Pivotal moments 2015 – When Expedia bought HomeAway
With the widespread of the concept of "alternative accomadation", Expedia which had showed dismissive eyes on non-traditional hotel models brought HomeAway, meaning that it set foot on the alternative accomadation market.
There is nothing new in the concept of “alternative accommodation” – but in 2015 it went mainstream in a big way.
Although many of the major online travel agencies will never directly admit it (similar to their cohorts in the hotel industry), consumers are now more than comfortable with a different type of experience when it comes to the accommodation element of a trip.
Sure, amongst the big boys of the intermediary world, Booking.com has in recent years moved from dipping its toe in vacation rentals (via its Villas.com brand) to now constantly talking up its wide range of options when it comes to searching for somewhere to stay.
But it was arch rival Expedia Inc that demonstrated to its investors, customers and, perhaps more importantly, the industry that it had a big finger on the pulse of where the market is supposedly heading.
After years of concentrating on so-called traditional forms of hospitality, with a fairly dismissive eye on the concept of rentals, homestays, timeshares and property sharing, Expedia Inc showed that it was finally willing to take the alternative accommodation market extremely seriously by splashing out $3.9 billion on HomeAway.
That dismissive eye, until November this year, was probably on the sensible side of sceptical – the consumer booking experience was often clunky, with real-time availability sometimes difficult to come by, and many properties[charlie1] still managed by individuals over the phone or email.
But HomeAway has been promising a technological leap for a while (with 100% connectivity on properties predicted by HomeAway CEO Brian Sharples), so on that front, the time was right for Expedia to move in.
Expedia’s marketing muscle (it spent an eye-watering $2.8 billion in 2014) can ensure that the concept of vacation rentals can move front and centre into the minds of its customers, thus giving huge air time to properties alongside existing forms of accommodation.
The company’s move cannot be seen in isolation as some kind of battle between the major online travel agencies, all desperately vying to position themselves as being up to date with consumer behaviour.
It is also a significant rearguard action against the rise of Airbnb, a brand with enough buzz and growth around it that it has to be considered a major player in its own right in the accommodation mix.
Perhaps there is a grain of truth in the notion that Expedia Inc simply took a punt on snapping up the cheaper brand in order to get its hands on a different intermediary for accommodation – but, still, the purchase vindicated everything that many have predicted for years: hotels have a significant challenge, and intermediaries need to get a piece of the action.
An expected twist in 2015
Plenty has been written on Tnooz in recent months following the introduction in September by Lufthansa of the Euro 16 surcharge for all GDS-facilitated bookings.
The debate has dragged up countless old arguments about the value of the GDS and what is the future of airline distribution – so there is nothing ground-breaking or surprising at all in what has followed since Lufthansa made its announcement in June.
That said, Lufthansa, one of the most high profile carriers in the world, with an enormous network and a very traditional and conservative view towards risk-taking, was probably one of last carriers industry watchers would’ve considered to be the new flag-bearer of an anti-GDS distribution model.
Nobody could have predicted the timing of the move, too, given that Lufthansa is already battling the trade unions over a long-running industrial dispute.
In short, anyone who claims to have foreseen the details of this saga, arguably the biggest story in distribution of the past few years, is showing off and fibbing.
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