TripAdvisor tripping Expedia Inc (NASDAQ:EXPE)’s “Hotwire”
TV travel advertising in the United States has gained a lot of momentum and competition is rife and Expedia Inc (NASDAQ:EXPE) is reeling in the wake of this sudden spurt. The company’s brands have been struggling to head-butt their way through the crowd in the Q2 but its hotel business took a hit and the Hotwire unit was particularly affected by the trend.
Competitors marketing aggressively
EXPe’s CEO, Dara Khosrowshahi spoke at the company’s Q2 conference call. He indicated that Priceline’s Booking.com has been advertising very aggressively in the U.S market and that TripAdvisor had made offline-marketing extremely difficult for the company’s brands such as Hoels.com, Hotwire and Trivago that had been acquired in March. He said that the brand channel segment is where the competition is heating up, there has been a change in the U.S marketplace and that EXPE’s T.V profile has taken a hit.
The market heats up
Hotwire, particularly has faced a lot of heat from Priceline. The latter launched some Express Deals that were very similar to the ones that were being offered by Expedia. In addition, the company’s fairly weak performance was worsened by an industry-wide increase in average and occupancy daily rates. These are factors that tend to affect discounters. Khosrowshahi said that currently, the company is not performing in the manner that they want it or expect it to.
Big Sale, low revenue
As an example, Mark Okerstrom, the EXPE CFO said that they had launched a big sale in May. This had been based on some advertising that had been put forth by Priceline. A large amount of cash was diverted to this effort which did not get recouped in revenue. Another major hit was in the search engine marketing-front. TripAdvisor switched from the traditional pop-up hotel advertising to the meta-search concept. This affected Expedia adversely but the companies are apparently working on some adjustments to that issue.