More big money moves in the world of online travel agencies with news that Spanish giant eDreams has changed ownership in a deal for around Euro 250 million-300 million.

A majority stake in the Barcelona-based OTA was sold yesterday by US private equity firm TA Associates to UK-based counterpart Permira.

The fee was not disclosed, but the Financial Times estimates the transaction was worth up to Euro 300 million, almost double the Euro 153 million TA paid for the business in 2006 from a group of venture capital firms.

Permira is supposedly also in the hunt for other, smaller online travel businesses in Europe.

eDreams launched in 1999 in Spain under the stewardship of Javier Pérez-Tenessa and James Otis Hare, and has since expanded into 14 other markets around the continent. Pérez-Tenessa is the current managing director.

Officials say:

“The company’s growth prospects are underpinned by relatively low levels of online penetration in core markets, potential for further geographic expansion and further moves into non-flight business areas.”

The deal comes just a day after Indian online travel agency MakeMyTrip announced its intention to seek an IPO on the Nasdaq stock exchange, a move it hopes will raise around $100 million for international expansion and acquisitions if its own.

Priceline is wasting little time making the most of its recent acquisition, online car hire firm TravelJigsaw, transferring control from current partners to the new system.

Priceline will not disclose how many existing partnerships it has with car rental technology and aggregation firms around the world for any of its brands.

But in the UK, for example, Priceline’s car hire engine is currently run by Ireland-based technology firm CarTrawler.

This is one of many relationships due to end shortly, an official says, “just a matter of work prioritisation” for the company’s tech teams.

At the time of the acquisition in May 2010, TravelJigsaw said its management had retained a minority stake in the company and would stay on to manage the next stage.

Many suggest the deal for the online and over-the-phone car rental service was made to provide a stablemate for Priceline hotel websites Booking.com and Agoda as they focus on growth in the European and Asia-Pacific markets.

TravelJigsaw offers customer support in 20 languages, and international customers can rent cars that are familiar to them in local markets through the company’s almost two dozen branded websites.

Ironically, current provider to the UK version of Priceline, CarTrawler, was one of the other companies spoken of as an alternative acquisition target by the online travel agency ahead of the deal two months ago.

The first two decades of online travel were filled with merge and acquisition activity within and between the US and Europe.

Starting in the late nineties with Travelocity’s acquisition of Preview and reaching a peak in the mid naughties with the Expedia/Hotels.com merger, Lastminute.com acquisition by Travelocity and the Orbitz/Ebookers/HotelClub acquisitions by Cendant.

Big dollar deals covering America and Europe. As we enter the third decade of the online travel I strongly suspect we are seeing the rise of Asian firms as acquisition targets and as potential acquirers.

When I suggest M&A activity in Asia, I am not just talking about the buying of Asian online travel companies by large European or US companies. I am also referring to Asian firms with money to spend and a target list to spend it on.

There are three big and M&A active Asian based companies with money to spend and a need for growth outside their home market – Rakuten, Wotif and Ctrip.

• Rakuten – is the largest online travel company in Asia and one of the largest ecommerce companies in the world. Based in Tokyo, Rakuten is generating around $2.5billion in gross bookings. 90% plus of it within Japan
• Wotif – is the dominant force in online travel in Australia. They are on track to sell $1billion in travel this year, 85% of it in Australia or New Zealand.
• Ctrip – is the biggest travel agency in China. Generating $3.7billion in GBs per year (according to PhoCusWright). Critically the vast majority of the sales are offline through a 12,000 seat call centre rather than online. I normally hear that 70% of their sales are offline but have also heard talk that the offline percentage could be as high as 90%.

In the last three years these companies have been very active in buying companies.

In 2008, Wotif bought Sydney based travel.com.au/lastminute.com.au and (separately) Thailand based AsiaWebDirect. The AWD (though a English language business) is Wotif’s first push for demand outside Aus/NZ

In 2009, Ctrip bought EZTravel, the number one domestic player in Taiwan. In December of that year Wotif also bought GoDo, an activities and services provider.

Rakuten has done three big deals in 2010 and we are only halfway through the year. Rakuten’s parent company launched a JV with China search giant Baidu, purchased US based Buy.com for $250 million and had $250 million left over to buy Euro ecommerce site PriceMinister (all separate deals).

None of these deals are specifically travel-related but they are indicative of the companies desire to push beyond Japan. The company has even announced a English By 2012 Pledge that will see English become the official language of the company in two years.

