Priceline’s Meituan investment is a big deal
Priceline has long been one of the smartest players when it comes to mergers and acquisitions and it looks to have made another key move with its recent investment into Meituan-Dianping finds EyeforTravel’s new report into the company.
Although Priceline has a comparatively small stake in the company, with its investment reportedly valued at USD450 million, it also announced that it was to create a distribution partnership between the company's travel division and Priceline's main Asian arm, Agoda. This is potentially more crucial than the investment itself and likely what Priceline was mainly looking to get at in the funding round.
"Now, Priceline has a fantastic presence in Asia-Pacific through Agoda, its partnership with Ctrip, and now this additional investment," says Alex Hadwick, Head of Research at EyeforTravel. "It is therefore sitting on a well-fortified position within the market space and is also hoping to grow its Booking.com presence in the country with a local team. What's more it has been able to achieve this without having to put in the huge sums other international tech giants have made into market. Famously Uber invested billions before conceding to local competition, so Priceline are able to minimise risk through their network of investments while growing market penetration."
With a predicted Compound Annual Growth Rate (CAGR) of more than 8% between 2017 and 2020 and even a faster growing domestic market, the attraction is obvious for Priceline and getting involved with local players at this stage could be crucial as EyeforTravel's research suggests that more than seven out of ten digital travel bookings in China are made with Online Travel Agencies (OTAs).
To preview and buy EyeforTravel's Expedia report, click here, or here for the Priceline report. These are part of the Future of the Online Giants series, which will cover Expedia, Priceline, TripAdvisor, Ctrip and Google. Keep a look out through EyeforTravel On Demand for the rest of these reports.
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