Competition
Expedia Inc (NASDAQ:EXPE) is one of Priceline’s most important rivals. Expedia is leading the U.S market with 43% market share as opposed to Priceline’s 15%. Priceline, on the other hand, is more internationally-focused than Expedia and is overtaking Expedia in the global arena. Attempting to combat this, Expedia acquired Trivago in 2012, which is one of the leading meta-search engines for hotel bookings in Europe.
According to Bloomberg, Priceline.com Inc (NASDAQ:PCLN) boosted its annual ad spending to more than $1 billion for the first time, extending its lead over Expedia in the hotel-booking market and stepping up a rivalry that’s benefiting Google. Google is basically the real winner here as Priceline, fueled by its Amsterdam-based Booking.com unit, has more than tripled spending on Google. Moreover, about 90% of the company’s $1 billion advertising budget was spent through Google.
The results found when searching on Google for the word “hotel” and/or “accommodation” plus any major city or tourist destination reveal the extent of Priceline.com Inc (NASDAQ:PCLN)’s investments in search-engine marketing. Additionally, Priceline’s Booking.com is the first paid result if that search included of the largest cities in the world. Not only is Google attracting more spending from online travel agents, but it is also becoming a bigger competitor. In 2011, Google introduced its Hotel Finder service, letting users search for accommodations on Google and in most cases bypassing other web providers.
Also of note is Orbitz Worldwide, Inc. (NYSE:OWW), which is another leading global online travel company. Orbitz uses innovative technology that enables leisure and business travelers to research, plan and book a broad range of travel products. One of the smaller players in the online travel industry, the company is benefiting from a partnership with American Express Travel. Long-struggling Orbitz recently reported its first profit since 2007, which is significant since the company has lagged behind the entire industry for years. That said, there is only a slim chance that Orbitz will threaten Priceline and/or Expedia in the foreseeable future.
The foolish bottom line
Being one of the few survivors from the dot.com era does not go without saying. As a matter of fact, I fully believe that it provides strong signs of investor confidence in the company. Priceline.com Inc (NASDAQ:PCLN) is a leader in a $100 billion industry, and it keeps growing year after year at a fast pace. Priceline’s ability to effectively penetrate into international markets such as Europe and Asia Pacific can potentially make the company a true winner and a worldwide leader in the online travel field.
The article This Dot.com Survivor Is a True Winner originally appeared on Fool.com and is written byYaniv Hirsch.
Yaniv is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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