Wednesday, 13 December 2017

Priceline and Expedia continue to grow but at what cost?

They are still growing strongly, but Priceline and Expedia are increasingly reliant on marketing spend to drive expansion and this could leave them with vulnerabilities, finds EyeforTravel’s new reports into the two companies.

Both Priceline and Expedia continued to post some impressive growth numbers in their Q3 results, with double digit rises in gross bookings but these increases appear to come at an ever-increasing cost and concern is rising among investors. EyeforTravel’s new reports into both Expedia and Priceline finds that investors are right to be concerned as this is a potential weakness for both companies that empowers potential rivals in the form of the main digital advertising giants Facebook and Google.

Both companies saw soaring costs in 2016 continue into 2017 and appear to be trapped in a competitive spiral, focusing on matching increases in the other’s marketing spend for fear of falling behind. In 2016, Priceline increased its brand advertising spend by 8% and performance advertising by 27%, whilst Expedia saw selling and marketing costs rise by 29%. Through the first three quarters of 2017, marketing spend by Priceline has grown by 22%. In percentage terms this matches a 22% increase in the broader ‘selling and marketing’ element of Expedia’s costs across the same time frame. For the latter, selling and marketing costs now make up more than 55% of the company’s overall costs, whilst Priceline's combined selling and advertising costs make up 70% of overall costs.



There can be little doubt that the majority of this spend is heading over to Google, with Priceline appearing to be the more reliant on the search giant currently. Around three quarters of search engine traffic to Booking.com is generated via paid advertising, as compared to around half for Expedia. This also comes despite Expedia paying less in advertising than Priceline but is nonetheless a concern for both companies as Google continues to relentlessly but quietly ramp up its travel products.

Not only are the two facing pressure from each other and the online travel agency market, but increasing pressure from their suppliers as well, as they try to recapture market share through book direct campaigns. Most of the major chains have initiated these alongside a broader consideration of what loyalty means in the industry. Combine this with a more combative regulatory environment in Europe, with wide price parity agreements being eroded, and what they will get is more competing forces for keywords and users’ attention across a wider number of search terms.

This has caused ripples on Wall Streets, with analysts focusing in on the growing costs and their effect on the bottom line as profit expectations are missed. After Q3 2017 earnings call for both companies, stocks plummeted, falling nearly 16% for Expedia the day following the call on 27th October and 13% for Priceline on 7th November. For Priceline this mimicked a similar stock drop following the Q2 earnings call, highlighting investor concerns.

Investor concern is unlikely to dissipate as these two are reaching such gigantic proportions that their growth is likely to slow naturally anyway and there doesn’t seem to be a way out of the marketing spend increases on the near horizon, with search engine marketing critical to their business models. Indeed, currently their ability to outbid almost any other player when required and their vast data regarding search term effectiveness currently makes this arena a competitive advantage for both players.

Nonetheless, the question remains, at what cost? It will be critical to continue to monitor marketing spend for both over the coming years to see what the limits of sustainability and effectiveness are. As the competition intensifies across the digital travel space and tech giants eye travel


To preview and buy EyeforTravel’s Expedia report, click here, or here for the Priceline report. These are part of the Future of the Online Giants series, which will cover Expedia, Priceline, TripAdvisor, Ctrip and Google. Keep a look out through EyeforTravel On Demand for the rest of these reports. 

Tuesday, 12 December 2017

China is Expedia’s Achilles heel

Expedia wants to expand outside the North America but making inroads into the world’s most influential travel market will be a tough ask in the face of increasingly fierce competition finds EyeforTravel’s new report into Expedia.

With a projected compound annual growth rate in outbound journeys of 8% to 2020 and an even faster growing domestic market, Expedia needs to get a slice of the Chinese market but since its sale of eLong, the competition has only got stronger and it may be too late to make inroads according to EyeforTravel’s new report into the company.

Expedia faces not only a series of rapidly growing brands that are beginning to establish themselves but an increasingly interconnected web of investments between these players that threatens to lock them out of the market. The key player is Ctrip, which is now reaching a point of near-dominance in the market. Other key brands in the market include Qunar, eLong, Tujia, Alitrip, and Meituan-Dianping, making it a competitive market place, but already several of these brands are falling under key rivals. Ctrip is the biggest player in the field, snapping up Expedia’s former brand in China, eLong, alongside Qunar, and it also has a subtantial investment into Tujia.

Expedia’s great rival Priceline is also deeply embedded into the market. It has investments and distribution partnerships with both Ctrip and Meituan-Dianping, tapping into two already key players, with explosive growth rates. In the case of Ctrip, Priceline’s investment gives them up to 15% of the shares in the company and also an observer on Ctrip’s board, allowing them a degree of influence in the company, one that is unlikely to be friendly to Expedia.   

