Actually many corporates off course do still use bureau corporate travel services - at vast expense for airline tickets from what I can see - , but for most of us, booking a holiday or sourcing a hotel room for a weekend now consists of a trip to an online travel site.
Travel sites were among the first to appeal to a mass dot com audience and today are part of one of the most mature online market sectors. But with maturity comes increased competition as the pioneers are joined by new competitors and shifting market conditions.
That's the situation that Expedia finds itself in these days. The world’s largest online travel agency recently posted another quarter of weak results as competition increased in the off-line brand marketing channel from Booking.com, TripAdvisor and its own Trivago.
To the observer it seems that Expedia is finding it difficult to retain dominant market share in the US after rivals such as Priceline Com started aggressively advertising their brands, forcing Expedia to ramp up its own spending.
For example, TripAdvisor - now spun-off from Expedia - is set to spend $30 million on TV advertising for its new hotel meta-search functionality.
In terms of the US market, Hotwire was the most advertised online travel brand on US TV, according to Cowen and Company, spending $4.4 million. It was followed by Priceline.com on $3.9 million, then TripAdvisor on $3.6 million and Booking.com on $2.3 million.
From a parent company perspective, Expedia is said to account for more than half of all current online travel brand TV advertising - some $12 million in total in June. That's out of a likely total of $1.7 billion across all advertising channels in 2013, behind Priceline.com on $1.88 billion.
The overall message? It's getting more and more costly to compete in the online travel space.
Dara Khosrowshahi, Expedia CEO, confirms:
"We've continued to face a challenging competitive environment especially in the US with three major travel players entering the brand marketing space: Booking.com, TripAdvisor going forward and our very own Trivago."
Shifts in balance between direct and indirect channels more than increased competition from such as Booking.com are changing the market landscape, argues Khosrowshahi:
"Booking.com [has] been competitive in those channels for some period of time. It's nothing new. I would say that we haven't seen any particular change in Booking.com's competitive activity within the Trip channel.
"Where we have seen a change is definitely the offline channel. With Booking.com coming in, with TripAdvisor coming in and with Trivago advertising as well, it's tougher for some of our brands to get the kind of share of voice that we've had in the past, even if we up our spend. So, from that standpoint,the brand marketing is definitely becoming more competitive."
TripAdvisor, one of Expedia's largest marketing channels, moving to the metasearch model globally impacted on traffic, revenue and profitability.
"The transition has been difficult and the environment is quite dynamic relative to our past history with them. We continue to work with TripAdvisor and are beginning to see signs of improvement in the channel relative to early results, something we would expect to continue over time as we move beyond the initial transition."
"The real issue for us in TripAdvisor was a switch from popup windows to metasearch. That hurt us in the near-term although we're seeing some good constructive trends as we optimize that channel and search engine marketing.
"For Brand Expedia, the [search engine marketing] channel has been a significantly positive channel, as we have increase conversion and as a result we're able to market more effectively. So, it's really the brand channel where we're seeing a competition and the change in the marketplace."
SunburnBut Khosrowshahi insists that 'Brand Expedia' continues to invest in the likes of eLong and Trivago:
"eLong continues to aggressively compete and gain share in China, affording us a unique and sizeable position in our Asia Pacific operations, and in its first quarter as an Expedia business, Trivago continued its international push and grew its revenue nearly 80% year-over-year.
"Trivago is continuing its global expansion and is currently focusing ramp of efforts in some very key markets including the US, Canada and Australia and New Zealand, and based on a strong consumer response in these markets, we've increased our marketing investment relative to our initial plans.
"Combined, eLong and Trivago investments drove a $13 million year-on-year reduction in adjusted EBITDA compared to the second quarter last year, the both of which represented incremental spending relative to what we described to you on our last earnings call. We remain optimistic about you just how big these businesses can be over the next few years."
The increased emphasis on TV advertising is not incompatible with Trivago's marketing strategy., adds Khosrowshahi.
"Trivago has a very strong track record of entering new countries using predominantly television advertising to build strong brands which they back up with a great product.
"They have developed a pretty sophisticated formula on how they do that. You spend up, you build up a strong brand and generally over time these markets become profitable and you can move on and reinvest into greater expansion.
"It's all very measured investment based upon metrics and they've got a strong formula."
Overall, Khosrowshahi remains upbeat about prospects:
"Our core consumer travel business is one that we believe can grow at healthy sustainable top and bottom line rates over the long-term. We're excited about the global growth opportunity, the growth of our mobile business and the conversion outside.
"With the bulk of our re-platforming efforts behind us, we're now transition this part of our business from a phase of technology and platform investment, to a phase of leveraging those investments and positioning the business, so overhead costs are growing more slowly than our revenue.
"In addition, we have three important businesses that we consider to be future growth drivers, eGencia, eLong and Trivago, where we're very focused on global growth, size and scale rather than on growing near term profitability.
"We believe these businesses represent huge long-term opportunities and we'll continue to grow drive them aggressively with an eye on a significant payoff in the future."