Earlier this year we launched our annual package, Megatrends Defining Travel in 2016, where we identify the global trends in travel this year and beyond.
In every industry, companies that distribute prod-ucts often get the bug to take more of the business for themselves. Supermarkets push their own private label goods. Amazon doesn’t just sell books from other companies, it publishes them itself.
Online Booking Sites’ Newest Rivals: Their Former Friends
The reason is simple: it is a bigger margin game, and you also own the customer, at least in more ways than just being an aggregated marketplace.
The same thing is now happening in the travel industry. Metasearch providers TripAdvisor, Trivago and Google, which had built businesses by gener-ating leads for online travel agencies and hotels are now becoming booking sites in their own right.
Witness what has happened just in 2015 among the big players:
- TripAdvisor launched Instant Booking on its own sites and apps in 2014 with a handful of partners. After reeling in seven of the 10 largest global hotel chains as participants, it recently signed on Booking.com as a partner. This will let TripAdvisor accelerate the international rollout of Instant Booking.
- Expedia’s Trivago hotel-metasearch site likewise is launching Express Booking for online travel agencies, and is offering an Internet booking engine for hotel partners.
- Google, meanwhile, is introducing Book on Google for hotels and online travel agencies. Hotels and online travel agencies can participate either by paying a commission or through bidding on clicks.
- Expedia, while giving TripAdvisor Instant Booking a cold shoulder, has expressed interest in testing Book on Google as Expedia touts the more prominent branding and lack of consumer confusion through the Google experience.
In the perennial battle between online travel agencies and hotel websites, online travel agencies commanded 41 percent, 69 percent and 64 percent of the hotel gross bookings in the U.S., Europe and Asia-Pacific in 2014, respectively, according to “The Phocuswright Yearbook 2014: The Year Ahead in Digital Travel.”
But now online travel agencies themselves will become increasingly dependent on third parties, namely metasearch sites such as TripAdvisor, Trivago and Google, which will increasingly attract a share of their booking spoils.
In these metasearch site bookings, the hotels and online travel agencies are still the merchants of record and handle customer service for guests but the metasearch sites will gain a foothold in consumer consciousness as booking sites.
As Dara Khosrowshahi, Expedia Inc. CEO, recently told analysts, “We don’t know exactly where it is going to shake out.”
Neither does anyone else. But one thing is clear: the trend is definitely greater distribution and an increased number of bookings through newly strengthened and growing travel metasearch players. We wouldn’t be surprised if the supposed “frenemies” for now would end up truly competing with each other in the next few years, with the resultant severing of the existing relationships.