purchases.

In recent years, major OTAs like Priceline and TripAdvisor have extended their revenue base by purchasing aggregators, blurring the line between the two business models. Priceline owns aggregators Kayak.com and Booking.com. TripAdvisor counts Airfarewatchdog.comand BookingBuddy.com among its properties.

OTAs and aggregators rely on both organic and paid search (i.e., searches for travel sites on search engines like Google) as well as other advertising spends to capture customers. Priceline and Expedia are by far the largest digital advertisers; according to e-commerce research organization eMarketer, Priceline’s 2013 global spend of $1.8 billion was equal to over half of all digital travel advertising spend in the U.S.

What are the drivers of the online travel industry?

Several trends and financial factors drive the online travel industry. Most prominent is global economic growth. As you might expect, rising discretionary incomes play an important role in the industry. However, as OTAs receive commissions on sales, the direction of hotel room rates and airline rates also affects revenues. Rising average daily hotel room rates since the recession of 2009, for example, have benefited OTAs’ top-line revenue.

Meta-search, the process by which an online travel site includes results of several different OTAs on a single page for easy comparison, also drives this industry. The convenience of meta-search results has propelled the rise of aggregators and is partially responsible for the recent popularity of aggregators as acquisition targets by traditional OTAs.

Perhaps the most noticeable trend driving the online travel industry is the shift from desktop computing to mobile phones and tablets. The general tilt in the population toward “mobile” usage is having a marked impact on the online travel industry. According to industry research group PhoCusWright, mobile phones and tablets made up 20% of online travel spending in 2013. As this share of the total industry rises, OTAs and aggregators will invest significant resources to optimize their interfaces for mobile devices.

The growing tendency for digital apps to foster consumer-to consumer transactions will also influence the online travel industry in the near future. Home sharing site airbnb.com raised nearly $500 million of private venture capital investment in 2014, at an impressive valuation of more than $10 billion. The interest of Silicon Valley in pioneers of the sharing economy like airbnb indicates that new breeds of travel sites — bypassing both suppliers and OTAs — have the potential to unsettle the business model of this still-young industry.

Finally, long-term capacity trends in the airline industry will drive online travel opportunities for years to come. Expansion in the online industry has occurred in tandem with the falling cost per mile of air travel to consumers, as airlines have revamped their fleets with lighter, more fuel-efficient aircraft and focused on lowering fixed costs and increasing profitability. Air travel is vital to the online travel industry, as healthy aviation traffic drives not only sales of flights, but hotel stays and rental car bookings as well.

via The Online Travel Industry: Investing Essentials.

Expedia Inc EXPE Cashing in on Growing Travel Market | Tech Insider

expedia-logo-300x150Expedia Inc NASDAQ:EXPE has released its second quarter results for the fiscal year 2014, beating analysts’ expectations which helped the stock to advance by 5% in the aftermath. In a segment on CNBC, Dara Khosrowshahi, Expedia’s CEO has commented on the company’s strong second quarter results, saying travel market is expanding and “online” takes an ever increasing chunk of it.

The travel company has seen its gross bookings number rise to $13 billion in the second quarter and its revenue increase by 24% year-on-year. Room nights grew at a pace of 20%, hitting a record, and adjusted earnings per share jumped 60% year-on-year.  Such positive results give the company an opportunity to spend more on marketing and investment, which in turn brings more customers and revenue, according to Khosrowshahi.

“Right now we are in a pretty good spot within a competitive marketplace. […] We are seeing our marketing spending going up faster than revenue but these are big scale businesses when you’re talking about $13 billion of gross bookings in one quarter, so we are able to scale off of our fixed expenses. So I think it is a great situation when you can spend aggressively into marketing but still increase profits […],” he added.

Last week, Expedia Inc NASDAQ:EXPE’s competitor Priceline Group Inc NASDAQ:PCLN announced the acquisition of OpenTable Inc NASDAQ:OPEN for $2.6 billion in cash, in a deal that marked its expansion into the restaurant business. Asked if  Expedia Inc NASDAQ:EXPE has similar plans, Dara Khosrowshahi said that such a move is not in the cards at the moment, as there are still plenty of opportunities in the travel market, which is a $1 trillion dollar-industry and growing. He has disclosed instead that the company plans to look for growth in Europe and Asia.

via Expedia Inc EXPE Cashing in on Growing Travel Market | Tech Insider.

Bitcoin Acceptance Yields Marketing Wins for Expedia | ClickZ

Expedia LogoExpedia is now accepting Bitcoin as a form of payment. The move gives the company cost savings and also allows it to market itself as a high-tech, customer-focused e-business.

