Online travel websites have been prone to going on trips, lately – shopping trips that is. Booking trips online is clearly paying off for the travel industry. One of the biggest players in the game recently went on a buying spree, consolidating several online booking companies in what can only be characterized as a massive takeover.
In Januray 2015 the US travel bigwig Expedia acquired both the US and Canadian Travelocity websites from parent corporation Sabra Corp for a cool 280M. Just a few weeks later, Expedia purchased another top-tier travel company, Orbitz Worldwide (which includes Orbitz, CheapTickets, eBookers and HotelClub) for a 1.6B deal.
This is even more impressive when you look at it this way: Online Travel Agencies (OTA’s) represent 16% of the US online booking market. According to PhoCusWright, after Expedia’s recent acquisition the company wields 75% of the market share – that’s 14% of the total 16%. The rest of the market belongs primarily to the Priceline Group.
We used SimilarWeb to take a closer look at both of these top tier travel companies to get a better understanding of how the new competitive landscape looks from a traffic point of view. For this research we looked at traffic for all of 2014 in the US only.
Before the Acquisition
First let’s take a look at how both websites were performing before each was acquired by Expedia.
As the graph shows, neither website was doing all that well traffic-wise. Orbitz saw nearly a 22% YoY traffic drop, while YoY traffic for Travelocity was in even worse shape with a 49.25% decrease. Of course, it’s important to note that the decrease in site traffic can at least be partially attributed to a shift to mobile devices. Still, the website traffic performance left a lot to be desired.
Expedia just bought the majority of its competition. So how does this affect the competitive landscape, and what does this mean for the future of the online travel industry?
The Traffic Breakdown
We mentioned before that OTA’s are responsible for 16% of all online booking business. Let’s take a closer look at how much traffic they’re generating from their recently acquired sites:
Expedia receives over 104 million desktop visits to all of it’s sites every month, and over 1B desktop visits for the whole year. Here you can see how all of the Expedia brands are represented, with the main website (Expedia.com) raking in the lion’s share of traffic.
When we look at the Priceline Group, the numbers are actually not that far off in terms of annual desktop visits. In 2014, Priceline grabbed a total of over 944M in site traffic from all of its sites.
And here’s the traffic breakdown for all of Priceline’s brands:
The Big Dogs: Competition is Fiercer than Ever
Now for the interesting stuff: based on our analysis, competition between Priceline and Expedia is closer than ever before. This is despite the fact that Expedia controls 14% of the industry, with the outlying 2% belonging mostly to Priceline. Of course, this is site traffic only – who’s taking home the biggest slice of the profit (no pun intended) remains to be seen. And there are other niche competitors we haven’t taken into account – like airlines, hotels and other travel suppliers.
But since both of these major players now control the majority of the very lucrative US travel industry, it would seem prudent to forewarn industry newcomers. For OTA’s size does matter. As PhoCusWright VP of Research observed, “This industry is fundamentally about scale. In order to compete, you have to scale in terms of technology, marketing, inventory…”
These are the big dogs dominating the yard, and as recent events have shown, they’ve both got a very large appetite for new meat.