An older gentleman stands in front of a temple in Siem Reap, Cambodia, gazing up in wonder as sunlight glints off his white hair and wizened face. As he begins to ascend the steps built into the temple ruins, it's clear he's not just making the sightseeing rounds, but fulfilling a yearning decades in the making.

This 30-second commercial for Expedia highlights the online brand not as just a website that books vacations, but as a company that delivers dreams.

"In the old days, we would just show you an ad about people traveling to a destination," says Vic Walia, VP of global brand marketing at Bellevue, Washington-based Expedia. "The insight when it comes to creating an ad now is, 'Let's find the right activity and build the ad around that.' "

When they started, online booking services like Expedia and Priceline were the disrupters. Now they are the ones being disrupted by the digital duopoly of Facebook and Google, as well as Airbnb, which days ago began its own aggressive ad campaign against online agencies—a direct invitation to hotels to partner with Airbnb. Add to that renewed competition from hotel chains using data garnered from rewards programs to offer tailored travel experiences to customers, and online bookers are feeling the squeeze and seeing investor pullback.

No longer able to rely simply on price as a point of difference, Expedia and rival Booking Holdings, which owns Priceline, are fighting back by offering events and activities beyond hotel and airline reservations and spending lavishly to market directly to consumers. Indeed, events provide more growth opportunities for such companies and also help appeal to the changing consumer tastes of the millennial market.

In 2016, Expedia spent $1.6 billion on total U.S. advertising, up 17 percent from 2015, according to Ad Age Datacenter. And Booking Holdings, which owns Kayak and Booking.com, spent $415.3 million on measured media, up 83 percent over 2015.

Duopoly disruption

The goal, experts say, is to rely less on third-party channels like Google—and with good reason. Google recently outpaced Expedia as the No. 1 source travelers use when booking trips, according to a recent study from travel and hospitality marketing firm MMGY Global, while Facebook is also honing ways to reach potential travelers on its site while they are researching trips. Airbnb is also commanding more of the mix as it expands its offerings to include hotels alongside home shares, and hotels are trying to convince consumers to book with them directly, boxing online agencies out.

In the $164 billion U.S. lodging market, booking fees are now nearly split between online travel agencies such as Expedia, with $39 billion, and hotels, with $38 billion, according to Phocuswright, a New York-based travel market research company. Within the online travel market, Expedia (including Hotels.com, Travelocity, Orbitz and Hotwire) commands 70 percent; Booking Holdings, including Booking.com and Priceline, holds 23 percent; and all others garner 7 percent, Phocuswright found.

"A key theme [for online travel agencies] is a shift to direct customer acquisition to drive app downloads and direct engagement," says Douglas Quinby, senior VP of research at Phocuswright. "We're seeing more brand advertising online, for sure, but also offline as well."

Part of the change comes as Google invests more in its own consumer travel offerings. Earlier this year, the tech giant rolled out new features on its mobile search that allow travelers to more easily toggle between choices to plan their trips, compare prices and book directly, according to a spokesman. Google now operates a host of its own services, all branded accordingly, including Google Flights, Google Destinations and Google Hotels.

Such improvements are already proving fruitful as more travelers turn to the Mountain View, California-based search company. According to the annual Portrait of American Travelers study from MMGY last year, 40 percent of travelers cite Google as their first source in booking trips. That's up 8 percentage points from the 2016 study.

Part of the issue for online agencies concerns credibility and consumer perception, experts say. "Travelers are generally distrustful of what they see online when it comes to travel. There's this undercurrent of 'I don't trust what I see, I need to validate it,' " says Clayton Reid, chief executive of MMGY. Enter Google, which most consumers already trust for other search needs.

"Google is the No. 1 influencer across travel and we're seeing it in the numbers," says Reid, noting that the company is getting more aggressive about its products for the space.

Facebook is another potential threat online players are watching closely. Two years ago, the social network rolled out Dynamic Ads for Travel. It recently added features like Trip Consideration, which helps marketers reach travelers who are still picking destinations. As Facebook gathers data and increases its capabilities as a source for vacationers, experts say it too could pose another challenge to online travel brands. But Facebook says its attention is on the advertisers only.

"In travel, we are focused on helping advertisers effectively reach relevant travelers during their booking journey, from providing trip inspiration to ultimately driving bookings," says a spokeswoman, noting that consumers do not book directly with Facebook but through the advertiser.

Digital travel brands also aren't ruling out competition from Airbnb, another brand wooing consumers, particularly younger millennials, for all their travel needs, including lodging and activities. No longer just for home sharing, the San Francisco-based marketer is booking more hotels directly, taking market share away from online agencies. It bought Luxury Retreats, a high-end rental business, for $200 million last year, and now works with more than 15,000 boutique hotel brands, according to an August 2017 tweet by co-founder and CEO Brian Chesky.

