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The Online Travel World OTA Rock Stars

By Katarina Puckett | November 25, 2014 | 0

The Online Travel World OTA Rock StarsThe four names I am about to mention have revolutionized the way we book travel. While many (including myself) appreciate the convenience and ability to research, plan and price their own travel, there have been casualties along the way. These four have brilliantly figured out how to game Google (see Antitrust: Commission obtains from Google comparable display of specialized search rivals — http://europa.eu/rapid/press-release_IP-14-116_en.htm?locale=en) in such a way that forces almost any hotel in the world that ever wants a reservation to pay a commission to them. In addition, countless traditional brick and mortar travel agents have shuttered their doors. Meet the OTA rock stars of the online travel world.

My internet travel rock stars consist of Stephen Kaufer (TripAdvisor), Dara Khosrowshahi (Expedia), Darren Huston (Priceline/Booking.com)  and Barney Harford (Orbitz).

So who are they?

Education—all four men are highly educated

  • Stephen Kaufer – Kaufer has a degree in computer science from Harvard University.
  • Dara Khosrowshahi – Khosrowshahi holds a BA in engineering from Brown University.
  • Darren Huston – Huston holds a Masters in economics from the University of British Columbia and an MBA from Harvard University.
  • Barney Harford – Barney holds an MBA from INSEAD and an MA in natural sciences from Clare College, Cambridge University.

Work Experience

  • Stephen Kaufer – Kaufer was president of CDS, Inc., an independent software vendor, and prior to that, was co-founder and vice president of engineering of CenterLine Software.
  • Dara Khosrowshahi – Previously Khosrowshahi served as CEO of IAC Travel, a division of InterActiveCorp. Khosrowshahi was instrumental in the initial expansion of IAC’s portfolio of travel brands, which now comprise Expedia, Inc. He served as Executive Vice President and Chief Financial Officer of IAC, overseeing all of the company’s financial matters, and also held the role of Executive Vice President of Operations and Strategic Planning at the company. Prior, Khosrowshahi served as President of USA Networks Interactive, having joined the company in 1998 as Vice President of Strategic Planning.
  • Darren Huston – Huston came from Microsoft Corporation, where he served as Corporate Vice President, Consumer & Online from 2008 and President & CEO of Microsoft Japan from 2005.
  • Barney Harford – Hartford served as an advisor to Kayak.com in 2008. Barney served as a board member of eLong from 2004 to 2008 and as chairman from 2006 to 2007. From 1999 to 2006 Barney held a variety of positions at Expedia.

Monopoly Board Brand Portfolio

Measures of Success

You can always tell if a CEO is doing a good job by the faith investors have as shown by company shares purchasing, and looking over the past six months, life has been very good for our rockstars (and their shareholders).

 

 expedia-share-price

 

 

 

priceline-share-price

tripadvisor-share-price

tripadvisor-share-price

What’s Their Secret to Success? The 10 Key Ingredients

Truthfully, it has actually been quite brilliant. All four of our rockstars have different paths, but they all still have the same 10 key ingredients as their formula:

  1. Robust review-centric booking engine
  2. Sense of urgency / Call to action booking message
  3. Upsell or alternative property opportunities
  4. Never a guest charge (always a hotel commission)
  5. Strong affiliate, private label and partner programs
  6. Crazy AdWords platform and budget
  7. Strategic AdWords & Social Remarketing Campaign
  8. BIG DATA Management
  9. Intelligent Email Campaigns
  10. Run by Digital Experts, who live breathe and sleep ROI Room conversions

As an example, looking at Keywordspy.com, it is scary to see what their average daily AdWords spend is for a few of these OTAs! Based on the numbers below it works out to $52,698,109 per 31 day month.

 

tripadvisor-share-price

expedia.com-adwords-spend

hotels.com-adwords-spend

trivago.com-adwords-spend

priceline.com-adwords-spend

booking.com-adwords-spend

kayak.com-adwords-spend

tripadvisor.com-adwords-spend

orbitz.com-adwords-spend

Rock Legends or One Hit Wonders? Keith Richards vs Vanilla Ice

What’s next for our fearless foursome? Will they continue to reinvent themselves and stay relevant to the captive audience they currently have? Or will they fade into oblivion like the hair bands of the 80s and yesterday’s AOL execs?

Short term I think the rock stars are printing money, as the industry hasn’t woken up and realized to what extend the OTAs have taken over, but long term I think the rock stars are worried. The market is becoming saturated and although a price commission war hasn’t officially started, it seems like a natural progression given the crowded marketplace of OTAs competing for the same business with the same products. They are going to need to invest a lot more money in branding and other publicity measures to differentiate themselves from the other OTAs for essentially the same hotel room or flights.

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