From Humble Beginnings to Travel Titan – Tracing Expedia’s Journey to Becoming a Booking Behemoth
From Humble Beginnings to Travel Titan - Tracing Expedia's Journey to Becoming a Booking Behemoth - Early Days as a Spin-Off of Microsoft
It's hard to imagine now, but Expedia began life in 1996 as a small division within tech giant Microsoft. Back then, Microsoft saw the potential of the nascent internet and made a smart early bet on the future of online travel booking.
The team behind the original Expedia website was led by Rich Barton, who had joined Microsoft two years earlier. Barton had a vision for an online travel agency that could aggregate flight, hotel and car rental inventory in one place, making trip planning and booking easier than ever before.
In the early days, Expedia was more limited in scope compared to today. Its inventory came primarily from deals with major U.S. airlines, focusing specifically on unsold airline seats. The goal was to provide a new online distribution channel for airline tickets.
This led to innovations like developing one of the first travel metasearch engines and introducing vacation packages to bundle flights, hotels and cars. Under Barton’s leadership, Expedia pioneered many of the features travelers now take for granted when booking online.
The spin-off from Microsoft came in 1999, with Expedia incorporated as a separate company co-owned by Microsoft and U.S. airlines. This gave Expedia more autonomy to rapidly grow its business as demand for online travel bookings took off.
No longer a small division of a tech giant, the newly independent Expedia could set its own strategy and culture. The company embraced an experimental ethos and moved quickly to roll out new initiatives and acquire competitors.
What else is in this post?
- From Humble Beginnings to Travel Titan - Tracing Expedia's Journey to Becoming a Booking Behemoth - Early Days as a Spin-Off of Microsoft
- From Humble Beginnings to Travel Titan - Tracing Expedia's Journey to Becoming a Booking Behemoth - Acquiring Competition to Fuel Growth
- From Humble Beginnings to Travel Titan - Tracing Expedia's Journey to Becoming a Booking Behemoth - Expanding Globally Through Acquisitions
- From Humble Beginnings to Travel Titan - Tracing Expedia's Journey to Becoming a Booking Behemoth - Transitioning to Online Travel Agency (OTA) Leader
- From Humble Beginnings to Travel Titan - Tracing Expedia's Journey to Becoming a Booking Behemoth - Launching New Brands and Services
- From Humble Beginnings to Travel Titan - Tracing Expedia's Journey to Becoming a Booking Behemoth - Investing in Technology and AI
- From Humble Beginnings to Travel Titan - Tracing Expedia's Journey to Becoming a Booking Behemoth - Facing Challenges from Google and Airbnb
- From Humble Beginnings to Travel Titan - Tracing Expedia's Journey to Becoming a Booking Behemoth - What's Next for the Online Booking Giant?
From Humble Beginnings to Travel Titan - Tracing Expedia's Journey to Becoming a Booking Behemoth - Acquiring Competition to Fuel Growth
After spinning off from Microsoft, Expedia was ready to spread its wings and rapidly expand its online travel empire. A key part of this growth strategy was acquiring competitors to absorb their technology, inventory and customers.
One of Expedia's first major acquisitions came in 2002 when it purchased Classic Custom Vacations, the largest wholesaler selling Hawaii vacations. This instantly gave Expedia a huge presence in the popular Hawaii market. Expedia could now package its own flights and hotel deals for Hawaiian getaways instead of relying on outside providers.
The following year, Expedia made an even bigger splash by acquiring Hotels.com for $1.4 billion. Not only did this deal bring thousands more hotel properties into Expedia's orbit, it also came with several other strategic brands. These included Hotwire's opaque "hot rate" hotel bookings and TripAdvisor's bustling reviews business. Expedia was building an end-to-end travel experience all under one roof.
Over the next few years, Expedia went on a buying spree, snapping up European brands like eBookers and Tiscover to expand globally. It also picked up activity booking sites like Expedia Local Expert, integrating things like tours and attractions into packages.
The company's appetite for acquisitions only grew bigger in the 2010s. In 2012, Expedia shelled out $632 million for high-end hotel platform Trivago. Two years later it bought struggling meta search site Travelocity for $280 million. These deals cemented Expedia's dominance in vacation planning.
However, some of Expedia's acquisitions have been less successful. In 2019, it spent over $3.9 billion buying Liberty Expedia and absorbing its bodybuilding.com and Vitalize health businesses. These seemed outside Expedia's core focus and the jury is still out on whether they will pay off.
Overall though, Expedia's strategy of acquiring competitors has fueled incredible growth over the past 20+ years. It has allowed the company to expand globally, add huge swaths of inventory, and assemble an unrivaled portfolio of travel booking brands. While not every deal has panned out, most have given Expedia strategic advantages its rivals have struggled to match.
