TripAdvisor, which debuted its direct Instant Booking option last year, has added hotel room inventory from Priceline Group's Booking.com to the feature, the two companies said last week.
Visitors to the world's largest travel-review site will see the Booking.com-branded listings and will be able to reserve by clicking the "Book Now" button. Inventory from Priceline's flagship website and its Agoda.com division will "likely" be added to Instant Booking, the companies said.
Priceline was No. 2 on Travel Weekly's Power List this year, with $50.3 billion in sales in 2014; it trailed No. 1 Expedia by less than $100 million. Expedia, which spun off TripAdvisor in 2011, acquired Orbitz Worldwide and Travelocity earlier this year.
The TripAdvisor-Priceline partnership is notable because of the battle hoteliers and intermediaries are waging to keep and expand their respective distribution shares. Despite hoteliers' efforts to reduce distribution costs and market themselves as the best place for customers to get the best prices on hotel rooms, suppliers' share of U.S. online hotel-room booking revenue will have fallen two percentage points between 2012 and 2016, to 52%, Phocuswright reported late last year. Those 2 percentage points imply about a $1 billion swing in booking revenue this year.
"There continues to be more share going into intermediaries versus direct, regardless of how hard the [hotel] chains are working," said Lorraine Sileo, senior vice president for research at Phocuswright. "This will only accelerate that."
TripAdvisor won't disclose how many people have booked through Instant Booking and how much revenue TripAdvisor gets from the commissions, company spokesman Kevin Carter said. But the site continues to gain in popularity, as its 375 million unique monthly visitors mark a 34% increase from a year ago. Through June, Trip-Advisor's revenue rose 27% from a year earlier, to $768 million, though net income fell 11%, to $121 million, as selling and marketing costs spiked.
There had been 235,000 global hotel properties bookable via Instant Booking. Booking.com boasts an inventory of almost 813,000 properties, but those include apartments and vacation rentals, which won't be added to the Instant Booking listings.
The announcement marked Instant Booking's most notable addition since Trip-Advisor announced in June that it would add Marriott International's inventory of more than 4,200 hotels. The company's shares spiked 26% on Oct. 14, the day the agreement was announced, to $83.72, Trip-Advisor's highest closing price in almost four months.
As for Priceline, both Sileo and Chris Anderson, assistant professor at the Cornell School of Hotel Administration, said the agreement was yet another effort to take U.S. market share from Expedia. The company has expanded its U.S. lead over Priceline this year by acquiring smaller OTAs Orbitz Worldwide and Travelocity. Combined, Expedia and Priceline account for more than 95% of U.S. consumers' bookings through OTAs.
"Priceline, or Booking.com really, has always been a leader in the digital marketing space," Anderson said. "This partnership indicates their assessment of the return on investment and the general move to add [cost-per-acquisition] to [cost-per-click]campaigns."
TripAdvisor went live with its Instant Booking feature in June 2014 with inventory from Choice Hotels International and other online retail sources. The next month, it added hotel inventory from GDS operator Travelport. TripAdvisor added Best Western International last October.