How far will the current inventory share agreement between Priceline and TripAdvisor go? The deal was framed as a temporary marriage of convenience, but the exact terms are shrouded in secrecy. Financial analysts are now pointing to a potential TripAdvisor acquisition. For travel trade insiders its a slippery proposition. From the outside looking in, not entirely out of the question.
TRIP badly needed access to Booking.com (or Expedia) inventory to transform Instant Booking into a marketable product. Priceline gained a powerful, semi-exclusive, and probably pretty cheap customer acquisition channel.
But is that where it ends? Once Trip weans itself off of Booking.com supply, will both parties simply part ways and go back to competing for the same customer? Why would Booking.com (owned by Priceline) hand over its inventory to a major competitor? How long will it continue feeding Trip its inventory?
The simple answer is that both parties see mutual benefit for the short to mid-term. But there’s also an alternative reality marked by a deepening, more symbiotic relationship forming between these two powerhouse travel brands.
Merrill Lynch analysts recently listed TripAdvisor among their top technology firm picks ripe for acquisition. It's a realistic proposition seldom discussed in travel trade circles. Part of it is because founder Steve Kaufer and team are brilliant builders of companies - not asset flippers. The question is whether commitment and loyalty will be enough to keep TRIP competitive in the long-run.
TripAdvisor and Expedia are starting to look more like each other, orientating themselves vertically with a full-service stack of travel products. Meanwhile, Priceline seems to be heading down a somewhat different path toward B2B services.
Booking.com is the world’s largest network and database of accommodations inventory. And with the growing ubiquity of accommodations booking platforms (think Uber, Facebook, Apple, metasearch brands) will Booking become the platform that feeds them all?
Priceline’s consumer facing channels are hitting some big bumps in the road. Europe is a regulatory minefield while travel bookings for its U.S. focused priceline.com brand were down in 2015.
TripAdvisor has the right ingredients to take the fight straight to Expedia (think Viator, FlipKey, and Instant Booking). But the company will need more capital, partners and expertise to make good on its acquisitions, while achieving speed-to-market.
Expedia is one rival but there are even bigger fish out there. Think Alphabet Inc. aka Google. They’re not so interested in "travel" per se, but rather mobility. Google wants to control all aspects of how we move about in the physical world (think Google Maps and car). Where we stay and the accommodations we choose while away from our immediate vicinity is a big part of that.
Let's suppose that an outright sale is on the table. Where do Priceline and TripAdvisor go from here?
By Q2 we should have a better sense of whether Instant Booking is catching on with the consumer. TRIP needs to make Instant Booking work from a monetization perspective.