Bitcoin_logoOnline travel site Expedia.coms announcement that it is accepting Bitcoin as a form of payment for hotel purchases is not only a sign of the decentralized peer-to-peer payment network inevitably going mainstream, but it also gives Expedia, like other early adopters, some distinct marketing advantages.

As of last week, customers can shop from Expedias inventory of hotels and pay for accommodations using Bitcoin. Expedia partnered with third-party Bitcoin payment processor Coinbase to integrate payment support into the hotel booking experience on its website.  An Expedia rep says its “basically just a matter of time” until the brand rolls out the functionality to other product lines like flights and car rentals and notes the speed will depend on the demand the brand initially sees with hotels.  According to the Bitcoin Press Center, Bitcoin is in use by a growing number of businesses and individuals, including restaurants, apartments, and law firms, as well as online services such as Namecheap, WordPress, Reddit, and Flattr.

via Bitcoin Acceptance Yields Marketing Wins for Expedia | ClickZ.

Online travel agents: Sun, sea and surfing | The Economist

economist logoIn 1996, when Microsoft was still ahead of the big technology trends, it launched a small brand called Expedia Travel Services. It hoped to persuade customers to book holidays online. It was not an immediate success. Few households had an internet connection then and, just as importantly, most people thought the idea of buying a holiday through the ether not to mention typing their credit-card details into a web browser plain foolish.

Few think the idea crazy now. Expedia, which Microsoft sold in 2001, has become the world’s biggest travel agent see chart. Last year, through brands such as Trivago, Hotels.com and Hotwire, as well as its eponymous operation, its gross bookings were $39.4 billion. The third-largest travel agent is also an online firm: Priceline, whose brands include Booking.com, made reservations worth $39.2 billion in 2013. Last year online travel agents OTAs had combined bookings of $278 billion, according to Euromonitor, a market-research firm.

Indeed, when it comes to reserving flights, hotel rooms and rented cars for holidaymakers, the online-travel market looks quite mature in many rich countries. PhoCusWright, another research firm, reckons that online booking now accounts for 43% of total travel sales in America and 45% in Europe. Since much of the rest is accounted for by business trips handled by specialist corporate-travel agents such as Carlson Wagonlit, scope for the OTAs’ market to grow seems limited. That explains Priceline’s purchase, announced on June 13th, of OpenTable, a restaurant-reservation website, for $2.6 billion: it sees this as a way to earn commission on another chunk of tourists’ spending.  There are some big markets where online bookings have yet to take off.   Germans still typically arrange their holidays through traditional travel agents. Although the Chinese now spend more on travel in aggregate than any other country’s population, in 2012 they booked only 15% of their trips by value online, says PhoCusWright.   It thinks this will rise to 24% by 2015, making the Chinese online-travel market worth around $30 billion.  Much of the expansion will be driven by ambitious local firms. Ctrip, the biggest, makes most of its money from air tickets and package tours to Greater China. But as Chinese tourists become more intrepid—ranging farther afield and no longer shuffling around in big tour groups—online hotel bookings are becoming more important.  Ctrip’s hotels division has grown at an average of 25% a year for the past five years, according to Trefis, a stockmarket-analysis firm, and had revenues of $366m in 2013. It will not be long before it eyes Western markets more keenly.

To stay ahead, the big OTAs are having to follow their customers as they switch from desktop computers to smartphones and tablets.  By 2017 over 30% of online travel bookings by value will be made on mobile devices, thinks Euromonitor. In part this will be the result of OTAs making their apps more appealing by, for example, adding location services that help travellers find the nearest rooms and restaurants. But it is also because the way people plan trips is changing. It generally takes a family more than three weeks to book a holiday, from deciding to travel to clicking the “pay now” button, in which time they may visit seven websites, says Faisal Galaria of Alvarez & Marsal, a consultant. In future, travellers are likely to become more impetuous, he says, and smartphones appeal to those making last-minute bookings.

For those still surfing for holidays on their PCs, other technological advances are on the horizon.  Amadeus, which supplies the software behind many OTAs’ booking systems, is developing new ways to entice customers to the agents’ websites. One is to use browser-tracking technology to aim personalised ads at consumers, showing them the latest prices for trips in which they had previously shown an interest. Such targeted advertising has been common among non-travel retailers for some time. However, until now it has proved trickier for the travel business as it involves collating frequently changing data from many airlines and hotels.

