Online Travel Companies – Q3 2017 Results

Snapshot of eight publicly traded companies: Priceline, Expedia, Ctrip, eDreams Odigeo, Despegar, MakeMyTrip, TripAdvisor, Trivago

(Note: I’ve written an updated analysis here: 10 Online Travel Companies Public Companies — Results and Key Takeaways)

The first section looks at some key financials and the second section goes over specifics for each of the 6 online travel agencies (OTAs) and 2 metasearches.

Some highlights:

  • By placing a greater emphasis on developing direct booking functionalities, metasearches have positioned themselves as direct competitors of OTAs.
  • Expedia and Priceline continue to build up their alternative accommodation business and are getting accelerated growth in this product category. Almost 50% of Priceline’s 1.2 million properties and 80% of Expedia Group’s 1.5 million listings can be defined as alternative accommodations. Still below Airbnb’s 3 million listings, but catching up quickly, and with the advantage of offering consumers the possibility of comparing all types of lodging options in one search.
  • Priceline, online travel’s largest advertiser, is shifting a greater share of its budget to brand marketing. Some metasearches are suffering the consequences.
  • Despite the softening of revenue growth, all companies in this analysis are had year over year revenue growth in the range of 11% to 84% in Q3 2017.
  • The largest OTA group in the world (Priceline) has a single digit share of the global travel market. There is still significant growth ahead for players in the online travel sector.
  • Fast growing geographies like APAC, India and Latin America present tremendous growth opportunities both for the regional and the global leading OTAs.

1. Q3 2017 Results

1. Revenue

Ordered from highest to lowest Q3 revenues. Data from quarterly and annual reports

Five out of the eight online travel companies in this analysis saw revenue growth slow down from Q2 to Q3 2017. Priceline, eDreams Odigeo and MakeMyTrip had revenue growth increase from in that period. Metasearches Trivago and TripAdvisor had the most pronounced revenue drops from Q2 to Q3 2017.

Despite the slowdown, all companies except TripAdvisor had double digit year over year growth in Q3 2017. MakeMyTrip (India’s largest OTA), Ctrip (China’s largest OTA) and Despegar (Latin America’s largest OTA) had the largest growth rates in Q3 at 84%, 42% and 24% respectively.

Priceline and Expedia concentrate more than 3/4 of the combined revenue of these 8 online travel companies.


EBITDA growth slowed down from Q2 to Q3 for all companies except eDreams Odigeo (missing quarterly EBITDA data for Ctrip and Q2 2017 EBIDTA for MakeMyTrip).

TripAdvisor, Trivago and MakeMyTrip also had year over year decreases in EBITDA in Q3. MakeMyTrip and Trivago both had negative EBITDA in Q3 2017. MakeMyTrip has not had positive EBITDA for any of the periods reflected in the table. The other 4 OTAs had year over year EBITDA growth in Q3 2017, ranging from 1% for Despegar to 26% for eDreams Odigeo.

Ordered from highest to lowest Q3 EBITDA. Data from quarterly and annual reports

EBITDA to Revenues Ratio (EBITDA ÷ Revenues) — assesses the company’s profitability

With the exception of eDreams Odigeo, all others had lower EBIDTA / Revenues in Q3 2017 vs Q2 2017. Trivago had negative EBITDA in Q3 2017 and MakeMyTrip, as we saw earlier, continues to post negative EBITDA figures, reflecting very deficient EBITDA / Revenues ratios.

1.3. Marketing

With the exception of eDreams Odigeo, the other online travel companies continue to invest heavily in marketing to drive short term growth (mostly through performance marketing) and to invest in longer term revenue potential (brand marketing). Most drastic year over year increases in marketing spend come from regional leaders Despegar (+31%), Ctrip (+58%), and MakeMyTrip (+140%!).

Marketing to Revenue Ratio (Marketing÷Revenues) — effectiveness and efficiency of marketing spend

Trivago had the highest marketing costs as % of revenue (95%) in Q3. Ctrip, Despegar and Priceline had the lowest ratios, at around 30%.

