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Despite stalled growth in China, Brazil and Russia, a wave of newly middle-class travelers from the BRICs and beyond will start visiting international destinations in the coming decades — dwarfing the numbers we’ve seen thus far.
Priceline participates in rivals’ hotel metasearch sites such as TripAdvisor and Trivago, but it is tiny compared to what it spends with Google and the $240 million Priceline will spend on TV advertising in 2014. Still, there is plenty of gamesmanship going on behind the scenes as Priceline has opted out of TripAdvisor’s new book-on TripAdvisor solution.
Priceline Group companies, including Booking.com and Agoda, are active advertisers in TripAdvisor hotel metasearch around the world, but when it comes to participating in TripAdvisor’s new Instant Booking product, Priceline has decided not to play.
Speaking from Amsterdam on the Priceline Group’s first quarter earnings call May 8, CEO Darren Huston says Priceline and TripAdvisor have a “healthy” and “symbiotic” relationship, working together on various products, but after mulling the “strategic value” of participating in TripAdvisor’s Instant Booking, Priceline has decided not to for now.
“They made their decision,” Huston said, referring to TripAdvisor. “We made ours.”
He added: “We are not afraid to make really difficult decisions. We do every day.”
The introduction of Instant Booking in TripAdvisor’s hotel-metasearch product on mobile is extremely important as TripAdvisor believes it will greatly increase monetization. That’s because users won’t find themselves lost in the handoff to third-party hotel or online travel agency sites in order to book the stay.
Although Instant Booking has the advantage of enabling users to enter their personal and credit card details within the app or mobile site, the fulfilment and customer service is actually handled by an online travel agency or hotel partner, and that is visible as users go through the booking process.
Getaroom.com and Choice Hotels are participating so far, but the Priceline Group has decided to walk away.
Huston contrasted working with Google, where the Priceline Group is one of its largest advertisers, on advertising projects where Priceline sees strategic value versus how it views TripAdvisor Instant Booking.
Huston said Priceline worked with TripAdvisor on the Instant Booking issue, and TripAdvisor made some changes at Priceline’s suggestion, but apparently not enough in Huston’s eyes.
Priceline is willing to invest with partners such as Google and even take less of a return on investment where Priceline sees the strategic value, but when it doesn’t see such strategic value (as in TripAdvisor Instant Booking as currently constituted), it doesn’t invest, Huston said.
Huston didn’t detail the Priceline Group’s precise issues with TripAdvisor Instant Booking, but one could speculate that it might have to do with economics, ownership of the customer, or branding.
Priceline’s ownership of TripAdvisor metasearch rival Kayak probably wasn’t the deal breaker, though.
Huston noted that Priceline works well with Expedia’s metasearch company, Trivago, and that both Expedia and Priceline treat their ownership in competitors Trivago and Kayak, respectively, like a “Chinese wall.”
In response to an analyst’s question, Huston also reiterated some of his misgivings about advertising in a big way on Facebook, Twitter and other social media platforms.
Unlike companies that are looking for a branding lift by advertising on Facebook, Huston said, Priceline is a direct-response advertiser .
While Google and travel metasearch companies have figured out how to turn advertising into transactions, Facebook and Twitter haven’t learned how to do that yet, although Facebook is “making progress,” Huston said.