The World at Your Fingertips: How Expedia Became a Leading Online Travel Giant

The World at Your Fingertips: How Expedia Became a Leading Online Travel Giant - Humble Beginnings as a Microsoft Subsidiary

It may be hard to believe now, but Expedia started out in 1996 as a small division within tech giant Microsoft. At the time, Microsoft saw the early potential of online travel and acquired a majority stake in a small company called Travelscape that was developing travel booking technology. Under Microsoft's ownership, Travelscape was rebranded as Expedia and became one of the first online travel agencies.

In those early days, Expedia focused primarily on airline reservations. This was revolutionary at a time when most travel planning still happened offline, through traditional brick-and-mortar travel agencies. Expedia brought the convenience of booking flights directly to consumers' homes through their desktop computers.

Being owned by Microsoft gave Expedia the financial backing and technological resources to grow quickly in those formative years. They were able to leverage Microsoft's massive investment in internet infrastructure in the 1990s. However, being part of such a large corporation also came with some downsides. Expedia wasn't able to be as nimble as smaller startups and all major decisions had to be approved through Microsoft's bureaucracy.

For the first few years, Expedia was confined to domestic U.S. air travel bookings. But it steadily expanded its inventory by partnering with more airlines, hotels, car rental companies and cruise lines. Within Microsoft, Expedia was seen as an acquisition success story as online travel boomed. By the early 2000s, Expedia was contributing nearly a quarter of Microsoft's overall profits.

In 2001, it was clear Expedia needed more independence from Microsoft to compete in the rapidly growing online travel marketplace. So two of Expedia's key executives orchestrated a buyout from Microsoft to spin off Expedia as a fully independent company.

This was a pivotal transition period for Expedia. No longer a small division of a tech giant, it was now navigating life as a standalone public company. Expedia would now be able to move faster, make acquisitions more easily, and carve out its brand identity.

The World at Your Fingertips: How Expedia Became a Leading Online Travel Giant - Expanding Global Reach Through Acquisitions

In the years following its spinoff from Microsoft, Expedia embarked on an ambitious strategy of growth through acquisitions. This allowed the company to rapidly expand its global footprint and product offerings in the hyper-competitive online travel marketplace.

One of Expedia's first major acquisitions was European online travel agency Trivago in 2005. This gave Expedia an instant presence in key European markets like Germany, Spain and Italy. Trivago's hotel metasearch model also complemented Expedia's own lodging business. Expedia later acquired a majority stake in Asia's eLong in 2015 to gain a foothold in China's massive travel market.

Expedia further expanded its geographic reach by scooping up Canada's VIA Travel in 2009 and Australia's Wotif Group in 2014. This ensured Expedia could provide localized booking experiences to travelers in English-speaking countries abroad.

On the product side, Expedia made waves with its 2008 acquisition of virtual tour company VirtualTourist. This allowed Expedia to supplement its travel booking engine with user-generated reviews, photos and recommendations.

In 2009, Expedia acquired airline technology provider AirAsia Expedia, expanding its airfare inventory and partnership opportunities. The 2014 acquisition of Wotif also brought in Wotif's B2B booking platform for small hotels and B&Bs. Expedia has since migrated many of Wotif's supplier connections over to the Expedia platform.

One of Expedia's shrewdest acquisitions was vacation rental site HomeAway in 2015 for $3.9 billion. This presciently positioned Expedia as a major player in the alternative accommodations space now dominated by Airbnb. Expedia could instantly offer homeowners a built-in distribution channel alongside its traditional hotel inventory.

Car rental metasearch site CarRentals.com also provided a nice complement to Expedia's existing hotel and airfare offerings following its 2015 acquisition. Expedia rounded out its end-to-end trip planning portfolio with the 2018 purchase of flight search engine Travelocity and Pillow and ApartmentJet, providing short-term rental and corporate housing inventory.

