These days, expediting your vacation begins online. As the market leader in online travel services (ahead of rivals Orbitz, Priceline, and Travelocity), Expedia offers online trip-planning tools that allow users to book airline tickets, hotel reservations, car rentals, cruises, and vacation packages. Its portfolio of brands includes flagship Expedia.com, accommodations manager Hotels.com, travel discounter Hotwire, luxury package provider Classic Vacations, and Chinese travel service eLong, among others. Launched in 1996, the company serves travelers in North America, Europe, and the Asia/Pacific region. In late 2011 Expedia spun off search engine TripAdvisor.
Change in Company Type
The move split Expedia into two publicly traded entities. Expedia focuses on travel transactions (such as airfare booking and hotel reservations). It provides travelers with access to more than 145,000 hotels and some 300 airlines in about 200 countries worldwide. TripAdvisor concentrates on travel-related media through about 10 related media and advertising brands. Spinning off TripAdvisor has promised to yield big gains for Expedia stockholders, who automatically received a stake in TripAdvisor and a tax-free windfall.
The deal also liberated the fast-ascending social travel service provider. In 2010 revenue from Expedia's core transactional business rose short of 10% while revenue generated by TripAdvisor increased by more than 30%.
Expedia is optimistic about 2012. Airline ticket transactions comprise 56% of its agency business. The company's concentrating on growing its merchant hotel and packages businesses because it delivers higher revenue per transaction. Also, Expedia is focused on boosting market share for its global agency hotel business through its Venere, Expedia, and Hotel.com brands.
In recent years Expedia has grown by centering its strategy on international expansion, as an increasing portion of its revenue is generated by bookings outside the US. To that end, in late 2012 it acquired a majority stake in trivago, a European travel site based in Dusseldorf, Germany, for about €477 million ($632 million). Trivago is an online metasearch site which compares hotel rates from over 600,000 hotels on over 140 booking sites worldwide.
International customers accounted for 38% of Expedia's 2010 revenue, up from more than 35% in 2009 and 30% in 2008. Building its image globally and expanding its brand portfolio have been key in its efforts to reach a wide slice of consumers (including budget-conscious, luxury, and business travelers). To this end, the company in 2011 partnered with budget airline AirAsia through a joint venture that sells airline tickets, hotel bookings, and holiday packages in Asia. In a similar deal, its Expedia Japan site also partnered with Airlink to offer travel packages to more than 40 cities, and subsidiary Egencia extended its services to about 10 additional countries (including Argentina, Hungary, and Russia). Egencia, the fifth largest travel management company in the world, also purchased Traveldoo in late 2011 to accelerate its global growth. Amid the turmoil in the US economy, the company acquired Chinese metasearch site Kuxun.cn in 2009 to strengthen its eLong operations, and localized Expedia sites were launched in Mexico, Denmark, and Turkey. Expedia continued to buy out other investors in the eLong business in 2011 to up its stake in the potentially lucrative market.
It's no surprise that a growing aspect of serving the travel market is enabling travelers to shop and book while they're on the go. To compete with Kayak and cater to its mobile customers, Expedia in late 2010 inked a deal to acquire Mobiata, a developer of mobile travel applications. Founded in 2008, Michigan-based Mobiata boasts several popular travel applications, such as FlightTrack (a best-selling iPhone travel application), TripDeck (an itinerary manager), and HotelPal (for booking hotels). As part of the agreement, Mobiata will remain headquartered in Ann Arbor.
Chairman Barry Diller controls about 60% of the company's voting power.
Originally a division of Microsoft, Expedia was sold to IAC/InterActiveCorp, which acquired the computer maker's majority stake in 2002 and the minority interest it did not already own in 2003. Two years later, IAC spun off Expedia into a separate publicly traded firm.