The online travel market has been a boon for travelers. Since 2009, the price of Chanel’s quilted handbag and Cartier’s Trinity gold bracelet have increased 70 percent and 48 percent, respectively.1 However, the average price of a luxury hotel room has increased just 10 percent in the same period.2 Transparency, a fragmented market, and a near-zero incremental cost product (rooms) create an ecosystem where only the strongest and most innovative hoteliers can grow revenues. As the global economy recovers from recession and travel expenditures return to pre-2009 levels, the biggest winners have been Google and travel firms born of zeroes and ones. The search engine now garners five percent of its total revenue from two firms: Priceline. com and Expedia; and Travel is its third biggest sector behind Financial Services and Retail. In addition, TripAdvisor and Airbnb, founded in 2000 and 2008, respectively, boast larger market values than Hyatt Hotels Corporation, InterContinental Hotels Group and Shangri-La Hotels and Resorts. As margin gets starched from third-party purchase paths, some hotel firms have leveraged scale and brand to capture direct bookings via robust sites, reversing margin erosion. In Q1 2014, Hotel brand sites captured 27.1 percent of bookings, vs.13.2 percent by Online Travel Agencies (OTAs). However, OTA share grew 9.2 percent year on year, compared to 6.1 percent for brand sites.3 In addition, metasearch is playing a greater role in the decision- making process—28 percent of U.S. leisure travelers report using metasearch engines in 2013 (including 39 percent of travelers aged 18-36), up from 17 percent a year ago.4 In March 2013, Expedia took a majority stake in upstart metasearch site, Trivago, and Priceline. com purchased travel search engine Kayak in May 2013. TripAdvisor also buttressed its massive review engine with metasearch capabilities. The company’s product focus for 2014 is the introduction of direct booking within its apps, moving the travel giant further down the transaction funnel. Download the full excerpt of the report at L2 (free registration)