Over past few years, the online travel market has seen exponential growth due to rapid rise of online travel agencies and shift of traditional tour operators to the online channel. Furthermore, the rise in marketing initiatives by travel companies to increase the online booking of hotel and transportation is enhancing the growth of the market. In developing countries, domestic traveling has increased due to declining currency exchange rates. Homegrown OTAs can take advantage of this situation, as they are well positioned to leverage this trend due to their ability to enable cross-selling and has a deep understanding of the needs of the local consumers. Moreover, easy financing through bank partnerships is motivating hotels to partner with travel agencies to enhance their services. OTAs are trying to acquire more customers by offering discounts and coupons offerings. The growth of market players depends on market conditions, favorable government regulations, and industry development. Rising Internet penetration and use of social media platforms for travel bookings are some of the factors expected to drive the growth of the market. Thus, companies are focusing on providing enhanced services to retain their existing customers and acquire new ones.
Expedia Inc., Booking Holdings Inc., TripAdvisor Inc., Ctrip.com International Ltd, and Airbnb Inc. are the major players that account for the majority share of the global online travel market. These players are focusing on expanding and enhancing their service offerings to remain competitive and increase their customer base. Also, these players are focusing on partnerships and collaborations to expand their business and customer base to enhance their market position.
Expedia Inc. dominated the global online travel market with a share of 1.97% in 2017. The company provides advertising and travel services through its brands.expedia.com, hotels.com, and others across the world. In order to expand its reach globally, the company significantly invests in enhancing technology, operations, brand building, supplier relationships, and other initiatives. The company also focuses on expanding and advancing service offerings to attract new customers and retain the existing ones.
Booking Holdings Inc. is also one of the prominent players in the global online travel market, accounting for 1.92% of the total market share in 2017. The company operates through its brands such as booking.com, priceline.com, KAYAK, agoda.com, rentalcars.com, and OpenTable. It also focuses on partnerships and collaborations with travel service providers and restaurants to expand its services; this helps the company increase its customer base and strengthen its position in the market.
TripAdvisor Inc. accounted for a share of 0.27% of the global online travel market in 2017. The company operates its websites, including tripadvisor.com in the US and the localized versions of its website in 28 languages. The company promotes brand awareness through both online and offline advertising. It focuses on mergers, acquisitions, collaborations, partnerships with other travel companies to expand its global reach.
Ctrip.com International Ltd held the fourth-largest share of 0.26% of the global online travel market in 2017. The company is one of the leading travel service providers that offers hotel reservations, airline tickets, and packaged tours to business and leisure travelers in China. It offers a range of other travel-related services such as financing and car services, travel insurance, traveler’s reviews, attraction tickets, and visa services to meet the various requirements of travelers. The company launched an information management system for car-leasing partners, which enables car leasing partners to manage orders and car fleet online and allows access to Ctrip’s preferential rates on car purchases and insurance products
Airbnb Inc. accounted for 0.25% of the total market share in 2017. The company, through its Airbnb app, helps its users to list, discover, and book accommodations across the world. Through the company’s platform, the residents and commercial property owners can rent private rooms, entire apartments, boutique hotels, castles, tree houses, and other accommodations. The company emphasizes partnerships for building the brand in the core business and therefore has entered into several partnerships and collaborations with other players to expand its geographic reach and customer base.
Apart from the aforementioned players, Ryanair DAC, Thomas Cook Group PLC, MakeMyTrip (India) Pvt. Ltd, Alibaba Group Holding Limited, eDreams ODIGEO SA, and FlixMobility GmbH also have a considerable presence in the global online travel market. These players focus on collaborating with businesses with a strong market presence to expand their market reach and diversify their services offerings.
Month & Year
Mergers and Acquisitions
September 2018
TUI Group strengthens its position in the excursions, tours and activities business, with the acquisition of Italian technology start-up Musement. The acquisition is expected to help TUI to expand its portfolio of travel experience products and to customize them for clients better.