From Q2 2017 to Q3 2017 the two metasearches — TripAdvisor and Trivago — and MakeMyTrip increased their marketing spend ratio. MakeMyTrip’s increase is particularly relevant, going from a 32% marketing to revenues ratio in 2015 to 76% in Q3 2017. The 5 remaining OTAs all had lower ratios in Q3 2017 vs Q2 2017.

(Expedia does not show direct marketing costs in quarterly reports)

On a Year on Year basis, only eDreams Odigeo and Priceline lowered their marketing to revenue ratios from Q3 2016 to Q3 2017. TripAdvisor and MakeMyTrip had particularly large increases.

(Expedia does not show direct marketing costs in quarterly reports)

2. Key Takeaways

2.1. Priceline

  • Decision to shift a significant share of its marketing budget to TV advertising. Priceline expects that the TV ads for will be viewed in 30 countries by the end of 2017 (up from 12 countries in 2016). The TV campaign aims to build greater awareness of’s alternative accommodations offering, which the company sees as a pillar of future growth.
  • As the largest online marketing advertiser in the travel industry, Priceline’s decision to move to TV and other brand building media will certainly negatively impact Priceline’s biggest customer acquisition platforms including Google, TripAdvisor and Trivago.
  • By the end of Q3 2017, had over 816,000 vacation rental properties reflecting a 58% year over year growth rate. Alternative accommodations now represent over 50% of’s 1.5 million properties which grew 41% over the same quarter of 2016.

2.2. Expedia

  • Revenue growth driven by international markets. Domestic revenue increased 9% vs 23% for international. International now represents 47% of worldwide revenue, compared to 44% in Q3 2016.
  • OTA revenues represented 78% of total Expedia revenues in Q3 2017, down from 81% in Q3 2016. HomeAway’s share grew from 8% to 11% in the same period.
  • Q3 year over year revenue growth by segment:
    – Core OTA: 11% 
    – Trivago: 22% 
    – Homeaway: 45%
    – Egencia: 13%
    – Expedia Total: 15%
  • EBITDA Q3 year over year growth by segment:
    – Core OTA: 3% 
    – Trivago: -233% 
    – Homeaway: 63%
    – Egencia: 13%
    – Expedia Total: 6%

2.3. Ctrip

  • Q3 2017 year on year revenue share and growth by main product segments:
    – Transportation ticketing: 43% share; 41% growth
    – Accommodation: 35% share of total revenues; 36% growth
    – Packaged tours: 13% share; 27% growth
    – Corporate travel: 2.5% share; 22% growth
  • On November, Ctrip acquired San Francisco based travel recommendation startup and relaunched it a few days later as Ctrip’s english language OTA.
  • Ctrip has stated that it has achieved more than one billion downloads of its app and that mobile bookings account for more than 60% of online reservations.

2.4. TripAdvisor

  • Hotel segment revenue and EBITDA have lost important ground. All growth is now coming from the non-hotel segment (including tours, activities, restaurants, vacation rentals). Non-hotel EBITDA went from representing 15% in Q3 2016 to 46% in Q3 2017.

Data from TripAdvisor quarterly and annual reports
  • In Q3 2017, Tripadvisor’s Viator launched a multi currency B2B booking platform for travel agents around the world to access and book over 70.000 tours and activities. Travel agents earn a 8% commission. This is a smart step that addresses the highly fragmented booking dynamics of the tours and activities products.
  • TripAdvisor has been active on the restaurant front as well. In addition to now having the biggest online restaurant reservation platform in Europe (The Fork), it has also partnered with food delivery providers Deliveroo and Takeaway, integrating tens of thousands of restaurants across many European countries.
  • Marketing shift from performance (with more immediate impact) to brand building channels (TV) to drive the message that people can not only use TripAdvisor for travel research but also to compare prices and book their travel. The last chart in section 1.3 shows a marked increase in the marketing to revenues ratio.

