The Week That Was For Online Travel Agencies: Priceline, Expedia, Ctrip

PCLN: Priceline Group logo
PCLN
Priceline Group

The online travel leaders seem to be improving their services for their hotel partners. Both Priceline (NASDAQ:PCLN) and Expedia (NASDAQ:EXPE) are collaborating with hospitality platform service providers in order to make it easy for hoteliers to keep track of their inventories as well as enhance the management of guests through cost effective means. With the persistent increase in competition in the industry, the players are trying their best to lure more partners in their respective platforms. However, there is one nation where competition might lessen for a while and that happens to be China. With Ctrip‘s (NASDAQ:CTRP) consolidation efforts, the competition might cease to be as cut-throat as before, and this might have given the Chinese OTA giant more confidence. As a result, Ctrip has set some ambitious targets in terms of booking volume and top line growth to be achieved by 2020. Below we give a quick run down about the week that was for these companies.

 

Priceline

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Hotel distribution and business service provider, eRevMax recently completed its two-way XML integration with Priceline.com. This integration is meant to help the accommodation providers such as RateTiger, RTConnect, and LIVE OS that are using eRevMax’s online distribution platforms. These providers can now update their inventories, room availability, and the prices in real time. Additionally, Priceline.com’s hotel partners can also utilize eRevMax’s Reservation Delivery Service for the automatic transfer of reservations booked at the channel directly into the hotel systems. This, in turn, will minimize the probability of missed reservations or overbooking problems. According to Priceline.com’s Vice President for hotels, Craig Schickler, the eRevMax partnership will facilitate the inventory distribution and rate management for Priceline.com’s hotel partners. Through eRevMax, Priceline’.com’s hotels will gain the facility to manage multiple channels online in a cost-efficient manner. eRevMax, in turn, will be able to provide its services to an expanded portfolio of clientele gained through Priceline’s vast inventory of hotel partners. [1]

SiteMinder–the Australia-based company providing cloud-based software to the travel and hospitality industry–recently collaborated with Priceline.com in order to help hotel partners with an enhanced online inventory distribution. Priceline.com will be integrated into SiteMinder’s Channel Manager as a result of this partnership which will help Priceline’s hotels to reach travelers in a new way when they book through Priceline.com’s apps or mobile web. This, in turn, will help independent hotels with low budgets to effectively manage their booking channels and to keep a better track of their inventories. [2]

Priceline’s stock lost around 1% over the week through Thursday. We have a  price estimate of $1,223 for Priceline’s stock which is around 10% higher than the current market price.

Expedia

Expedia recently led a minority investment worth $9.5 million in Alice, a hospitality platform that aids hotels in the management and completion of guest requests across different departments with efficacy through its array of mobile suite products. Though the two entities announced their partnership in December, the details of the deals weren’t disclosed up until now. The exact amount invested by Expedia still remains unknown. Alice had a total funding backup of around $13 million so far since its establishment in 2012.

The partnership will help Alice in gaining access to Expedia’s huge hotel partner database. Expedia hasn’t yet specified how it is going to leverage upon the partnership. Up til now, around 100 hotels that are using Alice’s services are all partners of Expedia. The company is aiming at gaining 300-500 more hotel partners through its collaboration with Expedia. [3]

Expedia’s stock witnessed around a 4.5% decline over the last week through Thursday. We have a  price estimate of $125 for Expedia’s stock which is around 15% higher than the current market price.

Ctrip

Ctrip’s new partner, Baidu–the internet search giant–has recently established its domestic market dominance with fresh investments that totaled around $3.2 billion. Ctrip also disclosed the intention to invest around $1.3 billion in cash and issuance of approximately 5.4 million ordinary shares (the value could be around $1.9 billion) in enterprises outside the U.S. These investments coupled with Ctrip’s 45% equity stake in Qunar (due to its share swap with Baidu) might allow Ctrip to win the majority of Qunar’s shares. [4]

Along with a 40% stake in eLong, a 45% stake in Qunar will further help Ctrip in consolidating China’s online travel industry, and in thwarting the rampant price wars that had been leading to erosion of the bottom lines for its major players.

This stability on the home front might have inspired the Chinese OTA giant to set bigger goals for itself. Ctrip now wishes to achieve a compound annual growth rate of about 30% for its top line in 2020 and wants to generate gross merchandise volume (GMV) of 1 trillion RMB by the same year. [5]

Ctrip’s stock witnessed around a 5% decline over the last week through Thursday. We have a  price estimate of $53 for Ctrip’s stock which is over 20% higher than the current market price.

 

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Notes:
  1.  eRevMax completes 2-way integration with Priceline.com, Financial Express, Jan 20, 2016 []
  2. SiteMinder Partners With Priceline, Hotel Business, Jan 14, 2016 []
  3. Expedia Leads $9.5 Million Investment in Hotel Platform Alice, Skift, Jan 19, 2016 []
  4. Baidu-backed Ctrip to consolidate leadership with spending spree as China’s online travel industry sees 2016 as being full of smiles, South China Morning Post, Jan 14, 2016 []
  5. Ctrip eyes new milestones, 1 trillion RMB in gross merchandise volume (GMV) by 2020, 4 Hoteliers, Jan 20, 2016 []