Comparison leads to…

IN a few weeks time I am taking part in a discussions regards the future of comparison websites (aka Meta sites) in the travel and leisure sector.  Specifically I suspect we’ll be looking at the UK market but having said that, there aren’t really many major players.  Here are some of my initial musings….

So the main few are Trivago (Expedia), Skyscanner and Kayak (Priceline).  One might also consider adding Travelsupermarket too.  Thats four main players but actually, Trivago are only hotels, Skyscanner only flights.  Both Skyscanner and Trivago are the only two which are really managed to internationalise with scale.  It’s no co-incidence that these two are single product businesses (flights and hotels respectively).  It’s far easier to scale up on product than many at once (I know from experience in this regard!).

So what is the future?  I think it’s pretty good for the time being.  Here’s why:

1.  Hotels and Airlines need distribution, the more the better if the ROI is good.

2.  Probably good practice to diversify sources of traffic away from Google, one must have a mix to mitigate risk

3.  Related to point 2, there remains only one main search engine, comparison sites offer alternate search engines

4.  Customers like to compare

5.  They lend themselves well to mobile browsing

6.  They can scale across boarders

7.  There are barriers to entry for competitors, not least technology but cost of traffic acquisition

Thats a pretty good position to be in, not only a good offence but also a good defence.  It’s no co-incidence Priceline and Expedia invested in these areas,  Owning a search platform is powerful in many ways, the most being the data one acquires.

So what are the risks?  here are some:

1.  Google.  Hotel and flight finder are on the way.  Holidays soon?  (Travelsupermarket I am sure see this as a threat).

2.  Differentiation:  Take Tui, 74% of their hotels / holidays are exclusive, they don’t need comparison sites as customers can’t compare anyway.

3.  Diminishing ROI:  Can happen for a couple of reasons, a) comparison sites put prices up, which they will, as shareholders need a profit rise every year and/or b) the current position forces OTA’s and alike to innovate and invest in brand building thus attracting ‘free’ traffic and mitigating / reducing the traffic mix from comparison sites.

I’ll add to this in the coming weeks….


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