Expedia has been flexing lately, demonstrating its powerful stance in the travel market as well as offering a glimpse as it strengthens its vulnerabilities against its main competitor, Priceline. Take a look at their recent acquisitions:
- Wotif (July, 2014): Wotif is a huge player in the Oceania market, especially Australia and New Zealand, a market which Expedia has little penetration. More info…
- Travelocity (Janurary, 2015): Travelocity is a strong brand that was struggling with new customer acquisition while keeping its back end robust. It was becoming a thorn in Sabre’s side, so to say. It initially had some partnerships with Expedia, and eventually Sabre sold the complete brand to Expedia, giving Expedia’s a larger share of the American pie. More info…
- Orbitz (February, 2015): The Orbitz acquisition was an industry shocker, however it shows that Expedia needs to keep their US market dominance, no matter what the cost. More Info…
What Expedia is worried about particularly is Priceline’s’ breadwinner, Booking.com. Booking started in Europe and then expanded globally, and is undeniably in more markets than Expedia, and currently Booking is making great strides in expanding into the US market, with a formidable on- and offline advertising budget (see more here). Booking alone caused Expedia to move off its more lucrative merchant model to an agent-based model, without giving them much credit, and lowered the commission rates too (see more about that here).
Now Booking is doing a full assault on the US market, with a year-over-year growth of 17%. If you look on their jobs site, WorkatBooking, you can see they have been expanding rapidly. Opening new offices and building teams all across the US. It is apparent that Expedia decided to counter their success, and hold on to their US marketshare by gobbling up other players, like Travelocity and Orbitz.
Another counter is that Expedia is expanding offices and teams in Europe, Bookings home turf. If you look on their hiring site, LifeatExpedia, you can see more global jobs than previously offered. Expedia finally expanded its inventory, having hostels bookable on their site too, which can do really well in Europe, where hostels are increasingly popular. This is something Booking has done almost from the start, so things can get interesting here and boast even more non-hotel accommodation than the other hotel OTAs.
The battle will definitely continue between Booking and Expedia. Priceline has been making moves outside the accommodation OTA sector, and is focusing more on the travel product and hotel services as well. Expedia is still late to the game on this one, but there still are plenty of tricks up their sleeve. There are many companies out there that can really add value to each of these players, and everyone is excited to see what happens next.