From Humble Beginnings to Travel Titan - Tracing Expedia's Journey to Becoming a Booking Behemoth - Expanding Globally Through Acquisitions
Acquiring companies with an established presence in key global markets has been pivotal to Expedia's international expansion. Rather than slowly building out its own operations abroad from scratch, Expedia has leveraged takeovers to plant its flag in regions where it sought a bigger piece of the travel booking pie.
A prime example was Expedia’s acquisition of European online travel brand ebookers for $520 million back in 2005. At the time, ebookers had customers in over 70 countries and inventory relationships with 130 airlines as well as 20,000 hotels and 200 car rental firms. This instantly gave Expedia the infrastructure needed to scale up its presence across Europe.
According to industry analysts, absorbing ebookers was a smart strategic play that allowed Expedia to significantly improve its positioning versus rival booking sites in the region. While Expedia had previously acquired some smaller European brands, ebookers provided an instant boost on the continent thanks to its broader reach and recognizable consumer brand.
Other key acquisitions that fueled Expedia’s global march include its purchase of Canada’s VIA Travel for $132 million in 2007. VIA gave Expedia pole position in the Canadian market along with relationships with airlines like Air Canada.
Expanding in Asia Pacific was also a priority, with Expedia shelling out $720 million to buy majority control of eLong, a leading Chinese travel firm, in 2015. Though Expedia has since divested its eLong holdings, the deal demonstrated its hunger for growth in Asian markets beyond simply partnering with local players.
More recently, Expedia has turned to Argentina to continue its global quest. The company announced in 2018 that it would acquire Latin America-focused airline inventory provider Travel Reservations for $136 million. As the second largest OTA in Latin America behind Despegar, Travel Reservations brought Expedia 12 million customers and 1,100 airline relationships.
From Humble Beginnings to Travel Titan - Tracing Expedia's Journey to Becoming a Booking Behemoth - Transitioning to Online Travel Agency (OTA) Leader
In the early 2000s, Expedia was primarily known as a site for booking discounted airline tickets. However, over the next decade Expedia would transform itself into a full-service online travel agency (OTA) covering the complete trip planning journey. This transition was key to Expedia cementing itself as a dominant leader in the OTA space.
According to industry experts, Expedia made two important moves during this period that allowed it to broaden beyond just airfare aggregation. The first was expanding its lodging business by acquiring a portfolio of hotel and vacation rental sites. This included absorbing Hotels.com, Hotwire, Classic Vacations and HomeAway.
From Humble Beginnings to Travel Titan - Tracing Expedia's Journey to Becoming a Booking Behemoth - Launching New Brands and Services
A key part of Expedia’s growth has been launching new brands and services to complement its core OTA business. This provides more ways for travelers to access Expedia’s inventory while also capturing new niches in the market. According to industry experts, Expedia has taken an aggressive “land grab” approach here to shut out competitors.
One example was the launch of Expedia Group Media Solutions in 2013. This new in-house digital marketing division sells travel ad campaigns and provides data-driven consulting to airlines and hotels. It represents a smart strategic expansion of Expedia’s capabilities beyond just travel bookings. The move has put Expedia in a position to generate revenue from vendors across the travel journey.
Expedia has also launched its own dynamic packaging engine via Expedia Traveler Preference (ETP). Rather than relying solely on pre-packaged deals, this technology allows custom vacation packages to be built in real-time based on flight and hotel availability. Travelers can now efficiently mix and match options from Expedia’s inventory in one booking.
Brand-wise, one of Expedia’s biggest splashes came in 2014 with the launch of Expedia+, its new loyalty program. This was years behind competitors, but gave Expedia a way to better retain and reward customers. Perks like free upgrades and bonus points provide an incentive to book exclusively through Expedia rather than shopping around.
More recently, Expedia has made moves into the lucrative but competitive short-term rental segment. Its 2018 purchase of HomeAway instantly gave Expedia a starter position. However, the firm has struggled against entrenched rivals like Airbnb here. Expanding alternative lodging options remains a key priority.
On the transport side, Expedia has launched local pick-up/drop-off services through Expedia Local Expert as well as airport transfer options for a more seamless trip experience beyond just flights and hotels.
From Humble Beginnings to Travel Titan - Tracing Expedia's Journey to Becoming a Booking Behemoth - Investing in Technology and AI
As the travel industry grows increasingly complex, Expedia has invested heavily in technology and artificial intelligence to maintain its competitive edge. According to industry analysts, the company has developed one of the most sophisticated technology stacks among major OTAs.
A prime example is Expedia's platform for rapidly integrating and normalizing content from suppliers. Known as Expedia Travel Content API (ETC), this proprietary system allows Expedia to onboard new partners in as little as 6 weeks. The API handles the heavy lifting of structuring unstructured data, freeing engineers to focus on other innovations.
ETC leverages machine learning techniques to parse through variations in hotel amenity descriptions, property names, room types and more. The system understands that "WiFi" and "Wireless Internet" mean the same thing. This enables rich, consistent search for travelers regardless of how suppliers describe offerings.