While not all acquisitions have been runaway successes, Expedia's shopping spree has enabled it to assemble an unparalleled breadth of lodging, airfare, rental car, activities, cruises and other travel products under one roof. Travelers can now conveniently book every element of a trip on Expedia without needing to visit myriad other websites.

The World at Your Fingertips: How Expedia Became a Leading Online Travel Giant - Building a Robust Technology Platform

Behind the scenes, Expedia was also focused on building a robust, scalable technology platform to power its rapidly growing business. By the 2000s, Expedia had expanded beyond just flight bookings to become a one-stop shop for all travel needs. This required assembling an enormous real-time inventory of hotels, vacation rentals, airline seats, rental cars and more.

To achieve this, Expedia needed to invest heavily in technology and recruit top engineering talent. One key focus was developing sophisticated pricing algorithms that could analyze historical demand patterns and forecast future price fluctuations. This automated variable pricing model was critical for optimizing revenue across Expedia's supplier network.

Expedia also built machine learning capabilities to deliver personalized recommendations and tailored promotions to customers based on their browsing history. The website experience became highly customized with travelers seeing relevant suggestions for hotels, upgrade options and add-on services.

Behind the customer-facing website, Expedia developed an API-driven platform to seamlessly integrate content from suppliers across the industry. Whether it's real-time access to Avis' fleet availability or Hyatt's room rates, Expedia aggregates everything through normalized APIs. This gives Expedia's engineers tremendous flexibility to bolt on new partners and inventory sources quickly.

A major challenge was bridging the gap between legacy mainframe systems still used by many travel suppliers and Expedia's own modern cloud infrastructure. Building bridges and ensuring uptime required considerable investment. But it also reduced long-term operating costs compared to running its own data centers.

Data science capabilities were also expanded to spot demand spikes for holidays or events, rapidly testing new features and personalizing the site experience. Advanced search functionality using natural language processing helps customers find exactly what they want even with vague inputs.

The World at Your Fingertips: How Expedia Became a Leading Online Travel Giant - Offering a One-Stop Shop for Travelers

Expedia realized early on that travelers didn’t want the hassle of visiting dozens of websites to plan a trip. Whether it’s booking a flight, finding a hotel or renting a car, consumers expect a seamless experience. Expedia aimed to be that one-stop shop for all travel needs.

This meant expanding beyond just aggregating flight options to become a major player in hotel, rental cars, cruises and activities. Expedia enticed travelers with the convenience of comparing rates and availability for different components of their trip in one place. No more wasting time clicking between airline sites, TripAdvisor, individual hotel chains and car rental sites.

Expedia made strategic acquisitions and technology investments to assemble its vast inventory network. Partnerships with leading hotel chains like Marriott and Hilton allowed Expedia to offer discounted rates unavailable elsewhere. Expedia Traveler Preference gave travelers the flexibility to pay upfront or pay later at the hotel.

For car rentals, Expedia partnered with top brands like Avis, Budget and Hertz to provide travelers seamless booking alongside their flights and hotels. Special discounts and loyalty rewards integration convinced many customers to book their entire package through Expedia.

Activity booking emerged as a key battleground in the 2010s, with competitors like TripAdvisor expanding their offerings. Expedia acquired Trover and Venere Net SpA to assemble tours, attractions and other in-destination bookings. Localized mobile apps and last-minute booking options made it easy to spontanteously book once on the ground.

Alternative accommodations also became a huge growth area following the rise of Airbnb. Expedia’s HomeAway acquisition positioned it as the top vacation rental site for homeowners outside of Airbnb. Customers could search everything from house rentals to unique properties like yurts and treehouses alongside typical hotels.

While competitors like Booking.com and regional players like Ctrip often had narrower focus, Expedia placed its bets on being the one website travelers could rely on for all aspects of trip planning. Its scale, supplier relationships and technology investments have helped Expedia maintain its positioning as a leading online travel agency worldwide.

The World at Your Fingertips: How Expedia Became a Leading Online Travel Giant - Launching Innovative New Features

In the fast-moving world of online travel, simply aggregating flight and hotel content isn’t enough. Savvy travelers expect a flawless, intuitive booking experience with personalized features that wow them. Expedia knew that to stay ahead, it needed to continuously launch innovative new features and capabilities on its platform.

