Expedia to polish ‘marbles’ as it targets $100bn sales

Expedia says its portfolio of travel assets is complete for 2017, as it pursues a period of consolidation following a succession of acquisitions.

Chief executive Dara Khosrowshahi said the firm would be more “inward-looking” and target “organic growth” next year.

He was speaking at Expedia’s 17th annual partner conference in Las Vegas last week where more than 4,000 hoteliers, airlines, cruise operators and other suppliers marked its 20th birthday.

During the conference Expedia’s recent flurry of acquisitions – including rival OTAs Travelocity, Orbitz/eBookers and holiday rental site HomeAway – was referred to as “collecting marbles”.

Khosrowshahi said: “We have collected a lot of marbles over the last three to four years.

“This year [2017] for us is going to be more of an organic growth year, more an inward-looking year.

“These integrations have been successful, but have put a lot of pressure on the business. For 2017 we feel we have a collection of assets that’s complete.

“We are really going to focus on developing these in 2017. In 2018 I may look up and become more greedy for marbles.”

During the conference, Khosrowshahi predicted Expedia would become the world’s first $100 billion agency within two years. Currently it turns over $71 billion and is growing at 30% year on year.

He said Asia would be where much of that growth would come, although Europe offered shorter-term growth opportunities given the strength of the dollar.

“Europe is our second-largest market and while Asia has long-term potential, we think Europe has immediate potential,” he said.

“We have millions of American travellers and Europe has become more and more affordable.”

Khosrowshahi said the weak euro and pound make it cheaper for US firms to “put the foot on the pedal” in terms of their investment in marketing.

Expedia said Europe was a growing part of its business, but acknowledges it faces a significant challenge from rival global OTA Booking.com.

However, Khosrowshahi said a strong presence in Asia is a necessity for growth, as is continued health in Expedia’s home US market.

Expedia recognised that with consumers increasingly feeling overwhelmed with choice, one of the challenges it faces is to become more personal in how it markets and sells products.

Khosrowshahi said Expedia’s various brands will do this by controlling the message they convey to customers while taking advantage of the firm’s powerful technology platform and business scale.

He cited Hotels.com’s customer loyalty programme as a successful industry-leading example. “It has a very distinct personality,” he said. “Loyalty customers now represent two‑thirds of its customer base and it’s growing because of one‑to-one connection-building with customers.”

Expedia is seeing independent hotels winning increased market share despite high-profile campaigns from hotel chains such as Hilton encouraging customers to book direct.

Khosrowshahi said this is because Expedia’s consumers were brand-agnostic and many independent hotels were exploiting the OTA’s algorithms to gain enhanced profile.

He claimed hotel base commissions have been falling in recent years, although partners are able to bid more to raise their profile within the Expedia marketplace.

“Our commissions are very competitive with any distribution network out there,” said Khosrowshahi.

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