Dara Khosrowshahi, CEO of Expedia Inc, has for the first time commented on suggestions that the world’s biggest online travel agency is a takeover target for Google.
He was speaking at this week’s Bank of America/Merrill Lynch US Technology Conference
When asked directly to address the Google acquisition rumours, he said: “I think that there’s a hedge fund some place laughing all the way to the bank,” he said. “Someone needs to have a good quarter, they introduce this rumour and the market does what it does.”
He added that, “other than that, I won’t comment.”
Khosrowshahi also added some detail to previous comments about Expedia’s decision to waive its air booking fees and reduce hotel booking fees for US consumers. In its Q1 earnings call, he said the move was costing it about $3m a month, in profit, for both products. “On a gross basis these numbers would be higher, especially for air, but they are being offset by the volumes improving and our ability to upsell more hotels, cars, etc with the air ticket.
Since the move, there has been an increase in traffic to Expedia.com, “so we can sell more media against that”.
He was confident that similar moves by rivals Orbitz and Travelocity would work in its favour. “Their hotel margins are not as robust as ours, so we think they wont be able to make up as much as we can without taking a bigger hit to profitability or by cutting back on their marketing spend, which will help us on a share basis.”
Overall, he expects that after a short term hit, the initiative will “break-even over a two, three-year time period.”
During the session, he also talked up the business coming through its call centre. “Hotels.com has a high offline component,” he said. “The conversion rate when our travellers call us is terrific, the engagement is terrific, they find that it’s a good experience.
“Offline is a very important channel for us.”