Gorilla marketing

Even with help from such marketing tricks, the smaller OTAs will find it increasingly hard to compete with the big two. Online travel is an industry in which size counts. The scale of Expedia and Priceline means they can sign up more hotels, and negotiate better prices, than their smaller rivals. This is a business that requires heavy spending on marketing, which hands another advantage to the big two.  OTAs will spend more than $4 billion this year on digital advertising, according to eMarketer, also a research firm; and Priceline and Expedia will account for over half of this. Some smaller rivals may find profitable niches, but in general it will be hard for them to grow. Whenever they open a door, “there are already two 800lb gorillas fighting it out in the room,” says Mr Galaria.

Not only gorillas. The observant may also spot an elephant in the room.  In 2010 Google bought ITA, a maker of flight-search software, and the next year it launched a flight-comparison website. The giant search company has also improved its hotel listings by including photographs and virtual tours, as well as price information. It has the clout to disrupt Expedia and Priceline if it so wishes. It has not done so yet. Google, many believe, would be loth to cannibalise such a large chunk of its main business: analysts think the big two will account for as much as 5% of its advertising revenue this year.

So besides Ctrip, perhaps the biggest threat to the big two OTAs is TripAdvisor, a popular travel-reviews site spun off by Expedia in 2011. This month it said travellers would be able to book hotels directly through its smartphone app. Weeks before Priceline’s deal with OpenTable, TripAdvisor announced it was buying La Fourchette, another online restaurant-booking service. The online-travel market is consolidating fast, but so far holidaymakers need not worry about a lack of options

via Online travel agents: Sun, sea and surfing | The Economist.

2014: Is this the tipping point for online travel distribution in APAC? | Travel Industry News & Conferences – EyeforTravel

Jun 2, 2014

As the travel industry starts to mature and new disruptive forces enter the fray, are you – and your business partners – ready to pivot?

skyscanner_logoIn a world where many travel brands want to drive more direct business, how do you choose the right partners? Whether it’s Google, Expedia, Skyscanner or Groupon, one pressing question is this: how are they going to assist or hinder your efforts in the fight to win the next billion Asian customers? By 2030, tourists from Asia will lead all regions of the world in total departures and travel expenditures. So yes, it’s a booming market and there are huge opportunities – as well as some significant challenges.

Over the past month, we’ve been talking to some of the speakers who presented at EyeforTravel’s Travel Distribution Asia last week. They helped us to identify some emerging trends in the region. Let’s now take a closer look.

1. Ready to pivot? Are peer-to-peer and villa rentals the next big thing?  Is this a tipping point in online travel?

Sean Seah, MD of Groupon Travel thinks so. “I think we’re at a pivot point. What I call travel 1.0 – the OTAs, search engines and pretty much metasearch too, which has been around for ages, have matured,” he says.

In APAC, specifically, this is a whole new segment, which could seriously shake up and disrupt the distribution model.“

In 2014 and 2015, the whole peer-to-peer model, like Airbnb and vacation rental space, like HomeAway, will be huge and that is going to make it even harder for travel suppliers like hotels to play the game, as these other guys are going to be just as good,” says Seah.

In Asia, there are still huge opportunities to run villas – especially for groups and families – in, say, Phuket and Bali

“The OTAs have brought transparency to the hotel space, but there is absolutely no transparency in the market for villas,” explains Seah.In other words, they are hard to find, very few are doing it and nobody has – as yet – gained critical mass. While, things are changing though this represents one of the greatest opportunities in APAC.

2. Mobile: it’s massive and it’s mainstream

For Skyscanner’s Andy Sleigh, General Manager, APAC you simply can’t succeed in APAC unless you understand mobile and are prepared to take advantage of mobile growth in a region, where around a third of the 4-billion strong population have access to the mobile internet.

“We take a mobile first approach – it’s a no-brainer when your mobile traffic more than tripled as ours did last year,” he says.

Expedia could not agree more.expedia-logo

Says Traci Mercer, Vice President, Market Management – Asia Pacific at Expedia Lodging Partner Services: “Mobile is massive, mainstream and the marketplace for travel is – Now!”

With mobile as the mainstream medium, Mercer says Expedia will be considering what the next ‘well’ is for new customer acquisitions. Watch this space.

3. Where next for wearables…and the smart TV?

For Mercer the big question is: “As we play this forward [the fact that mobile is now mainstream], what do wearables and smart TVs do to commerce online?”

In APAC, Mercer points toa leapfrogging of the PC in favour of smartphones and tablets or ‘phablets’ and this, along with the emergence of low cost carriers, is creating a larger middle class and creating an abundance of new travel consumers. Of course, when it comes to wearables, we aren’t just talking Google Glass, and there is plenty of room for innovation on this front.

