Skift Research Take
Priceline dominates the online travel industry. It quietly goes about its business and continuously puts up strong results year after year, turning a once-beleaguered near-dot-com-bust into one of the most successful technology companies in the world.
Over the past year, we published company deep dives on Expedia, TripAdvisor, and Ctrip. We also produced extensive research on the metasearch industry and hotel direct booking trends. We build on those findings in our latest Priceline report, which serves as an online travel capstone.
We drill into Priceline’s OTA behemoth, Booking.com, along with Kayak (and its latest Momondo acquisition), Agoda, Priceline.com, OpenTable, and Rentalcars.com, providing brand-level economics and strategic insights. The report analyzes Priceline’s revenue trajectory and the drivers behind it including gross bookings, daily rates, and take rates. We also provide our outlook on corporate expenses and the company’s future margin path. Priceline’s massive digital advertising budget is both a competitive moat and a margin headwind. We discuss digital advertising trends both for Priceline and the industry as a whole, focusing on how much the top players spend on traditional versus digital ads and on search versus meta. Finally, we provide industry analysis comparing Priceline with the leading OTAs in Expedia and Ctrip and metasearch companies in TripAdvisor and Trivago.
Given Priceline’s importance to the industry, this report serves multiple audiences. We offer hotels and vacation rental suppliers insights into the global leader in online travel. Online and offline travel distributors and advertisers will have a better understanding of a key competitor and potential partner. Investors will get a clear picture of the inner workings of Priceline and the online travel industry. They will also have access to U.S. online travel agency (OTA) market share estimates from our data partnership with Hitwise.
What You'll Learn From This Report
- How the Agency model helped Booking.com rapidly scale its hotel business
- Trends in merchant versus agent revenue for Priceline and Expedia
- Why Priceline’s margins are so much higher than its peers
- How Booking.com is growing its vacation rental business and its competitive outlook versus HomeAway, Airbnb, and TripAdvisor
- Booking.com’s rationale for flight testing
- Priceline’s approach to corporate travel and broader industry dynamics
- Priceline’s strategy in Asia
- Estimates of Kayak’s revenue, expenses, and EBITDA margin
- Rationale for Priceline purchasing Momondo
- Why metasearch is important for Priceline
- Hotel spending trends on metasearch
- How much Priceline and Expedia spend on Trivago, TripAdvisor, Kayak, and Google
- What Kayak could be valued at as a standalone entity
- Whether OpenTable is a good asset acquired at a bad price or a fundamentally impaired one
- Estimates of OpenTable’s current financials and implied current valuation multiple
- Agoda’s rapid growth path and our revenue estimates for the unit
- How Priceline.com is phasing out the opaque merchant model
- What Priceline.com actually contributes to the company financially
- Why opaque bookings inflate GAAP revenue and deflate gross profit, but are neutral to operating income
- How Priceline uses Rentalcars.com to have a more complete OTA platform
- Analysis of Priceline’s revenue, gross bookings, room nights, daily rates, and take rates trends along with our forward outlook
- A detailed look at the company’s margins, looking at the headwind from variable ad spend and tailwind from fixed cost operating leverage
- Estimates of true U.S. revenue for Booking.com versus GAAP reported results
- In partnership with Hitwise, U.S. OTA market share trends
- Strategic and financial comparison of Priceline with Expedia, Ctrip, TripAdvisor, and Trivago
- Does it make sense for Priceline to acquire TripAdvisor?
- Airbnb as a threat to the OTAs — what is real, what is not
- Why Booking.com can maintain its dominant position in hotel distribution