A major focus has been revolutionizing the mobile booking experience. Expedia was actually one of the first OTA sites with a mobile web experience in 2008. But converting desktop sites to mobile can be clunky. Expedia rebuilt from scratch and launched a slick new app in 2013 tailored specifically for smaller screens. Swipeable itineraries, smooth animations and destination images help planning a trip mobile feel intuitive. Offline access lets you search and book even without an internet connection, syncing when back online.

Artificial intelligence now powers key features that customers love. The mobile app leverages machine learning to create smart travel timelines predicting traffic conditions, airport security waits and other potential delays. These interactive timelines adjust in real-time if say, your flight is delayed. Expedia even auto-files refunds for flight delays based on timeline data. Pretty cool!

Virtual agents and chatbots provide 24/7 support to customers to resolve booking issues, change flights and answer pre-trip questions. Natural language processing understands complex queries like "cheapest nonstop flight from JFK to SFO next Tuesday.” Voice-enabled hotel searching via Alexa allows hands-free vacation planning while multi-tasking.

Recently, Expedia launched a visually stunning new 3D map view for hotels search. You can zoom in 360 degrees through photorealistic cityscapes to view exact building locations. Rotating the map gives a street-level feel, while toggling layers shows restaurants, transit and points of interest nearby. This immersive geographical search experience brings hotels to life unlike flat search grids.

Personalization features tailor suggestions based on past trips and real-time event data. If you book a hotel near a stadium hosting an upcoming concert, Expedia may automatically recommend booking a flight home the next day versus leaving the same day. Customizable travel profiles allow managing multiple upcoming trips and sharing plans with companions all in one place.

The World at Your Fingertips: How Expedia Became a Leading Online Travel Giant - Facing Challenges from Competitors

One of Expedia's chief rivals is Booking.com. While both companies offer similar inventory and a one-stop shopping experience, Booking.com has managed to carve out territory as the go-to site for independent and boutique accommodations. Expedia remains heavily reliant on deals with large chains. Booking's loyalty program and generous rewards have also proven popular with frequent travelers.

Meanwhile, meta search engines like Kayak, Skyscanner and Google Flights threaten Expedia's role as the starting point for travel planning. These sites let users compare fares across hundreds of sites and airlines, rather than booking directly through OTAs. Expedia is forced to pay to even appear in results. While not yet an existential threat, this does represent a leakage in Expedia's booking funnel.

Regional players with strong local footholds present another challenge. Ctrip dominates in China, where Expedia has so far struggled to gain traction. Japan's JTB and various Indian OTAs are also major forces in their markets. Local knowledge, better payment options and tailored inventory give these players an edge over global giants.

Nimble startups aiming to reinvent aspects of travel planning also nip at Expedia's heels. Hopper pioneered predictive algorithms for airfare deals and flexible booking options. Omio excels at multi-stop transport bookings. TourRadar offers niche multi-day touring activities avoided by incumbent OTAs. Startups are often happy to trade profitability for growth, making it hard to compete.

The rise of Google as the starting point for most travel queries presents a different kind of threat. Its deep knowledge graph means travelers often bypass OTAs and book directly on airline and hotel sites. Expedia now relies heavily on paid search marketing to attract users from Google. But costs are soaring while Google's own travel ambitions grow.

Consumer desire for more unique, personalized experiences that avoid cookie-cutter group travel also challenges Expedia's business model. Startups like Locals, Ture, and WithLocals let travelers connect directly with guides for small group outings. Expedia's preset packages and relationships with large operators seem stale in comparison.

The World at Your Fingertips: How Expedia Became a Leading Online Travel Giant - Focusing on Mobile and Localized Experiences

As consumer browsing habits shifted dramatically towards mobile, Expedia knew it needed to up its game when it came to mobile apps. Early versions of Expedia's apps were essentially stripped down copies of its desktop site. But travel planning on a 5” screen demands an entirely new approach.

