13 Dec

Metasearch vs. OTAs – Let the battle commence

The major online travel agencies, Expedia and Priceline’s Booking.com, seem to have the travel market sewn up, sucking in customers like celestial black holes. Their large market shares are driven by mega-million dollar digital marketing budgets and superlative technology.

A recent eMarketer report, “The U.S. Travel Industry 2014: Digital Ad Spending Forecast and Trends” notes that the Priceline Group, including Booking.com, Priceline, Agoda, Kayak and rentalcars.com, spent $1.8 billion on digital advertising globally in 2013. To put that into context, eMarketer forecasts that the whole of the US travel industry’s 2014 spending on digital advertising will be around $4.15 billion.

So are these mega-OTAs set on the path to market domination or might there be a challenger in the wings in the shape of metasearch?

Metasearch is not new. Kayak (another Priceline brand) and Skyscanner, for example, have both been around for quite a few years as have many others. They have been growing well and proving that consumers appreciate metasearch. A few more pieces of the metasearch jigsaw puzzle are just being put into place that might see a swing away from the OTAs.

TripAdvisor recently launched in the USA the beta of its TripConnect Instant Booking. This is a way for suppliers to load inventory into TripAdvisor’s hotel metasearch. This sees hotels paying on a cost per acquisition basis rather than a cost per click, something they are bound to prefer. Then it has been reported that Amazon is set to go live on 1 January with Amazon Travel, initially purveying a curated selection of hotels within a few hours’ drive from New York, Los Angeles, and Seattle. Amazon coming into the travel market could be a real game changer; and, of course, we mustn’t forget Google Hotel Finder. Currently, many of the hotels shown are bookable via Booking.com, but one or two hotel chains such as Westin are participating directly.

In addition to this activity, I think that there are two very good reasons why metasearch-driven bookings may one day overtake the OTAs. Firstly, hotels, airlines, cruise lines, etc. have a strong interest in not being intermediated. Metasearch allows them to participate in digital marketing channels with customers being directed to their brand websites. Here, they can properly control rates and ancillary sales. As metasearch channels grow, hotels and other players in travel are bound to favour these and may start playing hard-ball with the OTAs.

Secondly, I genuinely believe that consumers have a preference to book direct with a brand rather than booking with an intermediary. According to digital researchers L2, 39% of Millennials source their travel via metasearch rather than traditional OTAs or brand sites, compared to only 23% among the baby boomers. Millennials will be dominating the world as baby boomers start dying out, so they are setting the trends.

This leaves me wondering whether the OTAs have had their day. I have heard that their growth is slowing. Maybe the OTAs will start shrinking away as metasearch takes over as the preferred route to making a booking. What do you think?