A PiperJaffray survey of local search engines in 34 developing countries in Europe, Asia-Pacific, The Americas, Africa and the Middle East found that Priceline had a hotel paid-search presence in 82% of the countries, compared with 62% for Expedia and just 6% for Orbitz.
The hotel paid-search sweepstakes was considerably closer among the local search engines in 29 developed countries surveyed, with Priceline paying for text ads in 93% of the countries, edging Expedia’s 90% and clobbering Orbitz’s 34%.
The survey sheds light on the three online travel agencies’ mojo and geographic strategies in the battle for dominance of the global online hotel market.
“Priceline is laying the ground work to continue to lead the OTAs in penetrating less saturated, higher growth, markets,” says PiperJaffray senior research analyst Michael Olson.
Here’s how PiperJaffray describes its survey methodology:
“Our survey was performed in September 2010 and included 32 countries in Europe, 15 countries in Asia/Pacific, 13 countries in the Americas, and 3 countries in Africa/Middle East. The 63 countries we surveyed were chosen because each of those countries had at least one localized online travel booking site owned by either Priceline, Expedia, or Orbitz.
“For each of¬†the 63 countries, we performed a search on a local search engine for the name of that country’s capital city, followed by the word ‘hotel.’ We then recorded whether or not there was a paid advertisement for each of Priceline (Booking.com, Agoda), Expedia’s (Expedia, Hotels.com, Venere), or Orbitz’s (eBookers, HotelClub) owned sites in the search results.”
Breaking the numbers down a bit, Priceline had a hotel paid-search presence in all 12 of the surveyed developing countries in Europe [ranging from Bulgaria to the Ukraine], six of the nine developing countries in Asia-Pacific [Korea, Malaysia, Philippines, Russia, Thailand and Vietnam], eight of the 11 developing countries in The Americas [where Priceline is making a push], and both [South Africa and United Arab Emirates] of the Africa-Middle East developing countries surveyed.
Interestingly, according to the survey, Priceline had no hotel paid-search presence in China, where it doesn’t have a local website, apparently ceding that turf to Expedia for now. However, Priceline was the lone OTA of the three to do paid search in Taiwan, which, unlike China, was considered a developed country.
If hotel paid-search ads are an indication, Priceline [eight of 11 countries] is more aggressive than Expedia [three of 11] ¬†in Latin America. Expedia focused on Chile, Colombia and Mexico, while Priceline’s hotel paid-search ads skipped Mexico, but appeared in Argentina, Brazil, Chile, Colombia, Paraguay, Peru, Uruguay and Venezuela.
Meanwhile, Orbitz, ¬†which has a smaller hotel business than Expedia and Priceline, had no hotel paid-search presence in the developing countries of Europe, Latin America or Africa-Middle East.
While Orbitz had hotel paid-search placements in four [Hong Kong, Japan, New Zealand and Singapore] ¬†of the six developed countries in Asia-Pacific, with Australia shockingly absent, Orbitz had a search engine marketing presence in only two [Korea and Malaysia] of the nine Asia-Pacific developing countries surveyed.
Among the 20 developed countries surveyed in Europe, Orbitz had a hotel-paid search presence in only six — Austria, Finland, Iceland, Ireland, Portugal and Switzerland.
Despite Orbitz’s stated all-out effort to build its hotel business and, coupled with its ownership of eBookers, the survey found no hotel paid-search ads for Orbitz in key markets such as the United Kingdom, France and Germany.
This survey isn’t a definitive measure of the OTAs’ paid search marketing efforts, but it is a useful indicator of the competitors’ geographic focus in this vital arena.
Sometimes when online travel companies struggle financially, you wonder what it concretely means for their businesses. Pulling back on search engine marketing, or at least refocusing on key countries, sometimes can be a direct consequence.
PiperJaffray released the survey to clients in an industry note written by analysts Olson and Nicholas Gallus.
In the note, they forecast that Priceline’s international bookings growth will decelerate, in part because of difficult comparisons, but will continue to rise more than 25% over the next two to three years.
Part of that growth will take place because of increased online adoption in Europe and emerging markets, which stands at around 30% and 10%, respectively, compared with some 60% in the U.S., the note says.
The analysts point out that around 70% of Priceline’s operating profits come from Booking.com in Europe and Agoda in Asia.
Priceline’s paid search and SEO efforts in those regions have much to do with it.