Online travel agencies 2016 and H1 2017 results, and a look at Google’s travel revenues

Priceline and Expedia continue to gain market share

The table and graphs below display revenues and marketing costs for publicly traded OTAs: Priceline, Expedia, Ctrip, Tripadvisor, eDreams Odigeo and Lastminute Group. All data comes from their financial statements.

According to Phocuswright, Priceline and Expedia account for nearly two thirds of OTA global gross bookings and over 90% of the U.S. OTA market. Priceline and Expedia grew their revenues 16% and 31% respectively in 2016 and 16% (both) in H1 2017, thus outpacing the online travel market growth (estimated at 10% in 2016) in spite of their already massive size. Their marketing investments grew at or above the pace of revenues.

Ctrip continues to grow at spectacular rates (67% in 2016 and 45% in H1 2017) with very aggressive marketing growth as well (67% in 2016 and 45% in H1 2017).

In 2016 and H12017, Tripadvisor (-1% and 7%), eDreams Odigeo (5% and 3%) and Lastminute (5% and -2%) grew below the online travel sector’s and had low or decreasing marketing year on year investments.

(1) Notes and Data Sources

The ratio of Marketing/Revenues grew for all competitors from 2016 to H1 2017, but the strongest increases came from Priceline and Expedia. Expedia’s ratio spiked from 40% to 57%. Ctrip is at the lowest end of the spectrum (at around 30%), and eDreams Odigeo at the highest (at around 60%).

(1) Notes and Data Sources

Google’s travel business is larger than Priceline’s

In a November 2016 post, Skift estimated Google’s travel advertising business at $12.2bn. This number includes suppliers, destination marketers, Expedia, Priceline, Airbnb and Tripadvisor. It does not include all other OTAs and metasearches.

I attempted to come up with my own calculations of Google’s revenues from the whole travel industry. Just taking into account the set of competitors that Skift looks at, my estimation is below Skift’s: $10.5bn vs Skift’s $12.2bn. If I add all other OTAs and Metas in order to account for the totality of the online travel investments in Google, it adds up to $12.9bn.

Here is a summarized breakdown of my estimation of Google’s $12.9bn in advertising revenues from the travel industry:

– Expedia + Priceline = $5.5bn
(Assumption: 75% of their marketing is invested in Google)
– Ctrip + eDreams Odigeo + Lastminute Group + Tripadvisor = $1.3bn
(Assumption: 65% of their marketing is invested in Google)
– Other OTAs, Metasearches, intermediaries…= $2.4bn
(Assumption: the 6 online travel competitors above concentrate 65% of the intermediaries’ Google spend)
– Suppliers (airlines, hotels, cruises, car rentals, etc…) + Destination Marketing = $3.7bn
(Assumption: 100% online travel investment in Google = 60% OTA and Metas + 40% Suppliers and DMO)

The travel sector’s estimated $12.9 billion invested in Google would be equivalent to 16% of Google’s total 2016 advertising revenues ($79 billion). It would also mean that Google’s travel revenues are $2.2bn larger than the Priceline’s, the world’s largest OTA.

(1) Notes and data sources

– Data for Marketing Costs field is Performance Advertising + Brand Advertising. Not including Indirect Sales and Marketing Costs. 
– Data for EBITDA field is Adjusted EBITDA. 
Priceline 2016
Priceline Q2 2017 Earnings

– Data for Marketing Costs field is Direct Selling and Marketing. Not including Indirect Selling and Marketing. 
– Adjusted EBITDA
Expedia 2016 Annual Report
Expedia Q1 2017 Earnings
Expedia Q2 2017 Earnings

CTrip Q4 and full year 2016
CTrip Q4 and full year 2015

– Data for Marketing Costs = Direct Selling & Marketing
Q2 2017
Q1 2017

– Data for Revenues = Revenue Margin. 
– Data for Marketing Costs = Variable Costs. 
– Fiscal year ends march of the following year. When I show data for 2016, I am referring to April 2016-March 2017. When I show data for H1 2017, I am not referring to fiscal year. I am showing data from Jan — June 2017.
– Adjusted EBITDA
FY 2017 Annual Report 
FY 2017 Results Presentation
FY 2015 Annual Report
FY 2014 Presentation
Q1-FY-2018 Results

– Data for Marketing Costs = Online + Offline Marketing.
Annual Report 2016

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