Expedia wants to expand outside the North America but making
inroads into the world’s most influential travel market will be a tough ask in
the face of increasingly fierce competition finds EyeforTravel’s new report
into Expedia.
With a projected compound annual growth rate in outbound
journeys of 8% to 2020 and an even faster growing domestic market, Expedia
needs to get a slice of the Chinese market but since its sale of eLong, the competition
has only got stronger and it may be too late to make inroads according to EyeforTravel’s
new report into the company.
Expedia faces not only a series of rapidly growing brands
that are beginning to establish themselves but an increasingly interconnected
web of investments between these players that threatens to lock them out of the
market. The key player is Ctrip, which is now reaching a point of
near-dominance in the market. Other key brands in the market include Qunar, eLong,
Tujia, Alitrip, and Meituan-Dianping, making it a
competitive market place, but already several of these brands are falling under
key rivals. Ctrip is the biggest player in the field, snapping up Expedia’s
former brand in China, eLong, alongside Qunar, and it also has a subtantial
investment into Tujia.
Expedia’s great rival
Priceline is also deeply embedded into the market. It has investments and
distribution partnerships with both Ctrip and Meituan-Dianping, tapping into
two already key players, with explosive growth rates. In the case of Ctrip, Priceline’s
investment gives them up to 15% of the shares in the company and also an
observer on Ctrip’s board, allowing them a degree of influence in the company,
one that is unlikely to be friendly to Expedia.
Although Expedia’s weakness in the market is noticeable, it’s
not just Expedia that has struggled in the Chinese market. Other tech giants,
such as Uber and even Google, failed to truly make inroads despite putting in
big investments, emphasizing the complexity and unique dynamics of the market. It
appears that for now Expedia is choosing to focus on other Asian markets,
recently announcing that it is investing into regional OTA player Traveloka.
Traveloka focuses on Southeast Asia and Expedia reported in 2017 that the area
is its fastest growing regional market.
Nonetheless, the situation leaves Expedia largely bereft of
options to open up the Chinese market currently and potentially facing a very
large bill if they do want to establish themselves, both in marketing and
platform terms. However, one potential route in the long term might be through
its investment into SilverRail. Rail travel is already critical in China,
making up the largest segment of the digital travel market in the country and
is set to grow substantially in the coming years. A foothold in rail therefore
could be a key competitive advantage, especially as Priceline is so heavily
focused on accommodation and not as diversified in terms of revenue streams as
Expedia. However, it remains a longshot in the context of an increasingly
powerful number of localized and interconnected players.
To preview and buy EyeforTravel’s Expedia report, click
here, or here
for the Priceline report. These are part of the Future of the Online Giants series, which will cover Expedia,
Priceline, TripAdvisor, Ctrip and Google. Keep a look out through EyeforTravel On Demand for
the rest of these reports.