Last month, Chesky tweeted, "The interest from boutique hotels has been overwhelming. Many are unhappy with their existing options. We weren't expecting this much interest." Last week, Airbnb published an open letter encouraging boutique hotels to use its platform over online travel agencies, touting its lower fees. The company also just began running ads on the Hotel News Now website that read, "Tired of paying up to 30 percent to the big OTAs? Try Airbnb."

Airbnb, which has been searching for a chief marketing officer since the fall, recently hired Amazon Prime head Greg Greeley as president of its homes division. His experience expanding Amazon into new markets around the globe is expected to help grow the Airbnb brand in new destinations overseas.

Get a room

Meanwhile, hotel brands are pushing marketing campaigns and apps that encourage consumers to book with them directly, bypassing online travel agencies. Hilton's "Stop Clicking Around" campaign heralded such efforts two years ago. Last year, Marriott-owned Westin began a new push as well with "Let's Rise," designed to convince travelers its brand is right for them. And hotel brands are seeing more loyalty members book with them, according to one report.

Net revenue from discounted "book direct" loyalty rates exceeded net revenue from third-
party agencies by 8.6 percent on average from May through December of 2016, according to Kalibri Labs, which tracks hotel revenue. Hotels are also highlighting the amenities they provide with their apps and loyalty programs, like keyless room entry or individual room selection, that can potentially improve a visitor's stay.

Many hotels have enhanced their loyalty programs in order to get visitors to stick around but also to collect more information about their preferences and communicate directly with customers rather than through an online agency. In addition, they're offering more luxury programs directly to guests. The Radisson Blu Mall of America, for example, just announced a new program where visitors can rent a Tesla on the property in under 30 minutes.

Hotels "want to have a direct relationship with the customer so they can provide other services," says Cindy Estis Green, chief executive and co-founder of Rockville, Maryland-based Kalibri. "If it's booked through a third party, they have less of a connection and may get less information from a customer like an email address, so they don't have that same ability to follow up with them."

One large area of focus for online travel bookers is the home-sharing business that helped build Airbnb into a $2.8 billion behemoth over its 10-year history. Expedia now has a stake in the home-
sharing business after its 2015 acquisition of Airbnb rival HomeAway for $3.9 billion. Expedia's Walia says the company does showcase vacation rentals in its advertising, especially in Europe where the market is stronger.

Such rentals are "a big part of travel for Expedia and Priceline," says Amy Hinote, founder and editor of Chicago-based VRM Intel, a quarterly magazine and website that analyzes the vacation industry. "They want to be able to offer all the travel options to their consumers and that includes vacation rentals." She notes, though, that many online agencies often charge higher guest fees than those offered by Airbnb, which could temper consumer enthusiasm.

Expedia is also focusing heavily on marketing its experiences-type offerings. While the company already booked activities like museum tours, it broadened its mix to include events like concerts earlier this year in a push for locals to use its services rather than just travelers.

"Events are a new and growing account for us," says Walia. "We're trying to have that well-rounded experience." In addition to ads that tap into emotions, Expedia is highlighting the savings involved when travelers bundle activities, hotels and flights into one package with the brand.

Expedia listed $10 billion in 2017 revenue, below analyst expectations, though up 13 percent over 2016. Fourth-quarter profit, at $55.2 million, also missed expectations, which sent the stock plummeting. Expedia's stock, currently near $110, has lost around 8 percent of its share price year-to-date.

While Booking Holdings is holding its own financially—the company recently beat analyst expectations by reporting $12.7 billion in 2017 revenue, up 18 percent over the year earlier—the brand is making changes. In February, it revised its corporate name from Priceline Group to Booking in order to better articulate the bookings the company performs.

And as Google plays up its travel tricks, online brands are pulling back on third-party search channels, experts say. "Bypassing Google is the name of the game right now," says Hinote.

For its part, Expedia doesn't directly confirm the pullback, but Walia notes all channels are consistently under evaluation. On a recent earnings call, Mark Okerstrom, who joined Expedia as CEO and president last summer, said, "Over the long term, we have got to be mindful, and we always are mindful, of the incredible market power that Google has," noting the importance of making sure Expedia's own products are credible and wide-reaching and that its user experiences are localized.

With all players expanding their offerings and dipping a toe into a competitor's swimming pool, the lines are blurry at best, with an inevitable shakeout on the horizon.

"Everyone's fighting," says MMGY's Reid.