Why the metasearch consolidation is bad for everyone except Booking.com.

The traveler who priced a trip in 2012 had a real market to price it in. Kayak was independent and aggregated honestly. Priceline ran its own opaque-pricing experiment with a different incentive structure. Booking.com was the European hotel-aggregator with the best supply graph and a directness that made it pleasant to use. Hotwire ran cousin-of-Priceline opaque pricing on a slightly different inventory pool. Trivago competed against Kayak with European supply that the U.S. metasearches did not carry well. Expedia ran a more polished but less complete OTA. Travelocity, then a real brand, served the conventional package travel customer. Hotels.com had the loyalty hook the others did not. The traveler choosing among six or seven of these against a search problem got real price competition, real supply variation, and real differentiation in how the inventory was surfaced.

That market is gone. The traveler today prices a trip in a market that has the appearance of variety and the structure of a single owner. Booking Holdings controls Booking.com, Priceline, Agoda, Kayak, OpenTable, and Rentalcars. Expedia Group controls Expedia, Hotels.com, Vrbo, Travelocity, Orbitz, Hotwire, Wotif, ebookers, and CheapTickets. Trivago, the independent-looking metasearch, is majority-owned by Expedia. The two parents control somewhere on the order of 70-80 percent of the U.S.-and-European online-leisure-booking volume by most credible 2024 estimates, with the rest distributed across Airbnb (which competes in a slightly different category), Google's metasearch surfaces (which the parents pay to appear in), the airline-and-hotel direct channels (which the parents shape through their take-rate pressure), and a long tail of vertical-and-regional players that survive on the margins.

This is the requiem. Not for any specific brand. For the market the traveler used to operate in.

The map

Read the consolidation history without the press-release framing. Priceline acquired Booking.com in 2005 and Kayak in 2013, then renamed the parent Booking Holdings in 2018 to surface the dominant brand. Agoda was acquired in 2007 and integrated into the parent's Asian-supply graph. OpenTable was acquired in 2014, giving Booking the U.S. restaurant-reservation footprint to feed back into the trip-planning experience. Rentalcars was acquired in 2010 and operates as the rental-car distribution layer for the parent's properties. The parent's six surfaces, presented to the traveler as separate brands with separate value propositions, share a single supply graph, a single revenue-management infrastructure, and a single optimizer that decides which brand to surface to which traveler at which price.

Expedia did the same shape on a slower timeline. Hotels.com was acquired in 2002. Travelocity in 2015, after years of decline. Orbitz, also in 2015, ending the competitive dynamic between Expedia and Orbitz that had defined a decade. Vrbo, acquired through HomeAway in 2015. Trivago, the metasearch the consumer reads as independent, is 60-some percent Expedia-owned with the public-float minority spinning off pretensions of independence.

The result, in 2024, is a duopoly with a long tail. The duopoly carries the volume. The long tail survives by either occupying a vertical the duopoly does not care about (luxury-leisure, group-travel, cruise-only, regional Asian-or-European supply) or by partnering with one of the duopoly poles to access supply they cannot independently aggregate.

The traveler reads variety on the search-engine results page. The variety is largely cosmetic. Two parents. Twenty-something brands. One outcome.

The antitrust thresholds nobody crossed

The U.S. and European antitrust regimes both have horizontal-merger thresholds that, on the face of them, the metasearch consolidation should have triggered. The U.S. Hart-Scott-Rodino review applies to mergers above certain transaction-value thresholds. The Department of Justice and the Federal Trade Commission share antitrust authority, with the DOJ generally taking the lead on travel-distribution. The EU Merger Regulation applies to mergers with EU-revenue effects above certain thresholds, with the Commission's competition directorate doing the substantive review.

Several of the consolidation steps should have, in a market-structurally-coherent regulatory environment, drawn substantive review. Booking acquiring Kayak in 2013 combined the leading hotel-OTA with the leading metasearch. Expedia acquiring Orbitz in 2015 reduced the number of independent U.S. OTA poles from four to three. Expedia acquiring Travelocity in 2015 reduced the number of mid-market U.S. OTAs further. Each transaction passed regulatory review with limited remedies. The DOJ and FTC accepted the parent-company arguments that metasearch and OTA were sufficiently distinct categories that horizontal-merger concerns did not apply. The European Commission accepted similar arguments for the European reviews.

The argument was clever and substantively wrong. Metasearch and OTA are not distinct categories from the traveler's standpoint; they are two surfaces of the same booking funnel. A traveler comparing prices on Kayak is doing the same job they would be doing on Booking.com, with a different surface and the same parent's inventory mostly. Treating them as distinct categories produced a regulatory blind-spot that the parent companies exploited consistently across a decade.

