Metasearch is disrupting the traditional travel industry. Which of the major players are positioned to yield the highest return?
In an increasingly competitive world, time is money. According to figures compiled by a web analytics firm, travelers made on average 21 visits to different travel websites before finally booking a trip with many reporting that is was extremely tedious and time-consuming. For the founders of commercial travel companies such as Priceline and Expedia this presents an ideal business opportunity to create websites for booking trips faster and more efficiently. A metasearch engine enables a user to compare the strengths and weaknesses of these different online travel agencies (OTAs).
In 2013, Priceline.com, Expedia and Orbitz Worldwide were the top performers with revenues of approximately $4.5bn, $2.7bn and $800m respectively. The market is undoubtedly competitive with these top companies actively vying for a greater market share. Priceline acquired Kayak, Orbitz Worldwide acquired Travelocity Partner Network, and Expedia acquired Trivago closely followed by the acquisition of Room77 the metasearch startup from California – all multi-million dollar deals. As mentioned on the Business Insider, these publicly traded companies (NASDAQ/NYSE) are rapidly developing and the sector making this happen is thought to be “the next trillion dollar industry”.
The market for investors is ripe for investment with affordable yet rewarding share prices. Caroll Rheem said on Investors.com, “Expedia’s acquisition of Trivago really validates how importantly the industry views metasearch as a business model and a consumer proposition”. The key players in the travel metasearch engine market are clearly Priceline, Expedia and Orbitz Worldwide. Therefore, the key question for investors to ask is which, if any of these companies will yield the highest return?
Image from DataFox Watchlist "Travel Metasearch Engines"
Expedia’s operation margins and growth are nowhere near that of Priceline’s, however, the valuation of their stock is much cheaper. Investors and VC’s alike need to decide whether companies like Priceline are really a safer bet or do companies like Expedia have room to grow. For hotels and airlines, these consumer travel websites are great marketing tools that enable them to showcase great prices and features. The metasearch marketing generates incremental revenues and produces exceptional return-on-ad-spend.
Want more info on these companies and the travel metasearch sector? See a full industry analysis in our DataFox watchlist.
Finally, the value of these websites to travel consumers is undeniable. By adding and enabling real-time availability and rate shopping, travel websites provide their customers with everything potential travellers need to research and book their travel accommodations. The market for these metasearch engines in the travel industry will never cease to exist simply because people travel, be it for business or for pleasure. To summarize, who are the winners you might ask? Everyone. It will be interesting to see these powerful companies contest for a higher market share with threats from smaller companies trying to get a piece of a really big pie.