Apparently, it's renaming and rebranding time at the top of the online travel agency (OTA) industry. Last month one of the major ones unveiled a new name, Expedia Group (NASDAQ:EXPE), complete with fresh branding. This came very shortly after its No. 1 rival, Priceline Group, spun its own cocoon and emerged as a butterfly named Booking Holdings (NASDAQ:BKNG).

Big companies don't undertake renaming/rebranding campaigns lightly. Booking Holdings' justifications for doing so have been well covered by my colleague Nicholas Rossolillo; here's a look at why Expedia Group took the plunge.

Expedia Group logo

Image source: Expedia Group.

Welcome to the 2010s

Expedia Group's decision to add an extra word to its name was made, it said, "to better reflect its identity as a leading global technology company."

"At the same time, the changes acknowledge the unique contribution of each individual Expedia Group brand and business to the success of the overall organization," the company added.

With the new name comes a fresh new logo (above). This change was probably more necessary than the new moniker, as Expedia's previous blue-and-yellow branding looked like a refugee from the 1990s.

These modifications seem largely cosmetic, but like any rebranding/renaming project, there are deeper currents at work. Expedia Group has broadened its businesses over time, reducing its dependence on core, traditional travel services like flight ticket and hotel room brokering. 

For the company, the do-it-yourself, or DIY, accommodation segment -- which exploded only recently -- is growing dramatically in importance (even if it's still relatively small). These days the HomeAway DIY unit is the hot segment for the company, with its gross bookings increasing 47% on a year-over-year basis in the fourth quarter. That well outpaced the growth figure for the core OTA segment, which improved by 10%.

Expedia Group's new name implies a collection of related assets like HomeAway and the core traditional Expedia flights-and-hotel site, rather than a narrowly focused operation.

Also, I think it's important for OTAs to appear as solid and dependable as possible. Travelers are generally looking for the best deals on sites that can reliably provide the services they need; there isn't a lot of brand loyalty in this game.

The Expedia Group name conveys that there's a suite of offerings such a customer would require (I'd say the same for Booking Holdings). Meanwhile, the company's new branding -- to me, anyway -- implies solidity, comfort, and reliability.

Selling the service

Ultimately, what's likely driving this want/need to refresh and repackage is intensifying competition. The broader travel market continues to grow -- global digital travel sales are poised to rise by over 10% this year, according to researcher eMarketer -- and everyone wants a bigger piece of it.

Although there are certain differences, at heart all OTAs broadly offer the same services. That's why marketing is so critical in the industry. And with the increase in business, there's more of a need to get noticed.

Across the board, marketing expenses are rising notably; in Q4, Expedia Group saw its own advance 16%, against only an 11% increase in revenue. Booking Holdings' last quarter as Priceline Group featured a 15% expansion in total marketing/advertising outlay, although this was outpaced by revenue growth of 18%. 

Marketing is all about perception, and brand name/identity is a big part of this. Booking Holdings and Expedia Group now have new looks and (somewhat) new names, which will be hammered home with that increased spending. It'll be interesting to see how this will affect their respective businesses.

 

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Booking Holdings. The Motley Fool recommends Expedia. The Motley Fool has a disclosure policy.