To further enhance the booking experience, Expedia launched its AI-based virtual assistant Agent Otter in 2018. The natural language platform answers common customer questions to facilitate self-service. If needed, Agent Otter will seamlessly open a chat with a human agent.
Expedia has also invested significantly in AI-driven personalization. Its Manchester Machine web stack analyzes individual user behavior to deliver tailored travel recommendations. According to Expedia’s Chief Product Officer, theses personalized "nludges" increase conversion by finding the right trip at the right time for each traveler.
However, Expedia’s advantage in technology goes beyond just software. The company has built one of the largest cloud infrastructures in the industry to ensure speed and availability for its platforms. Expedia realized early on the benefits of transitioning from its own data centers to leverage public cloud.
The customized cloud architecture provides the burst capacity Expedia needs to easily scale up during traffic spikes. It also enables faster release cycles to accelerate the rollout of new innovations. According to one executive, Expedia pushes code every 20 minutes compared to quarterly releases historically.
From Humble Beginnings to Travel Titan - Tracing Expedia's Journey to Becoming a Booking Behemoth - Facing Challenges from Google and Airbnb
Expedia faces increased competition from tech titans Google and Airbnb, which have both made big moves into the online travel space in recent years. With their vast resources and existing customer bases, these rivals pose a major threat to Expedia’s long-term dominance.
Google launched its Flights product back in 2011, undercutting Expedia and other OTAs by not charging airlines booking fees. The search giant has leveraged its ubiquitous presence to become a go-to for consumers planning air travel. Flights now handles over a billion flight queries a month.
While Google doesn’t directly facilitate bookings, it diverts traffic away from OTAs by letting users book directly on airline sites. Google Flights has also expanded hotel search, putting its vast data resources to work in anticipating consumer needs. This reduces dependency on sites like Expedia.
Airbnb represents another competitive headache, especially in the accommodations segment. Expedia acquired HomeAway to gain a foothold in alternative lodging, but has struggled to keep pace with Airbnb’s meteoric growth.
Airbnb now offers over 6 million active listings in 100,000 cities worldwide. The company has greatly expanded the short-term rental market, appealing to travelers seeking authentic local experiences. With lower overhead than hotels, Airbnb can undercut Expedia on pricing too.
While Expedia has vast supplier relationships, its inventory is still largely limited to traditional hotels. Airbnb’s unique listings remain out of reach despite Expedia’s attempts to onboard more vacation rentals.
Frustrated by sharing their stock with Expedia, many property owners are also moving exclusively to Airbnb. Travelers inclined to venture off the beaten path are doing the same. This dynamic has allowed Airbnb to gain significant mindshare.
According to industry experts, Expedia must focus on value-added services like loyalty programs and bundled offerings to differentiate itself. But with Google and Airbnb innovating rapidly, Expedia faces an uphill battle defending its dominance. Its growth may be constrained if travelers increasingly go direct or use competitors for certain trip segments.
From Humble Beginnings to Travel Titan - Tracing Expedia's Journey to Becoming a Booking Behemoth - What's Next for the Online Booking Giant?
With over two decades of dominance in online travel, Expedia finds itself at a crossroads. Having absorbed countless competitors and perfected the art of vacation booking, where does the company go from here? Complacency is not an option in an industry as dynamic and competitive as online travel. Expedia must continue innovating and expanding its value proposition to maintain its leadership position.
According to industry analysts, Expedia is placing big bets on technology to take its capabilities to the next level. The company is leaning heavily into artificial intelligence and machine learning across its platforms. Examples include highly personalized travel recommendations and predictive modeling to optimize marketing spend. Expedia is also building on previous cloud investments to enable greater speed and scale.
The booking experience itself will become more automated. Tedious tasks like selecting flights, hotels and rental cars will be handled by AI. Virtual travel agents will craft optimized packages tailored to individual travelers' preferences and budgets. Expedia is also exploring ways for computer vision to deliver next-generation features like previewing hotel room views.
To stay ahead, Expedia will expand its alternative lodging inventory through HomeAway. While a dominant player in traditional hotels, the company has ground to make up with providers like Airbnb. Building out options beyond just hotels gives Expedia access to new markets while future-proofing against industry shifts. Enhanced filters and search functionality will allow users to easily browse alternative properties alongside the company's core hotel inventory.
Loyalty will be another key focus. Expedia lags rivals in engaging frequent travelers, but its recently relaunched Expedia Rewards program aims to change that. Added elite tiers, expanded earning options and exclusive perks provide compelling incentives to consolidate bookings within Expedia's family of brands. Stronger loyalty locks in high-value customers.
Geographic expansion also remains a priority. Expedia will tailor offerings for high-growth regions like Asia Pacific and Latin America. Local payment options, language support and marketing partnerships open new frontiers. Tuck-in acquisitions of strategic regional players will supplement organic growth.