June 2018
Cleartrip announced its acquisition of Saudi Arabia’s largest online travel aggregator Flyin. This acquisition is expected to help Cleartrip to gain a wider customer base, enhancing its competencies in the Middle East and North Africa.
February 2018
ATPCO announced the acquisition of Route happy, a company that provides flight scores, cabin amenity data, and merchandising tools. The company will be wholly owned by ATPCO but will operate separately.
November 2017
Airbnb announced the acquisition of Accomable, a British start-up that focuses on travel listings that are disabled-friendly. The company is also focusing on developing its platform and features to attract more of those looking to book disabled-friendly travel services.
July 2017
Travelsoft acquired Sepage, a travel data marketing service. The acquisition is expected to bring artificial intelligence to the travel and tourism industry.
June 2017
Travefy is an itinerary management and client communication service provider which recently announced the acquisition of a travel agent platform named TripScope.
February 2017
TUI Group strengthens its position in the excursions, tours and activities business, with the acquisition of Italian technology start-up Musement. The acquisition is expected to help TUI to expand its portfolio of travel experience products and to customize them for clients better.
Michael Porter’s five forces model gives a framework that models the global online travel market, which is influenced by five forces. The strategic business managers, trying to create an edge over competing firms in the global online travel market can utilize this model to better comprehend the industry connection in which the firm operates. The components of each of the forces and the degree of impact of each component in the context of the global online travel market have been broken down and analyzed. Threat of New Entrants
The initial investments in the travel industry create a significant barrier, limiting the entry of new players; however, at present, these barriers are reduced due to the Internet. Moreover, the presence of various efficient communication channels reduces the initial marketing costs and provides the new competitors the access to the potential suppliers and the resources. Even a new entrant in the industry can use the communication channels of large chains to understand the key marketing concepts and lure customers. However, a vital barrier is the differentiation and availability of endorsements. Established firms have successfully differentiated themselves owing to the services, amenities and other qualities which attracts potential clients. This differentiation has also helped the market giants to tie-up with various hospitality segments, such as hotels and airlines, and gain substantial endorsements. This further strengthens the share of the key players in the market. Furthermore, the lack of expertise is a major barrier for new entrants into this market. Therefore, the threat of new entrants to enter the online travel market is likely to remain moderate. Bargaining Power of Suppliers
The suppliers for travel agencies are primarily hotels, airlines, and bus operators, among others among others. Major companies like Expedia, Airbnb, and Thomas Cook have significant power in price negotiation with suppliers. The companies own some of the hotels and aircraft, which further lowers the cost of operation. This strategy provides the key players with higher bargaining power. However, stringent government regulations are a limiting factor for the travel industry. Therefore, the bargaining power of suppliers in the online travel industry is projected to remain moderate. Threat of Substitutes
In the travel industry, the threat of substitute products is minimal due to the unavailability of substitutes in the market. As the substitutes in the travel market are scarce, the buyers’ propensity towards substitutes is significantly low. Therefore, the threat of a substitute entering the online travel market is expected to remain low. Bargaining Power of Buyers
The bargaining power of buyers remains high owing to the greater concentration of buyers in the market and a low switching cost for the fragmented buyer set. Also, low brand loyalty by the consumers towards a specific brand remains low owing to the availability of numerous options to choose from. Price sensitivity plays a crucial role in the bargaining power of the consumers, therefore the bargaining power of buyers in the online travel market is expected to remain high. For companies in the market, demanding customers to pay higher prices, they have to create unique ideas for their tour packages to enhance customer satisfaction. Intensity of Rivalry
The travel industry remains highly competitive, which is a result of the huge number of entrants in the market and due to the increased spending on advertisements to attract a large customer base. Moreover, the high level of competition among the players in the travel industry has led to higher intensity of competition among the rivals. Therefore, the rivalry among the companies in the online travel market is expected to remain significantly high.