The structural reason the antitrust thresholds were not crossed is that the regulatory framework was looking at category boundaries the parents had a strong interest in defining narrowly, and the parents had the legal-and-economic-expert-witness budget to define them narrowly in every review. The traveler's market shrunk while the regulators agreed that no relevant market had been concentrated, because the relevant market the traveler operated in was not the relevant market the regulator was defining. The traveler does not get to pick the relevant market. The parent's outside counsel does.

This is the part of the requiem worth marking. The market did not consolidate against the rules. It consolidated through the rules, with regulatory blessings at every step, on definitions of the relevant market that the parent companies wrote and the regulators accepted.

The structural losses

The losses run in three directions.

Hotels lose. The take rates the parent companies extract from the supply side have been roughly stable to mildly increasing over the last decade, with the increases concentrated in the smaller-supply categories that lack negotiating leverage. The independent-hotel category running on Booking.com pays rates of 15-25 percent of the booking value, depending on the property and the rate-parity arrangement. The chains negotiate harder and pay closer to the low end. Either way, the take rate is a meaningful share of the hotel's gross margin, and the competitive leverage to bring it down is structurally absent because the alternative-distribution channels do not move enough volume to threaten the parents.

Travelers lose. The price competition the traveler reads as cross-OTA shopping is largely intra-parent re-shuffling. The parent runs a single optimizer against the traveler's session and produces a price; the traveler thinks they have shopped across OTAs and have actually shopped across surfaces of the same parent. The price is the price the parent's optimizer wants to charge, calibrated against the parent's revenue-management goals, not against an external competitive constraint. The "best price" the traveler sees is the best price the parent is willing to offer that traveler in that session, which is not the same thing as the best price the market would have produced under genuine competition.

The long tail of suppliers loses. Independent vacation rentals, smaller hotels, regional bed-and-breakfast operators, off-the-tourist-map properties: all of these depend on the duopoly's supply graph for distribution and pay the take rates the duopoly sets for accessing it. The leverage these suppliers had in the 2012-era market, when there were six or seven independent demand-side players competing for their inventory, has been compressed to roughly zero. The supplier either accepts the duopoly's terms or accepts not being distributed.

This is the burial. Three classes of stakeholder, each worse off, each unable to organize a market response because the market response that would help them (substitution to a competing demand-side player) is not available at the scale that would matter.

What survives the burial

Booking.com survives well. The parent's financials are excellent, the optimizer is mature, the supply graph is unmatched outside Asia, the regulatory posture is durable. The eulogy is for the market, not for the company. The company is doing fine.

Expedia survives less well, with operational struggles through 2020-2024 around brand consolidation, executive turnover, and the operational catch-up to Booking's optimizer maturity. The parent is durable as a number-two pole and is not going away, but it is not the structural threat to Booking that a healthier number-two would be.

The structural alternatives that survive on the margins are Airbnb (different category, different supply graph, different problem), Google's metasearch (which captures upstream traffic and routes it to the duopoly with a percentage take), the airline-and-hotel direct channels (which the duopoly's take-rate pressure has actually grown by giving suppliers a stronger reason to invest in their own customer-acquisition), and the small-supply specialty operators (Mr & Mrs Smith for boutique-luxury, Plum Guide for high-end vacation rentals, the regional-OTA layer that survives on the local supply the duopoly does not aggregate well).

The traveler in 2024 has the duopoly, the airline-or-hotel direct, the Airbnb-style alternative, and the regional-or-specialty long tail. The total experience is worse than the 2012 market on every dimension a careful observer would measure. The trade-press writes about the convenience of the consolidated experience, which is real, but the convenience is the consolation prize for the price competition that no longer exists.

This is the part where the eulogy ends and the operator-tier reading takes over. The operator class building in this category in 2024-2027 is building either inside the duopoly's supply graph (which means accepting the duopoly's economics) or building one of the survivable specialty positions on the margins. The middle ground (a new general-purpose OTA, a new general-purpose metasearch) is not available, because the duopoly's supply graph is the moat and no new entrant can replicate it without spending more capital than the unit economics support.

The traveler the metasearch market once served is gone. The market that served them is gone. The duopoly that ate it is doing fine and will continue to do fine. The regulators who let it happen will continue to define the relevant market in a way that makes their record on this look defensible. The hotels and travelers and long-tail suppliers who lost the market will continue to operate in the smaller market that replaced it. The eulogy is short. The market is buried. The operator class works with what survives.

—TJ