Also this year, Ctrip has announced plan to buy offline Hong Kong Travel Agency WingOn (to provide them with ticketing and fulfillment services in Hong Kong). And In a move reminiscent of a 1980s European tour operator, Ctrip has started buying up hotel interests across China. [NB: Tnooz post on both those deals]

Three years of deals from three companies

The reasons behind these deals are clear: each of the companies is very different but they share the common traits of being dominant in their home market and unable (mainly through market factors) to replicate outside of their home market the elements that drove that dominance.

Hence the need to use the big domestically generated cash-lows to fund international growth.

I predict that there is more to come; that we should expect to see more deals by these companies in the next three years. I would also not be surprised to see one of these companies make a major play through a big ticket acquisition in either Europe or America.

Less than 10% of travellers with web access in Europe’s key markets are planning and booking travel products without using the internet at any point.

The latest study into trends in the European consumer travel marketplace indicates just 6% of French travellers and 5% of those from the UK will carry out the entire trip planning and buying process without using the internet.

Report author PhoCusWright reveals Germany, the other key market in Europe and, until recently, still moderately reluctant to collectively throw its weight behind the web, Germany, had just 9% of internet-connected travellers running their travel arrangements offline.

Elsewhere in the report, PhoCusWright claims price is not the biggest motivator behind why web users visit a travel website.

The most commonly cited reason is a positive experience on a previous occasion, say 51% of Brits, 50% of Germans and 38% of French consumers.

Perhaps most interestingly, and a slight reality check in the rush toward mobile and travel services, is news that fewer than 10% of travellers had performed a travel-related activity on their handsets in the past 12 months.

This, PhoCusWright says, is likely to change as a third of travellers have web smartphones (38% in France, 37% in Germany and 47% in the UK) and the mobile travel audience is expected to double into 2011.

NB: This is a guest article by Mike Nelson, president of the Partner Services Group at Orbitz Worldwide

In recent months, much has been written about the relationship between hotels and online travel companies, in part due to ongoing debate over public policy matters.

These are difficult and complex issues to be sure, but we can’t lose sight of the valuable underlying asset at stake – a healthy, long-term business partnership.

As market conditions fluctuate and individual hoteliers evolve their pricing and distribution strategies, online travel companies remain an important part of the overall equation.

In any economic climate, online travel companies are a strategic resource for hotels that want to stimulate demand, access a global distribution platform and benefit from vast marketing and promotional investments.

From a category perspective, I believe the advent of online travel companies and their current roots remain the same – to lower travel barriers by making the planning, search and booking of hotel rooms easier, especially for customers that are not loyal to a particular hotel brand.

Each day, tens of millions of potential travelers search for hotel rooms on an travel site. A majority of those visitors are supplier agnostic.

When a customer is loyal, they’ll most often book directly with the supplier. As depicted in the chart, the percentage of customers booking directly with suppliers is expected to remain constant.

The growth of online travel companies is expected to come from other third party sources.

The defining value of OTCs is turnkey access to millions of global customers that a hotel would not otherwise reach.

This is true in established markets like the US and Western Europe, and will be even more critical for hotels looking to attract customers in high-growth regions like Asia Pacific and Latin America.

Online travel companies with a strong global footprint are especially helpful in driving bookings outside of a hotel’s domestic market where its brand is not as strong.

Using Orbitz as an example, our percentage of hotel bookings coming from destinations outside of the US has nearly doubled in the last three years.

Online travel companies also make steep investments in sales and marketing activities. The top three publicly-traded online travel companies by total booking volume spend nearly $2 billion annually in sales, marketing and advertising programs.

These investments range from online search engine placements and integrated print and broadcast advertising campaigns to time-sensitive web promotions.

As a result hotel partners benefit from broad-based customer pull and the ability to manage pricing through the use of promotions and the opacity associated with packaging.

Pricing flexibility is particularly helpful in spurring seasonal or off-peak travel demand. A recent example was a Winter Hotel Blowout Sale on Orbitz, which offered our hotel partners the opportunity to reach millions of customers with promotional offers.

Partner hotels that participated in this broad promotion achieved 26% year-over-year room night growth versus flat year-over-year performance for those that did not.

In addition, an online travel companies diverse mix of traffic – including customers searching primarily for airfare – provides a qualified customer that is highly engaged in the travel planning process.

These customers are exposed to real time pricing and availability along with user reviews, virtual tours, and photos.

In fact, many of these customers will choose to book a hotel directly with the supplier after researching on an online travel company.

