Priceline and Expedia will face competition on commission rates if Airbnb expands into hotel booking.
The present incumbents would not be able to move into Airbnb’s turf due to regulatory obstacles.
It is certain that cannibalization of Priceline and Expedia’s room night will be done by Airbnb.
Hotel chains might start favoring Airbnb as an alternative distribution channel.Priceline Group, Inc. (NASDAQ:PCLN) and Expedia, Inc. (NASDAQ:EXPE) have faced growing concerns over their future growth potential due to the rise of Airbnb, Inc. (Private:AIRB). Currently, Airbnb is valued at $25.5 billion, which is more than EXPE's market cap of $16 billion and close to 40% of PCLN's market cap of $64 billion. In the third quarter of 2015, Airbnb sold 23.8 million room nights in comparison to 61.5 million by EXPE and 115.6 million by PCLN.
Both Priceline and Expedia have been able to survive in the highly competitive online travel agency (OTA) market by spending billions of dollars in the past few years to consolidate the market. The end result has been that 95% of the market is now in the hands of these two OTA behemoths. Both these OTAs currently charge commissions as high as 15% to 25% for bookings made on their platform.
Read more @ http://seekingalpha.com/article/3961264-priceline-expedia-face-might-airbnb
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