In 2013, Expedia relaunched its mobile app experience from the ground up. Gone was the cluttered interface overwhelmed with tabs, links and complex workflows. The new app opted for larger visuals, gesture controls and simplified booking flows. Swipeable itineraries made it easy to review a multi-city trip at a glance. Color-coded calendars showed pricing fluctuations at alternate destinations. Smooth animations kept the experience feeling fluid, with transitions that responded to the orientation of your device.

Expedia also tapped into mobile-centric features not possible on desktop. Offline access enabled searching and booking even without an internet connecton, syncing details back when returning online. Push notifications alerted travelers to price drops, gate changes or flight delays. Travel timeliness integrated traffic data, security wait times and weather to anticipate potential hurdles. Real-time tracking even allowed in-air rerouting of delayed connecting flights to save a trip.

Recent app updates incorporate more AI-enhanced features travelers now take for granted. Photo-realistic 3D map views make pinpointing exact hotel locations a cinch. Voice commands via Siri or Google Assistant enable hands-free vacation planning. Cross-device syncing picks up searching started on desktop right within the mobile app.

Localization has also been key to Expedia's mobile strategy. While Expedia.com caters to U.S. travelers, the company realized that different regions demanded tailored sites. Local payment options, languages and inventory in Asia or South America needed custom sites with relevant content. App extensions now support everything from Japan Rail passes to bundled Disneyland packages to cater to specific mobile use cases.

For Seattle-based travelers, the Expedia app integrates prominently with Alaska Airlines - critical given its Pacific Northwest hub. Those in Detroit find deals on nearby Canada getaways and cross-border routes on tunnel busses. Sports fans in Boston can book trips syncing with Red Sox home stands, while L.A. travelers can view curated hotel offers near prime Hollywood film locations.

The World at Your Fingertips: How Expedia Became a Leading Online Travel Giant - Looking Ahead to the Future of Online Travel

The online travel industry is continuously evolving, and Expedia will need to keep innovating to maintain its leadership position. While Expedia has come to dominate the market for booking flights, hotels, and packages online, the future of travel planning could look radically different.

As artificial intelligence and virtual reality mature, immersive trip planning from home will become more commonplace. Imagine virtually walking through 3D recreations of resorts, hotels, and cruise ship staterooms to preview your vacation. Voice assistants will use conversational interfaces to suggest personalized recommendations and adjustments in real-time, similar to a human travel agent. Reviews and experiences from past travelers could be overlaid right within the virtual environment while you’re exploring a destination.

Expedia is already experimenting in this realm with its Mix 3D map view for visualizing hotel locations. But more expansive AR and VR planning experiences could enable next-level early trip inspiration. The challenge will be replicating the feeling of human-guided discovery through technology.

Travelers today, particularly millennials, crave unique experiences that reflect their personal interests and values. This means increasing demand for boutique, hyperlocal accommodations, tours, and activities versus big box hotels and tourist traps. Startups like Airbnb, ToursByLocals, and WithLocals cater to this by connecting travelers directly with local hosts and guides. The prepackaged, one-size-fits-all travel that OTAs like Expedia often focus on will need to become more bespoke.

Leveraging data on customer preferences, OTAs could auto-generate suggested itineraries blending main attractions with under-the-radar finds matching users’ hobbies, cuisine passions, and more. Expedia has a treasure trove of behavioral data it could utilize, avoiding privacy concerns through aggregation and anonymization. Integrations with apps like Yelp, TripIt, and Roadtrippers that travelers already rely on can also help piece together more personalized end-to-end experiences.

Sustainability will also guide the future of travel. Flight shaming and overtourism are driving demand for eco-conscious transport alternatives, eco-lodges, volunteer tourism opportunities, and ways to travel that avoid harming local communities. Expedia could incentivize greener accommodation options in its rankings and integrate emissions offsets. Off the beaten path recommendations can redirect tourists away from overloaded sites.