Independent studies have shown that listing on an OTA can drive a 25% increase in direct bookings. As a result, the true distribution costs of working with an online travel company are in fact much lower than typically perceived.

To whatever degree a supplier chooses to work with an online travel company, we’re but one piece of the larger puzzle.

In good times and bad, online travel companies should be focused on building stable long-term partnerships with their hotel suppliers. We remain focused on working with our hotel partners to build new distribution channels and products, reach new customer segments and deliver an industry-leading travel experience.

For our part, the balancing act will always rely on our ability to win each and every day on behalf of our suppliers and customers.

NB: Mike Nelson is president of the Partner Services Group at Orbitz Worldwide, running the worldwide business operations for the company’s supplier relations, customer experience and partner marketing organizations.

When the Google-ITA Software deal was first mooted in late-April 2010, Expedia CEO Dara Khosrowshahi appeared to reasonably relaxed about the whole thing.

First of all, Khosrowshahi hinted that Orbitz, not Expedia, should be more worried about any potential deal as it relies on ITA’s QPX system for flight search.

“From our standpoint, we don’t feel too exposed,” he said at the time.

Fast forward a few more weeks and Khosrowshahi sharpened his view ever so slightly, claiming “it’s not something we are particularly worried about” if Google continues to work with advertisers in the manner it traditionally has done so.

But since the deal was announced on July 1 and the ramifications explored and pored over intensely, darker clouds have appeared over the Bellevue, Washington-based Expedia Inc.

Chairman of both the Expedia board and also former parent company IAC/InterActiveCorp, Barry Diller, now says the planned acquisition of ITA is “disturbing” in the general overview of Google moving into vertical markets.

Speaking to the UK’s Financial Times [registration required], Diller says:

“It is a dangerous step because it is inevitably going to cause problems with customers and regulatory authorities.”

Diller goes as far to say the deal is a “full frontal assault on a core area of the internet life” – no doubt drawing reference to Google’s – until now, it appears – holier than thou ethos to sit in a neutral position in terms of travel search.

He goes on to say that the deal should either be killed by the regulators or conditions imposed. This is clearly a substantial ramping up of disquiet over the deal from the lukewarm comments earlier from Khosrowshahi.

Diller is by far the most high profile figure in the travel industry to wade in with a less than favourable reaction to the deal after many – including Expedia-owned TripAdvisor CEO Steve Kaufer – sat quietly on the fence.

Perhaps his comments will trigger others to follow suit (especially in the light of how some believe OTAs as well as metasearch engines are watching developments closely, and nervously).

Clearly there is something in buying a string of country domain names and then throwing an existing online travel system onto it – or at least that’s what Sunshine.co.uk thinks.

Just a few months after unveiling three new domains – Tenerife.co.uk, Majorca.co.uk and Tunisia.co.uk – officials behind Sunshine have splashed out yet again, securing a further eight addresses and preparing the sites as dedicated country OTAs for UK travellers.

The eight additions include UK domains for Hawaii, Cyprus, Gran Canaria and what officials are calling “the biggest capture” of the list, Spain.co.uk.

The new sites are expected to go live this week with country specific content and product form the existing Sunshine portfolio.

Co-founder Chris Clarkson says the new sites will run on the same principle as the Tenerife portal from earlier this year, with locally sourced editorial content and cheap holiday deals.

The strategy behind producing such sites is becoming increasingly obvious, with Clarkson claiming the Tenerife site appears on the first page of Google for key travel phrases after just a few months.

Despite the enjoyment country sites appear to have with search engines, Clarkson says a number of the new domains were bought from brokers and were never used.

Trebles all round it appears at Directline Holidays after releasing annual performance data indicating solid sales and traffic growth in 2009.

The online travel agency says visits to its website increased by 26% during 2009, crediting an effort on bolstering its presence in search engine optimisation.

During 2009 the increase in traffic led to the site seeing around 19 million visits, chief executive Maria Whiteman says.

Directline is widely recognised as a strong performer in search engines despite the powerful presence of rival OTAs such as Expedia, Lastminute.com and Travelrepublic all ahead in terms of traffic.

The agency was singled out by Greenlight Search in April 2010 as the most visible travel site in the UK for key travel-related search terms.

Whiteman says sales at the agency grew by 50% in 2009 to £50 million.

Directline was one of several contenders tipped in June this year to be on Thomas Cook’s acquisition hitlist of other businesses to help it establish an online travel agency in Europe.

