Online travel sites getting squeezed by Airbnb, hotel chains

NEW YORK: Online travel booking sites Priceline Group and TripAdvisor took a beating from investors, highlighting how the companies’ once industry-disrupting model is under growing pressure from other competitors.

Shares of TripAdvisor fell 23 per cent on Tuesday, while shares in Priceline declined 13.5 per cent.

Rival Expedia Inc’s shares skidded another 2.74 per cent and are down 19 per cent since Oct 26, the day before the company reported weaker-than- expected third quarter results.

Though the circumstances at the three companies vary, they all are encountering increased competition from sites such as Airbnb and others that offer alternatives to traditional hotels.

Hotel chains also are putting up a tougher fight for the online sites’ business.

“We’re a big business now,” Priceline chief executive officer Glenn Fogel said on the group’s third- quarter call on Monday.

“And as one finds in large numbers, (growth) rates naturally slow down.” TripAdvisor Chief Financial Officer Ernst J. Teunissen warned investors during its quarterly earnings call that its year- over-year revenue per shopper had fallen 11 per cent in the third quarter.

Companies such as Hilton Worldwide Holdings have become more aggressive in drawing customers from the third-party sites, offering incentives including free wifi and discounted pricing to make it more attractive for consumers to book a room directly through their mobile apps or websites.

Hilton has for the third time this year raised its full-year profit forecast and said business travel to its properties had improved in the months following the US presidential election in November 2016.

“The highest growth that we’re seeing on a year-to- date basis continues to be in our direct channels.

And I think we’ll continue to see that if we do our job,” said Hilton chief executive officer Christopher Nassetta on the group’s third- quarter earnings call late last month.

He added that there was still value in third-party agencies as long as they operated on “reasonable economic terms.”

Hotels are driving harder bargains in negotiations on commissions paid to third- party sites, analysts said. — Reuters