Twenty years on from when a Microsoft general manager pitched to Bill Gates the idea of creating the world’s biggest travel company, it’s as good a time as any to reflect what impact this has had.
Expedia today is a $17.5 billion multinational corporation comprising of an impressive stable of brands well-known to customers in the UK and around the world like Hotels.com, Trivago and ebookers.
The recent partner conference in Las Vegas where 4,000 hoteliers and other suppliers gathered for its annual Expedia fix heard it remains at heart a technology company that happens to be in travel.
Annual revenues today top $70 billion and are tipped to breach the $100 billion mark in the not too distant future, so it stands to reason Expedia’s impact on travel has been significant to say the least.
Common parlance when talking about tech infiltrators into established sectors is to describe them as disruptive, although overuse is rendering this concept increasingly vacuous.
However, with Expedia’s early disruptive period behind it, a question posed to a line-up of its senior brand bosses in Las Vegas was who do they think the company has disrupted over the last 20 years.
Take the UK market. In the last 20 years it has seen the rise of a clutch of its own domestic pure play OTAs like Travel Republic, On The Beach and now LoveHolidays that have achieved considerable scale.
Among the clutch of second tier OTAs that 20 years ago traded exclusively off analogue Teletext leads to call centres, there has been some churn due to what has always been a fiercely competitive sector but new brands have emerged and scaled.
Arguably the biggest area of consolidation has been in the pure play online agency sector with the likes of lastminute.com, Opodo, Orbitz, ebookers and Travelocity all now under different ownership, the last three belonging to Expedia.
At the same time, while there has been inevitable decline in the traditional tour operator/agent/high street model as the web took marketshare, that appears to have at least plateaued.
Many independent high street agents also appear to be enjoying something of a resurgence with the likes of Hays Travel, Barrhead Travel and Midcounties Co-operative all targeting and achieving growth in store numbers.
And the last 20 years has also seen the rise of the homeworking travel retail model with thousands of agents earning a good living in specialists like Travel Counsellors and in divisions of other companies.
If one thing has disrupted the UK travel sector over the last two decades it is the rise of the low-cost airline which more than anything threatened to de-bundle the package holiday and sideline all intermediaries.
Yet tour operators remain a vibrant and valued part of the travel eco-system here and across Europe, and the recent emergence of Jet2 and Jet2Holidays in the UK proves this more traditional model is far from broken.
Expedia likes to talk about its pivotal role in the global travel ecosystem, but it was notable that tour operators did not feature as part of that vision set out in Las Vegas.
However, in Europe’s two largest travel markets, the UK and Germany in particular, packages are proving to be durable and, although becoming more dynamic, this remains firmly tour operator territory.
Answering the question about Expedia’s disruptive impact, Hotwire president Henrik Kjellberg conceded there will still be offline travel agents 20 years hence.
He said Expedia has been about offering customers new services and “innovating new ways of doing things”.
“I think we are adding a tonne of value to the consumer,” he said. “Also we are helping quality partners that offer great services because in the past it was very hard to differentiate yourself unless you had a sales network.”
Egencia president Rob Greyber agreed saying Expedia has if anything “disrupted the customer” in a positive way. “I think there has been an enormous amount of change,” he said.
“But the real radical change has been the power of putting the information at the fingertips of everyone who wants it in the world. That’s tremendously exciting and it’s as promising today as it was 20 years ago.”
Cyril Ranque, president of Expedia Lodging Partner Services, added: “The biggest thing that the OTAs have done is remove uncertainty for the traveller and build trust.
“We have enabled a lot of travellers to take the risk to go on vacation. Without the transparency and the objectivity provided by OTAs that probably would have taken much longer.”
These views were reflected in main stage sessions during the partner conference.
Dara Khosrowshahi, president and chief executive of Expedia Inc and founder Rich Barton spoke about empowering people by bringing them the information that had previously been the preserve of travel agents.
And guest speaker Peter Diamandis, co-founder and vice-chairman of technology genomics research company Human Longevity explained how rapid growth is achievable online due to Moore’s Law, which sets out how technological growth is exponential.
He described how innovations go through a number of stages starting with digitisation which is often followed by a period of deceptively slow growth until a certain critical point is reached and disruptive, explosive growth is achieved.
Scale and efficiencies then lead to a dematerialisation of the product, like how standalone GPSs are now basically defunct because they have become no more than apps on smartphones.
Then comes demonetisation as the cost of repetition and replication falls to zero and that leads to democratisation when you are able to easily reach billions of people across the globe as high-speed internet access become ubiquitous.
So if Expedia’s most disruptive achievement over the last 20 years is the democratisation of travel is it subject to the current crisis of confidence in democracy we’ve seen throughout 2016, a year in which doubts have been raised about the wisdom of the crowd.
Khosrowshahi alluded to the challenge of giving people the power of ultimate choice when he said there is a danger of overwhelming consumers, so Expedia’s answer to that will be to invest more in personalisation to help guide customers to the right product for them.
So Expedia faces the challenge of cracking curation on a global scale, tailored to regional markets where smaller rival brands with the advantages of a local focus and trusted brand status will also be adopting personalisation techniques.
Delegates in Las Vegas were shown an opportunistic television campaign by Hotels.com designed to catch people’s attention during the recent US presidential election.
Big and powerful though Expedia’s brands are they don’t have the same emotional resonance with consumers in markets outside of its US home where billions of marketing dollars have been spent on brand building over the last 20 years.
Cash-rich and acquisitive though it is, Expedia doesn’t have the scope to start buying established brands in every single country it sells in just to nudge up market penetration a few percentage points.
However, now it is rid of the distraction of integrating recently acquired brands like Orbitz and ebookers it will aggressively target organic growth and says it sees immediate opportunities in Europe, particularly given the strength of the dollar.
It sees Asia Pacific and India as the markets it must grow in to achieve its ambitions and admits in Europe it faces a pretty formidable competitor in Booking.com.
So for now, rivals in the UK and Europe can look forward to a period in which Expedia will undoubtedly blaze a trail in terms of technological advances but leave enough lucrative business on the table for all, while it continues to help grow the travel market.
And maybe Expedia’s rivals should also be grateful that one of the consequences of its success, and that of rival Priceline, is that Google travel advertising revenues are so high they are helping to clip the search engine’s own ambitions in the sector.