missileMidnight Oil sang: “The rich get richer, The poor get the picture, The bombs never hit you, When you’re down so low, Bombers keeping coming, Engines softly humming, The stars and stripes are running, For their own big show.”

The iconic Aussie group may have singing about the early ’80s nuclear arms race led by ‘Ronald Raygun’ but these lyrics neatly apply to today’s online travel landscape where two seriously big and aggressive companies from the the United States, Priceline and Expedia,  are pretty much taking over the world. Their world.

According to analyst Douglas Quinby from PhocusWright, companies owned by Expedia and Priceline had 47% share of global online line travel agency sales in 2013, up from 38% in 2011.

Since then, their momentum has accelerated while many other companies have struggled, even those with global reach such as Orbitz, so it’s a sure bet the duo are now above 50% global market share.

Alongside TripAdvisor and Airbnb, they are the world’s most powerful online travel companies.

Expedia’s annual results last week revealed its 2014 gross bookings grew 26% year year-on-year to more than 50 billion US dollars.

Priceline  is yet to report for year-end 2014 but for the third quarter it achieved 28% growth in gross bookings to just shy of USD14 billion for the three month period.

The result is that the squeeze is on and mid-size online Australian travel companies – outfits that once had some decent mojo – are feeling the pinch.

“The business is in a fair bit of trouble,” one said last week.

“I’m not happy with the way things are going at the moment,” commented another.

A third well-known brand with a loyal client base complains the market has never been tougher.

These are businesses that have been around for a decade or more and have anywhere between 75,000 to 500,000 monthly visitors.

They’re struggling with the scale of their competitors which in the case of Priceline-owned Booking.com is attracting more than 7m visits a month.

Expedia’s acquisition of former market leader, Wotif.com, the performance of which had been hit hard by what its former chairman called “foreign interlopers”, will also take its aggregate monthly visitations to beyond 7m.

The next biggest OTA would be Webjet, with around 4m. Then there’s a massive gap to the next tier of OTAs on or around 1m a month.

Several of these are actually owned by Priceline and Expedia anyway, giving them enormous cumulative marketing firepower.

It’s like they’ve come across some native tribe armed with bows and arrows while they have the latest automatic weapons.

And how are things across the ditch in New Zealand?

In the past, due to its small size (population 4.5m) and inescapable isolation, New Zealand had largely been left alone by the big two.

Not any more.

They have bodies on the ground and are marketing hard.

“The fight for customer eyeballs has intensified … thanks to the fire hose of search marketing from Booking.com and Expedia,” commented one local market leader.

Back in Oz, the locally-owned businesses mentioned above are getting by, just.

But their owners are nervous and, judging by the rhetoric and mood, it can’t be long before some hard decisions start getting made.

From their perspective, the future looks like more of the same, in every kind of way.

Read About It – Midnight Oil

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