Two recent studies point to some interesting potential trends in online travel. If you are involved in travel in anyway – read on.

I believe that the hard line between online and offline is rather losing its luster. The consumer of travel products does not have a single interaction.

Buying travel is not like buying paint. It is a highly emotional experience and the inspiration to purchase chain requires many interactions along the way.

So travel and the acquisition life cycle is something that defies categorization and structure. As it rightly should.

Those wanting to play in it – they need to be very careful to heed the diversity of interaction and frequency.

In general, for commodity purchases, the web is ideal. Simple out-and-back air fares, hotels, cars, etc.

Complex and higher priced items do not do so well. In corporate travel the growing trend in online transactions includes statistics trumpeted by the TMCs (both traditional and new players like Egencia) belies the fact that a significant percentage of bookings made online have a “touched” element to them.

I still would like to challenge that the TMCs publish statistics showing not the online purchase but the complete touchless transaction.

[Also I would love to see some qualitative metrics as to how happy the users are compared to using a hands on agent]

Similarly the percentage of OTA bookings that generate a phone call or interaction should be reported. Here the number of calls that go to the suppliers’ customer service should be considered.

Recent studies from both PhocusWright and Forrester point to a shift in consumer attitude and behaviour.

In the PhocusWright study, Consumer Travel Report Second Edition, the top reason US travelers give for booking offline is that they are seeking personal service.

Forrester confirms this, but goes into more detail as to why. The quality factor trumps the hassle factor for many travelers according to Forrester’s research.

Roughly a third of all travellers in Europe and the US say they will pay above-average prices to save themselves time or hassle.

And this is where I agree with Forrester head travel man, Henry Harteveldt, when he says travel websites need to evolve with the consumer.

Speaking at the recent Amadeus eCommerce forum and quoting research from a special study commissioned by Amadeus, he exhorted the audience to move beyond the purely functional.

In my view the process of inspiration is not covered in the usual left brain-focused purchase sites such as the airline sites and the OTAs.

There are a lot of inspirational websites out there. But there is a lot of junk and no easy way to get your inspiration other than starting with search on Google.

Interestingly, the US consumer, according to Forrester’s studies, do not lead in any of the categories of inspiration (read blogs, read reviews, social networking etc).

But where to go from here? Developing a strategy for promotion of travel is complex. It is indeed multi-dimensional.

• Is there a single best practice out there?
• Can a single channel be used?
• Does the consumer actually notice or care about your activities?

I believe that there is an incredible amount of junk out there. A term I have created is to describe it as digital diarrhea.

This in my view just goes to feed the Google monster. What we thererfore need are fundamentally simpler and easier comprehension based tools.

Acknowledging our users ADD means that there needs to be both a simplification of the basic interaction yet allow richer content to sit easily accessible.

The whole dilemma of search vs navigation should evolve with an “and” not an “or” value.

A good example of this approach in my view is how Cleartrip in India does it. It has a basic transactional site, as clean as can be – yet bolted on the site is an inspirational and navigable alter ego in the Small World service.

There are many others but few are mainstream. While its still a 1.0 version, the point can be seen of how meandering inspiration as well as focused searching and navigating can be combined.

Some great examples are the oft-quoted JetBlue. But even bigger sites like AirFrance/KLM are getting into the act.

I foresee others doing the same. It also opens up opportunities for new smarter sites to emerge and not necessarily from the labs of the big players but the garage bands of some of the brighter sparks around.

But don’t just think of this as one size fits everything. It is most decidedly not.

Consumers are getting tired of the same old stuff, particularly online:

• They want inspiration.
• They definitely want more quality and value not necessarily demonstrated by the lower price.
• They want reliability and in my view above all they want Trust.

Until this is delivered, either through a hard statement of trust or by experience hard fought and won loyalty of a consumer, travel websites will continue to be just a click away from some other service.

Fun idea from European online travel agency Ebookers – although one game behind already – which could either be a social hit or as disappointing as an English goalkeeping fumble.

Trying to attract fans to its Facebook page, Ebookers has created a competition whereby the first person to post the word “goal” onto its Wall every time the England football team score in the FIFA World Cup wins a two-night hotel stay in the UK.

Ebookers says it will run the competition throughout the duration of the tournament whilst England is involved.

The flaws in the competition are obvious:

• England is not the most reliable of goal-scoring teams.
• Another two poor performances in the group stages and the competition is over.

Ebookers is probably breathing a huge sigh of relief it hasn’t launched the same competition for every time Germany scores.