Expedia was a pioneer in exploiting the disruptive potential of the web. Combining technology with the explosive growth of the Internet, we created and commercialised what is now commonly called dynamic packaging (although we never called it that and neither do customers).
So what? Our innovation gave customers better value.
Internet-based travel companies grew rapidly, with Expedia rising to become the fifth biggest tour operator in the UK and one of the world’s biggest travel companies, with $15 billion of bookings last year. Tour operators and suppliers have followed and, as we foresaw, they now have a significant online presence.
But what will it look like going forward? Travel is a cyclical business: demand rises and falls. As demand has recovered and as the more traditional travel firms are beginning to understand the role of technology, it’s common to hear speculation about the demise of the “online travel intermediaries”.
This is ill-informed speculation, for the following reason: we have been successful because we constantly focus on solving customer’s problems with great technology and a great selection of travel products. And although the role of technology in making clients’ lives easier is changing, it remains as important as ever.
So luckily, we’re not going anywhere… I say luckily because we pioneered technologies that everyone is benefiting from. Our view is that in the next 10 years there are unlikely to be major technological “discontinuities” such as the emergence of the web. Technology’s role is just changing and becoming less obvious.
Now our focus has turned to accelerating the evolution of the online travel experience from being relatively transactional to becoming a true service, which uses customer insight to deliver a more relevant experience. Serving that end, technology becomes more important than ever.
The role of the web is still in its infancy, so far only the basic plumbing has been done. To continue to serve customers we have to evolve our understanding of the web from following simplistic penetration and conversion metrics to develop insight into how the web is changing the way people think and make decisions about everything, not just commercial transactions.
Translating that insight into a better customer experience is a far more complicated proposition and that’s where we’re focusing our efforts. Given the 10 years of experience we have, we’re ideally positioned to continue to lead the way.
We could not discuss 10 years of online travel without mentioning search. It has been a major catalyst of the growth of the web and everyone has benefited. And if we mention search we can’t avoid mentioning Google. Despite popular paranoia, Google is unlikely to be all things to all people. It’s an advertising business, and it’s profiting nicely from the travel vertical so it’s unlikely that it is interested in changing its role.
Like all technologies, great search capability will become widespread and I’d be surprised if it wasn’t high on the priorities of all companies with any online presence.
So my guess is that the next 10 years will impact the stakeholders thus: customers will benefit from technology which gives them an ever more personalised, relevant service; suppliers will continue to benefit from direct distribution, but also from their existing partnerships with online travel players; competition and industry structure – the industry will continue to be cyclical and definitions of online and offline will be less relevant.
Technology will continue to be a force in the industry, not in disrupting the dynamics of travel, but as an enabler in extracting customer insights and acting on them. Those who do not act on these insights will perish. Expedia will retain a leading position.
Dermot Halpin is president EMEA for Expedia Inc