Although Expedia’s weakness in the market is noticeable, it’s not just Expedia that has struggled in the Chinese market. Other tech giants, such as Uber and even Google, failed to truly make inroads despite putting in big investments, emphasizing the complexity and unique dynamics of the market. It appears that for now Expedia is choosing to focus on other Asian markets, recently announcing that it is investing into regional OTA player Traveloka. Traveloka focuses on Southeast Asia and Expedia reported in 2017 that the area is its fastest growing regional market.  

Nonetheless, the situation leaves Expedia largely bereft of options to open up the Chinese market currently and potentially facing a very large bill if they do want to establish themselves, both in marketing and platform terms. However, one potential route in the long term might be through its investment into SilverRail. Rail travel is already critical in China, making up the largest segment of the digital travel market in the country and is set to grow substantially in the coming years. A foothold in rail therefore could be a key competitive advantage, especially as Priceline is so heavily focused on accommodation and not as diversified in terms of revenue streams as Expedia. However, it remains a longshot in the context of an increasingly powerful number of localized and interconnected players.


To preview and buy EyeforTravel’s Expedia report, click here, or here for the Priceline report. These are part of the Future of the Online Giants series, which will cover Expedia, Priceline, TripAdvisor, Ctrip and Google. Keep a look out through EyeforTravel On Demand for the rest of these reports. 

Thursday, 7 December 2017

Are hotels focusing enough on the stay?

The following is the introduction from EyeforTravel's new the Future of the In-Stay Experience report. 


Hospitality businesses live and die by their reputations but are accommodation brands really focusing enough on the one moment where they have the guest’s complete and undivided attention: The stay itself? It is these crucial moments when they interact to request a service, such as check-in, a spa treatment or for local recommendations, that will last longest in the guest’s memory.

Now, there are new possibilities to improve the guest experience as technologies open up and fall in cost. The future of the stay will be one where the guest can use their own device to interact directly with the hotel’s staff or even the hotel itself through AI-powered interfaces. Customers will be able to call on far more services, and staff will be more connected and effective.

Hospitality companies’ key objectives currently are to drive loyalty and improve the customer experience in the hope that this will drive down acquisition costs by creating repeat guests. Although the pre-stay digital area is important and has received a lot of focus recently, it is the quality of the experience when they are in the property itself that will truly generate long-term loyalty and strong review performances.

From a marketing perspective, it’s the one time that they have the guests’ complete attention. Potentially it represents a key competitive advantage for accommodation suppliers, as they compete against themselves and against the online travel agents (OTAs) to grab and maintain the guest’s attention.

This paper will demonstrate the solutions that allow hotels to facilitate better guest-focused services and communications.


We talk to the leading tech firms in the field, break down the changes happening already and what hospitality brands should be looking to implement to secure their guests’ loyalty in the years to come. 

Tuesday, 5 December 2017

New Free Report: The Future of the In-Stay Experience

EyeforTravel's new report is out now and completely free for you to download. It covers the growing sphere of in-stay technology focused on improving the guest's experience and hotels' relationships with those guests.

Hospitality businesses live and die by their reputations but are accommodation brands really focusing enough on the one moment where they have the guest’s complete and undivided attention: The stay itself? Now a wave of innovation and consumer technology is giving hotels new opportunities in this space and opening up ways to build relationships. Download the free report now to see how you can take advantage of this exciting and expanding area

From the moment a hotel takes a guest’s booking they have an unrivalled marketing opportunity. The guest is theirs to build a relationship with and a growing wealth of technological solutions are springing up to handle this before, during, and after the stay. Through smarter properties and systems, hotels can build up complex guest profiles that can be used to improve almost every aspect of property performance and therefore the guest’s experience. What’s more these technologies are becoming cheaper and more accessible through mobile apps and cloud computing.

The future of the stay will be one where the guest can use their own device to interact directly with the hotel’s staff or even the hotel itself through AI-powered interfaces. Customers will be able to call on far more services, and staff will be more connected and effective.

Download this completely free report now and find out what the emerging technologies are, who is providing them, and how they can help to transform your business and your relationship with the guest.

This report explores:
  • The tech and tools available to create better guest stay.
  • What tech companies are working in the field and what solutions they can provide.
  • How to work with changing consumer technologies and behaviors.
  • How to improve pre-stay messaging.
  • How property management systems are developing and what this means for hotels.
  • What the future of the guest stay will look like.
  • The real-world results of implementing technological solutions.
  • How staff can improve their performance through new technologies.
  • How hotels can gather and utilize the new wave of data coming from emerging technologies.

This content is brought to you by EyeforTravel San Francisco 2018. Join 300+ senior travel experts talking about mobile, social media, data & partnerships, and the travel start-up scene.