I was at a blockchain event last night when a Beijing-based investor let loose a rant on how this Internet world of centralisation was creating monopolies especially in travel where OTAs were completely dominating the market and there was now no room for new startups in travel that could scale well and successfully.
Just that morning, Booking Holdings had announced its intention to acquire HotelsCombined, the hotel metasearch business, based in Australia, and the sale is pending regulatory approval expected by year end. It was inevitable in this world of scale and consolidation that HotelsCombined could not and would not stand alone for much longer.
Started in 2005, it’s been self-started, self-funded and self-run for going on 13 years and as successful as it has been in executing in parts of Asia, let’s face it, it’s tough to compete as an independent in a world of giants.
HotelsCombined’s focus on hotel search has stood it well. Its focus on business-to-business execution with its affiliate model in the early years helped it grow to a good enough size that it could expand its business across Asia.
The iconic HotelsCombined bear, Max (Image credit: HotelsCombined)
Its move to a consumer brand in the last few years was slow, steady and measured. From 2015, the company started advertising in Korea, Russia and the Middle East and tested advertising as well in France, UK, Ireland, Australia, Japan and Brazil. Max, the bear, started making his appearance.
It is South Korea that in particular stands out as a success story for HotelsCombined. One of the toughest and closest markets to penetrate, Hotelscombined managed to do so through a partnership with Naver, implanting its hotel search into the Korean search giant, as well as through its own marketing campaigns.
One recent campaign featured product placements into a Korean TV travel reality series called “Grandpas Over Flowers” in which four veteran Korean actors, Lee Soon Jae, Shin Goo, Park Geun Hyung, and Baek Il Sub, travel to different countries with actor Lee Seo Jin. The show is produced by TVN, which is popular not only with travellers but all Koreans.
The South Korean reality show “Grandpas Over Flowers” (Image credit: tvN via YouTube)
Building a consumer brand today though needs more than a cute bear and product placements, and winning in one country. However if it is the one country that matters, then you’ve got an interesting prospect for an acquisition.
At yesterday’s event hosted by Atlas, a new startup that wants to build “the next generation of TripAdvisor and Booking.com, powered by blockchain” (more of that in another article), the high costs of customer acquisition were mentioned. With Booking Holdings and Expedia spending $7b between them on Google, which company can outspend them?
Certainly not HotelsCombined or any other independent travel company that has to fend for itself in this consolidated world.
In an interview in 2013 with WiT, then COO and now CEO Hichame Assi talked about its expansion plans for Asia and its localisation strategy. “We believe in localisation and will evaluate each market individually to determine its requirements for local presence. One of the keys to our penetration of new markets involves integrating local OTA partners and we’ve progressed well thus far with this method.”
Clearly its localisation strategy in key markets in Asia has paid off and was probably a key reason why Booking Holdings wanted it for KAYAK as it expands in Asia.
It gives Steve Hafner’s team in Asia a stronger base on which to build. KAYAK has had some success in South Korea but found it harder in Japan where it faces competitors like Yahoo!
Whatever the price was paid, we hope it was a good deal for the HotelsCombined team, who are recognized as one of the most solid and humble teams working in digital travel.
Whatever the outcome, whether HotelsCombined continues to operate as its own brand or will be subsumed under the KAYAK brand, we hope the team remains intact and its rebel spirit endures. We have a feeling given Hafner’s own “rebel spirit”, which seems to have remained intact with the Booking acquisition, this may be the case.
But then we are a naïve and optimistic bunch at WiT.
• Featured image credit: rudall30/iStock-Getty Images