Priceline Group Inc. (NASDAQ:PCLN) is going to face some major headwinds from increased competition as two of its competitors have joined hands and entered a partnership agreement. Expedia Inc. (NASDAQ:EXPE) and Tripadvisor Inc. (NASDAQ:TRIP) are now operating Instant Booking program jointly. Having Expedia listed in Tripadvisor’s Instant Booking feature will provide the consumers with far greater number of options to choose from and therefore result in a far greater number of bookings.
Cantor Fitzgerald analyst Naved Khan believes that the playing field is now leveled between the three major players in the industry and it will be interesting to see what kind of financial impacts result from this change in scenario. Since the introduction of the Instant Booking feature last year, Priceline has enjoyed a sort of monopoly on the feature and it has proven to have worked wonders for the company and resulted in significantly higher top and bottom line numbers than originally expected.
The participation of Expedia in the Instant Booking is currently under the testing phase and the accessibility is only limited for the users in the United States. However, it will soon be rolled out on a global scale and according to Mr. Khan it will create a total 100 to 200 basis points uplift for Expedia. The analyst predicts that the impact of the said addition will be apparent on the company’s topline but the bottom line of the company will be majorly unchanged due to the underlying economics of the channel.
The obvious winner here is Tripadvisor which will see a major uptick in the amount of traffic and number of nights booked while for Expedia it will depend on how its offerings fare compared to Priceline’s. Cantor Fitzgerald has reaffirmed an Overweight rating for all three of the involved companies.