4. Keep it clean, simple and transparent 

What KAYAK has seen through continued growth in 2013 is that there are similar user preferences across its various regions, and if we are speaking of integrity, it’s important to be transparent too.

“Consumers across all regions prefer a simple, intuitive and clean user interface, comprehensive search results, a fast response time, transparency in pricing, and a seamless multi-platform experience,” says Debby Soo Vice President – APAC.

KAYAK believes it is able to take its widespread and deep experience with consumer preferences in the US and apply those lessons to markets like Europe and Asia.

via 2014: Is this the tipping point for online travel distribution in APAC? | Travel Industry News & Conferences – EyeforTravel.

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Why Priceline’s peers are struggling to maintain operating margins » Market Realist

By Smita Nair • Apr 29, 2014 9:00 am EDT 

Operating margins

Priceline and its peers such as Expedia (EXPE) and Orbitz Worldwide (OWW) have been investing in marketing and promotion, technology, and personnel in an attempt to improve long-term operating results, but these expenses have pressured operating margins. Priceline’s management said on the earnings call that “operating margins were impacted by 146 bps of deleverage and offline advertising mainly related to our Booking.com TV campaigns in the U.S. and Australia and the inclusion of KAYAK offline advertising.” Although Priceline has managed to efficiently improve its margins, its peers have struggled.

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In 2013, Priceline’s total online advertising expense was approximately $1.8 billion, up 41.2% year-over-year. A substantial portion of this was spent internationally through Internet search engines, meta-search and travel research services, and affiliate marketing. The company has worked on building brand awareness for Booking.com, Priceline.com, Agoda.com, KAYAK, and Rentalcars.com via aggressive marketing and promotion campaigns. It said it uses online search engines (primarily Google), meta-search and travel research services, and affiliate marketing as primary means of generating traffic to its websites. It also invested approximately $127.5 million in offline advertising via television, print and radio.

Priceline said its online advertising ROIs were down year-over-year for 2013. Its online advertising as a percentage of gross profit has increased due to lower returns on investment (ROIs) from online advertising, brand mix within the group, and channel mix within certain of its brands. Plus, its international brands are generally growing faster than U.S. brands, and usually spend a higher percentage of gross profit on online advertising.

Priceline CEO Darren Huston said in a Bloomberg interview that the company spends more on search ads on Google, and that results from Facebook (FB) and Twitter (TWTR) haven’t worked out for the company. Huston said in the article that the ad spending would be modified to include TripAdvisor Inc. (TRIP), the KAYAK travel search engine, and Expedia’s (EXPE) search site Trivago. When asked about the emergence of Google as a potential competitor, Hudson said he was not worried, adding “Google of course respects us as an advertiser.”

Expedia mentioned in its annual filing that its marketing channels include social media sites such as Facebook (FB) and Twitter (TWTR). The marketing initiatives also include promotional offers and traveler loyalty programs such as Welcome Rewards and Expedia Rewards that are recorded under its expenses. Orbitz (OWW) said in its annual filing that its marketing expense increased 16% or $39.5 million to $292 million, due largely to the growth of its private label distribution channel, which increased affiliate commissions by $23.5 million, and search engine and other online marketing of $32.7 million.

via Why Priceline’s peers are struggling to maintain operating margins » Market Realist.

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Expedia Demonstrate The Power of Agile, Responsive Marketing

By Chelsea Varney, Published April 27, 2014

Controlling your own customer experience has never been more important.

Walking into a supermarket you will often see consumers choosing to scan their own groceries or even ordering produce directly to their door.

It’s all about being independent and the extensive array of online tools has made it exceedingly easy.

Customers are now more aware of what they want and are able to cut out the seemingly now trivial ‘middle man’ of the sales advisor.

The travel industry has been shaken up pretty roughly by this transition.

No longer needing to rely upon professionals to book their holidays, travelers are purchasing their own getaways by using comparison and customization platforms.

Indeed, a One Poll survey found that 62% of those questioned believed that Travel Agents was a dying business.

Price (75%) was the highest ranking factor that affected their decision making process, meaning travel agents are having to work much harder to generate business.

But, how can travel brands stop themselves slipping into the industry abyss?

Adapt

There has been a steady rise in the amount of people choosing to travel, with over one billion people (globally) vacationing each year.

big-bucks

This increase in global travelers has been in part facilitated with changDing ways that people arrange their travel, and many businesses have had to adapt fast.

Building on customer relationships and identifying a sense of brand reputation has meant that some companies have continued to survive against independent booking websites.

In fact, a great knowledge of target audience partnered with swift action and marketing nous has lead to a few travel agencies flourishing.

