Weekly OTA Notes: Priceline, Expedia, TripAdvisor

January 29th, 2016 by Trefis Team
PCLN: Priceline Group logo
PCLN
Priceline Group

This week witnessed a stock value erosion for the leading OTAs on account of the rising threats from Airbnb. According to some industry leaders Airbnb is growing as a stiff competitor on the online accommodation booking platform and can pose major threats to the existing leaders in the future. However, the market for online travel is always dynamic with major players continuously expanding their portfolios through investments and collaborations. A case in point is Expedia (NASDAQ:EXPE), which led an investment this week for the airport booking startup, Wingz.  Also, after Priceline‘s (NASDAQ: PCLN) Booking.com’s collaboration with TripAdvisor‘s (NASDAQ:TRIP) Instant Booking, it seems the world’s largest travel review website’s popularity as a booking partner has risen among top global hotels. Below we give a quick rundown for all these companies.

See Our Complete Analysis for The Companies Here

On January 27th, Priceline and TripAdvisor witnessed a downgrading by Goldman Sachs because of the rising threat of competition posed by Airbnb, the website enabling users to list, find, and rent lodgings. The global OTA market leader, Priceline, was downgraded to neutral from buy and TripAdvisor was downgraded to sell from neutral. Expedia on the other hand, remained at neutral. [1]

Relevant Articles
  1. What’s Next For Gap Stock?
  2. What’s Driving Altria Stock Higher?
  3. What’s Next For HIMS Stock?
  4. Buy, Sell, Or Hold Deere Stock?
  5. Is The Worst Over For Super Micro Stock?
  6. Pick Honeywell Over 3M Stock?

According to Goldman Sach’s analyst, Heath Terry, the online travel market is heating up with stiffer competition. However, under these circumstances, Priceline is still best positioned to  succeed. TripAdvisor, on the other hand, can be an acquisition target for the larger players. [2]

All three of these leading OTAs experienced a decline of around 4% to 5% in the market this week.

Airbnb is rising as a tough competitor in the OTA space. In fact, in a November 2015 interview with Skift, Expedia’s CEO Dara Khosrowshahi did mention Airbnb’s rising powers and how it will directly challenge the market leaders in online hotel bookings in the coming years.

airbnb

(Source: Skift)

In December 2015, Airbnb confirmed it had raised around $1.5 billion in a Series E financing round. The round valued the company at around $25 billion. Airbnb has so far raised $2.4 billion in funding. [3]

Expedia

After its investment in hotel platform Alice last week, Expedia led an $11 million investment this week in Wingz, the airport ride startup. The total funding for Wingz now adds up to $13.7 million. Wingz, established in 2011 and based out of San Francisco, is a mobile application for booking private rides to and from the airports. Wingz is in the final stages of launching on the Expedia platform. [4]

TripAdvisor

In separate news, TripAdvisor has entered into a partnership with Starwood Hotels & Resorts Worldwide Inc, to make the latter’s hotels and properties available on TripAdvisor’s Instant Booking platform. With Instant Booking’s “Book Now” option, travelers can simply click to reserve an accommodation with Starwood. However, it would be made clear that the reservation process is being powered by Starwood itself and bookers would be provided with contact details of the hotel’s customer service. Starwood, one of the leaders in the hospitality domain, had been a long time partner for TripAdvisor. Now its properties being featured on Instant Booking, adds another feather in the booking platform’s cap. [5] Last year, 7 out of the world’s top 10 hotel chains had partnered with the Instant Booking platform. Notably, in a recent study by the investment banking and asset management firm, Piper Jaffray, the number of leading global hotels that joined TripAdvisor’s Instant Booking platform had increased by 20% during Q4 2015, just after Priceline’s Booking.com agreed to feature its properties on Instant Booking. [6]

On January 27th, TripAdvisor released a Windows 10 application across desktop and mobile devices. Along with TripAdvisor’s exhaustive list of booking tools, including Instant Booking, the application also includes over 290 million user reviews on hotels, restaurants, and tourist attractions, accompanied by over 46 million traveler photos. One of the attractive features available through the application is the Near Me Now tool that helps travelers reach attractions located near them with the help of their phone’s GPS. (Read press release.)

 

View Interactive Institutional Research (Powered by Trefis):

Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap

Notes:
  1. Priceline, Expedia and TripAdvisor face Airbnb threat , Market Watch, Jan 28, 2016 [↩]
  2. Goldman Downgrades Tripadvisor, Priceline Group amid Stiff Competition, Bidness etc, Jan 27, 2016 [↩]
  3. Airbnb Confirms $1.5 Billion Funding Round, Skift, Dec 7, 2015 [↩]
  4. Expedia Continues Investment Spree With Airport Ride Startup Wingz, Skift, Jan 26, 2016 [↩]
  5. TripAdvisor signs Instant Booking deal with Starwood, FTN News, Jan 27, 2016 [↩]
  6. TripAdvisor booking inventory up over 20% after Priceline deal, Travel Weekly, Jan 24, 2016 [↩]