Online travels agencies are getting a duopoly

Nowadays, we could feel lost when deciding where to go online to book for an hotel or a flight. Indeed, many online travel agencies (OTAs) have emerged these last years: Booking, Hotels.com, Hotwire.com, Kayak, Trivago, Orbitz, Travelocity, Egencia, etc. It seems like we have a lot of choice of websites before even trying to select a hotel.

The truth is choices between companies in online distribution are getting less and less if you look at it closely. In fact, two powerhouses are in reality fighting in the online travel agencies sector and buying websites after websites: Expedia and Priceline.

If one would think these two companies are new in the market with OTAs this is clearly wrong as they were respectively founded in 1996 an 1997: not that young!

These two giants develop global strategies and are now mastering OTAs. Priceline has a market capitalization of 64 billion dollars and owns famous OTAs such as Booking.com, Kayak, Agoda. Expedia is known for its acquisition of Egencia to get a B2B side and its development of Voyages-sncf.com and got lately back into consolidation strategy with the acquisitions of Wotif, Travelocity (280 million dollars) and Orbitz Worldwide (1.6 billion dollars) in the last three months. If Expedia was said to start decreasing, it is not anymore the case and the company now has 75% market share of US OTAs.

Priceline and Expedia are consequently big players that are hard to avoid online.

As a result, the big question is: does this mean an even harder time for hoteliers?

With only two companies competing on this distribution channel commissions are not predicted to decrease. For hoteliers, working without OTAs is becoming harder every day and they might not escape to Priceline or Expedia. Hoteliers, especially independent hoteliers need to work hard on their revenue management through different distribution channels to make a profit. With commissions from around 15% to 30%, OTAs are slowly eating their piece of the cake. Hoteliers have consequently to react to face this distribution challenge and find innovative online solution to fight the two mentors of OTAs.

Clémence Fernet & Tiphaine Leblanc

All rights reserved Ehotelier.com and Bidnessetc.com for pictures

Sources:

Blanc, M. (2015), Expedia (EXPE) Acquires Travelocity From Sabre (SABR) For $280 million, Bidnessetc

Creager, E. (2009). Are travel websites really different?, Chicago Tribune.

Gonzalo, F. (2015). The OTA duopoly: Priceline vs Expedia, Ehotelier.

http://ehotelier.com/news/insights/2015/03/09/the-ota-duopoly-priceline-vs-expedia/

Lainé, L. (2015). Expedia absorbe Travelocity pour 250 millions d'euros, L’Echo Touristique.