Being able to listen to customers and adapt strategy can bring you popularity and cult status, as demonstrated by Expedia Canada.

Expedia Reacts

In 2013 Expedia launched a television advertisement campaign urging Canadians to escape winter by traveling.

The advert featured a rather annoying violin solo, which after repeated showings increasingly grated on the viewing public.

People took to Twitter to vent their hatred of the infernal racket. Expedia were soon confronted with a barrage of complaints.

Greeted with negative sentiment throughout the social media sphere, Expedia’s creative agency, Grip Limited, devised a plan.

The brand responded quickly, and put out a replacement video which depicted the violin being flung out of the house, a direct response to the complaints made online.

This let consumers know that Expedia was listening to their feelings in a physical and daring way.

This clip directly addressed the preferences and desires of the audience as the violin is smashed up by one of those tweeters complaining about the ad.

This direct, agile approach let the audience know that every single comment is being examined and acted upon, even a solo tweet from a small user.

The Results

When you analyse the social data surrounding the campaign the brand was successfully able to eliminate the negative conversation.

Moreover, they managed to maintain buzz and even experienced an increase in chatter on release of new videos.

What this demonstrates is not only the power of listening, but also of an agile marketing strategy.

Expedia-AD-with-WM

Good marketers don’t stick to the original plan like glue, they react to trends and opportunities.

In fact, one of the most popular campaigns of 2013 – dunk in the dark by Oreo, was a reaction to listening to public conversation on the live blackout at the Superbowl.

Using emerging technologies allows marketers to weather the storm of reactions and also adapt their strategies.

Putting the customer at the forefront of your campaign and listening to their conversations means that a greater connections can be formed.

This is especially important for those within the travel industry who need to maintain loyalty and build on brand reputation.

This case study was taken from our latest report on Travel and Hospitality.

via Expedia Demonstrate The Power of Agile, Responsive Marketing.

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Why TripAdvisor and Priceline Wish Facebook Ads Performed Better – Skift

Both Priceline and TripAdvisor have expressed their disappointment in recent months in the value of Facebook advertising. Pictured, TripAdvisor CEO Stephen Kaufer at the PhoCusWright Conference in November 2010. PhoCusWright / Flickr.com / Flickr.com

Both Priceline and TripAdvisor have expressed their disappointment in recent months in the value of Facebook advertising. Pictured, TripAdvisor CEO Stephen Kaufer at the PhoCusWright Conference in November 2010. PhoCusWright / Flickr.com / Flickr.com

Priceline Group CEO Darren Huston’s lament that Facebook and Twitter can’t do what Google advertising can when it comes to driving travel transactions is not news to TripAdvisor, which complained of the same shortcomings five months ago.

At the time, TripAdvisor CEO Steve Kaufer said using Facebook to promote its Cities I’ve Visited Ap leads to better monetization, but Facebook falls short in driving transactions in the way that Google Adwords does.

“We weren’t able to get the same traveler in shopping mode to come over to TripAdvisor in any scale that matched Google,” Kaufer said, referring to advertising on Facebook, when speaking at an investor conference in November 2013.

Unlike Huston, Kaufer didn’t address the effectiveness — or lack thereof — of advertising on Twitter at the time.

The independent statements of Kaufer and Huston are a blow to Facebook advertising as a travel-transaction-booster. Both TripAdvisor and the Priceline Group were previously rooting hard for Facebook advertising to succeed as both companies look for other ways to advertise in addition to Google’s platform.

TripAdvisor, in particular, has engaged in lots of disputes with Google when it felt Google was pilfering TripAdvisor reviews and artificially limiting traffic to TripAdvisor in favor of Google promoting its own travel products.

In addition, TripAdvisor was once considered Facebook’s best friend in travel because of TripAdvisor’s Cities I’ve Visited Facebook app, with Facebook even citing TripAdvisor’s promotions on Facebook in its IPO registration papers.

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Travel companies do have an alternative to Google, though, in one growing channel — travel metasearch through companies such as Kayak, Trivago, Skyscanner, and TripAdvisor, among others.

You only have to look at the Priceline Group’s acquisition of Kayak for $1.8 billion, and Expedia’s acquisition of Germany’s Trivago for $564 million in cash and 875,200 shares to see how Priceline and Expedia were looking for an advertising hedge against Google’s dominance.

Many travel industry companies hoped that alternative would be Facebook, but so far Facebook hasn’t delivered in the view of some major players, at least.

Facebook declined to comment on the issue.

via Why TripAdvisor and Priceline Wish Facebook Ads Performed Better – Skift.

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