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Is the Metasearch Model in Big Trouble?

Is the Metasearch Model in Big Trouble?

Is it a temporary reset or the metasearch new reality?

Metasearch critics have long warned that comparison-shopping businesses from Trivago to TripAdvisor have been overly dependent on a couple of big online travel agency advertising partners. And two of the biggest, Booking Holdings and Expedia, have been stepping back a bit.

After all, hotel-metasearch site Trivago has been reeling over the last year as the Booking Holdings contribution to Trivago’s total revenue fell to 38 percent in the second quarter from 49 percent a year earlier.

In 2017, TripAdvisor generated 43 percent of its revenue from Expedia, Booking, and their respective subsidiaries, and that was a drop-off from 2014-2016 when they accounted for a combined 46 percent of TripAdvisor’s total annual revenue.

“I agree with the basic premise that having only two companies (plus Airbnb) is bad for metasearch as it puts too much power in only two companies,” said Kayak co-founder and Lola chief technology officer Paul English, referring to the market-making power of Expedia and Booking in metasearch bidding auctions.

The way the metasearch model works is Expedia and Hotels.com, as well as Booking.com and Agoda, for example, provide revenue to metasearch businesses such as Trivago, TripAdvisor and Google when they list their hotels and flights on these comparison-shopping sites, and pay advertising fees or commissions when consumers click over to the online travel agencies’ sites or make bookings.

TripAdvisor (43 percent) was much less dependent on the two big online agency groups for their revenue contribution in the second quarter than was Trivago (76 percent). One reason is that TripAdvisor is a much more diverse business, including hotels, tours and activities, restaurants, vacation rentals and flights, than is lodging-only Trivago.

Swing Factor

Several financial analysts, including Michael Olson of PiperJaffray and Justin Patterson of Raymond James, highlighted the importance of online travel agency marketing decisions when they pointed to the level of future online travel agency advertising in TripAdvisor’s platforms as being a looming issue clouding the company’s future performance.

Read rest of the article at Skift

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