Online Travel’s M&A Race Accelerates

Summary

Consolidation of market share both organically and, more recently, via mergers and acquisitions (M&A), has been accelerating as the global recession recedes into the past. Three key themes underpin this pick-up in share consolidation:

1. The U.S. and European markets appear to be reaching a relative state of maturity, which is driving a moderation in global online travel bookings growth;
2. With rate parity, the basis of competition boils down to the ability to invest in both marketing and technology; and
3. The rapid consumer shift to mobile further disadvantages smaller players.

The result has been acceleration in market share consolidation toward a small group of industry leaders and, subsequently, a long tail squeeze, which has fueled a wave of M&A as smaller players seek an exit before it is too late. This consolidation will continue, and this analysis identifies several potential avenues through which deals are likely to flow:

• the ongoing roll-up of sub-scale OTAs;
• acquisitions to bolster emerging market presence;
• efforts to extend into adjacent verticals; and
• surprise, surprise – Expedia, Priceline and TripAdvisor have, and should continue to drive this consolidation.