Skift Research Take
This report assesses Expedia’s competitive positioning in travel amid the explosion of disruption and technological innovation now playing out across the entire sector. The company continues to charge forward with a combination of healthy organic growth from its diverse brands, as well as the positive impacts from its latest acquisitions. Revenue streams and overall profitability look strong in the short to mid term, but nothing is certain in today’s environment.
In an exclusive interview at the 2016 Skift Global Forum in New York City Dara pointed to artificial intelligence and voice-activated search as a concerning threat to the business. The big technology platforms including Google, Facebook and Amazon know this and have vast resources aimed at dislodging Expedia and other aging online travel agency brands from their current high-ground position.
The online travel agency (OTA) landscape is also not a winner-take-all environment, despite heavy consolidation in the space. Both Expedia and Priceline are well-positioned for steady growth into the next decade – but not without headwinds. The rise of alternative booking platforms including Airbnb, local niche OTAs, metasearch brands, consolidation in the hotel space, and the steady march of new giants into the travel sphere such as Facebook and Amazon will likely chip away at Expedia’s dominant position.
The online travel ecosystem is changing with all participants looking to take share of different parts of the search and booking process. This has led to aggressive marketing campaigns by the hotels to push direct bookings, while the OTAs continue to spend billions in digital marketing each year. Here we discuss the current landscape and our predictions surrounding direct booking, M&A, and advertising trends.
HomeAway will likely prove to be a transformational acquisition with a business model change combined with strong bookings growth in alternative lodgings. Here we address the new consumer fee structure, the move to online bookings, likely actions by consumers and suppliers, and the overall impact to Expedia.
Hotel metasearch brand Trivago has been growing revenue rapidly, but spending heavily to market itself. As this spend normalizes, Trivago should become more profitable over time. Additionally, Expedia is exploring an IPO of Trivago and could unlock value by doing so. Here we explore how large the IPO could be and how it may be structured.
The Orbitz integration has hit some near-term headwinds, but we believe the synergies will be compelling over time. Here we quantify the potential gains and track the progress of the integration.
We also dive into corporate travel where Expedia-owned Egencia is disrupting the space and growing well ahead of legacy managers, air bookings where Expedia is benefiting from cross-selling its hotels, and B-to-B where its affiliate network is creating new partnerships that could reshape how the large hotels and OTAs work with each other.