RBC Explains the Details Behind the TRIP/PCLN Agreement (TRIP) (PCLN) (EXPE)

This morning TripAdvisor (NASDAQ: TRIP) and Priceline (NASDAQ: PCLN) announced that the Booking.com brand will make its hotel inventory available on TRIP’s Instant Book platform and analyst comments are beginning to flow. The functionality should be available in the next few months however, it will likely not have a material impact on Q4.

Mark Mahaney from RBC Capital thinks this is a “"big win for TRIP, a small positive for PCLN and a slight negative for EXPE". The IB platform opens the door to book lodging at over 235k properties which will greatly expand the available inventory on TripAdvisor. Online Travel Agents only want to pay to acquire once, after which the customer will, ideally, go directly to the OTAs site instead of coming through paid channels.

Priceline benefits slightly from the additional revenue. TripAdvisor increases the value of its brand in addition to the extra revenue from additional booking sites. The net loser is Expedia who is seeing competition increase while not getting additional booking.

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