2.5. Trivago

  • The largest advertisers on Trivago are reducing their marketing spend on Trivago in favor of other channels. As a result, Trivago will need to build a more diversified advertiser base by focusing on the long tail.

Source: Trivago Quarterly Report
  • Trivago has started testing searches for 150.000 vacation rental HomeAway properties for select users in Germany, Italy, Canada, the UK, and the US (Expedia acquired HomeAway in 2015 and owns a controlling stake of Trivago). It will be interesting to see the impact of adding alternative accommodations and how it solves the user experience challenge of displaying both hotels and alternative accommodations in search results.
  • Mobile’s revenue share reached over 60% in Q3 2017.

2.6. eDreams Odigeo

  • Mobile share of bookings grew from 29% in Q3 2016 to 37% in Q3 2017. A strong growth above industry standards.
  • Flight revenue grew 12% year on year Q3 vs 2% growth in non-flights. Flight’s share of total revenues went from 77% in Q3 2016 to 79% in Q3 2017.
  • eDreams Odigeo had a stronger quarter in terms of revenue and EBITDA growth, in comparison to previous quarters and years. However, year over year booking growth for the quarter was only 1%, which reflects a loss of share not only to the other public companies in this analysis, but also to the online travel market as a whole. With an almost flat marketing spend (particularly compared to the aggressive investments of its global competitors as seen in section 1.3), it will be a challenge for eDreams to grow bookings at least at par with the online travel market’s. Anything below means a continued loss of market share.


  • Number of mobile transactions up 55% YoY to 29% of total transactions.
  • Packages, Hotels and Other Travel Products accounted for 55% of total revenue in Q3 2017, up from 49% in Q3 2016.
  • Brazil remains the largest market by transactions for Despegar accounting for 41% of total transactions, increasing 29% YoY in the third quarter. Transactions increased 24% YoY in Argentina and 30% YoY in Mexico in 3Q17.
  • Online travel in Latin America is in the early stages of development. Despegar seems well positioned to reap the benefits of being a leading player in this fast growth region.

2.8. MakeMyTrip

  • Troubling growth-profitability trade-off, particularly for a company that has been operating for 17 years. 84% revenue growth rate in Q3 2017 comes at a high price:
    – Marketing costs grew by 140%
    – Highest marketing over revenues ratio (by a wide margin) among the 5 OTAs in this report
    – Year over year decrease in EBITDA. From -$27 million in Q32016 to -$54 in Q32017.
    – Recurrent and significant negative EBITDA. For the first 3 quarters in 2017, MakeMyTrip’s accumulated EBITDA is -$165 million
  • The Hotels and Packages segment generated 64% of the total revenue in Q3 2017, down 5 percentage points from the previous year. Other Revenue’s share went from 2% to 9% in the same period primarily due to bus ticketing revenue by Redbus, the bus booking platform acquired in 2016.

Data from MakeMyTrip quarterly reports

– Yearly data refers to calendar year for all companies except for eDreams Odigeo and MakeMyTrip, whose fiscal year ends in March of the following year (i.e. for these two companies, “2016” in this report is equivalent to April 2016-March 2017). However, quarterly data presented here for all companies refers to calendar year in order to provide a better comparison.
Expedia: Data for Marketing Costs is Direct Selling and Marketing (adjusted selling and marketing). Data for EBITDA field is Adjusted EBITDA.
Priceline: Data for Marketing Costs field is Performance Advertising + Brand Advertising. Data for EBITDA field is Adjusted EBITDA.
eDreams: Data for Revenues = Revenue Margin. Data for Marketing Costs = Variable Costs.Data for EBITDA field is Adjusted EBITDA.
TripAdvisor: Data for Marketing Costs = Selling & Marketing (includes stock based compensation expenses). Data for Ebitda is Total Adjusted Ebitda
Trivago: Data for Marketing Costs = Advertising expense for annual data. For quarterly data, it is total Sales and Marketing Costs (Advertising costs is approx 95% of it)
MakeMyTrip: Marketing costs = Marketing and sales promotion expenses.

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