This Is How Airbnb Is Gradually Becoming A Direct Competitor For The Leading OTAs

by Trefis Team
-7.72%
Downside
1942
Market
1792
Trefis
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Priceline
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Priceline’s restaurant booking website, OpenTable, will now face a new competitor. Airbnb, in its endeavors to eventually become a full service travel-booking company, is now set to launch its own restaurant booking platform. The Airbnb website and mobile application will now allow users to reserve tables in around 650 restaurants in the U.S. It is noteworthy to mention that OpenTable is the biggest player in this segment in North America, enjoying around 50% of the total market share. While Airbnb is gradually expanding its offerings, leading OTAs are also expanding their alternative lodging offerings, the segment that is Airbnb’s main revenue generator.

Another Direct Competitor For The Existing OTAs

Airbnb seems to be following the footsteps of the major online travel agencies who aim at becoming a one-stop shop for all the travel needs for its customers. While booking for their lodging from the Airbnb interface, people can also book the restaurants where they choose to have dinner. Since its launch in 2008, the company has gradually expanded from its lodging booking to provide special travel experiences, flight booking options, and personalized travel suggestions to its users.

Like Priceline’s OpenTable in The U.S., TripAdvisor’s TheFork is the largest online restaurant reservation website in Europe. Following the footsteps of Priceline and TripAdvisor, Airbnb is also taking the help of strategic investments and acquisitions to expand its offerings. In 2016, it invested around $13 million on Resy, a New York based restaurant software company. Resy will help with the restaurant bookings  on Airbnb’s websites and mobile applications.

 The Leading OTAs Are Also Aggressively Expanding In The Alternative Lodging Segment

It is interesting to note that while Airbnb is trying to become more like a full service OTA, the OTA leaders Priceline and Expedia are strengthening their alternative lodging segments, the segment that is Airbnb’s main offering. Expedia has significantly grown its vacation rentals inventory after its acquisition of HomeAway in 2015.

Priceline currently has its eyes set on expanding its alternative accommodation, as stated by its management in its Q2 2017 earnings call. The company’s chief executive Glenn Fogel mentioned how Booking.com is growing steadily in the vacation rentals segment. The Booking.com platform included around 721,000 vacation rental properties by the first half of this year growing at the rate of 54% y-o-y. Q2 happened to be Priceline’s fourth consecutive quarter of this rapid growth in the rentals inventory which is currently growing at over twice the rate of its hotel inventory listings. Fogel mentioned that growing in this segment is one of the most important plans for the company.

The competitive advantage that Priceline’s Booking.com has over HomeAway or AirBnb is the ease of booking. Additionally, Booking.com doesn’t charge an additional service fee and instantly confirms bookings. HomeAway is still striving to add all its properties into the online platform and it also charges a service fee. We can well expect Booking.com to be one of the most formidable competitors in the alternative accommodations space in the years to come.

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