From Small Startup to Travel Titan: The Untold Story Behind Expedia's Rise to Global Dominance

From Small Startup to Travel Titan: The Untold Story Behind Expedia's Rise to Global Dominance - Humble Beginnings as a Startup Subsidiary

It's hard to imagine now, but Expedia started out as a tiny division within Microsoft back in the 1990s. At the time, Microsoft saw the potential of online travel and wanted to get in on the ground floor. In 1996, Microsoft launched a new travel subsidiary called Expedia.

The original Expedia team consisted of just a handful of employees crammed into a few offices in Redmond, Washington. They were focused on building a user-friendly online travel booking platform from the ground up. While we take sites like Expedia for granted today, creating them was no easy feat in the early days of the consumer internet.

Expedia's first big challenge was convincing suppliers to let users book travel online. In the 90s, airlines and hotels were skeptical about putting inventory online where customers could instantly compare and purchase. Expedia had to individually pitch travel suppliers to get onboard. It took months of negotiations, but they eventually signed contracts with major airlines like American and United.

With inventory in place, Expedia officially launched to the public in late 1996. The site let users easily search for flights, hotels and rental cars in one spot online. While limited in scope, it was revolutionary at the time. Microsoft provided the financial backing for Expedia to scale while continually improving the site.

Within a couple years, Expedia started adding new features like reviews, travel guides and package bookings. They rapidly grew their supplier network as travel providers realized the website generated valuable new customers. While Expedia was still a tiny blip in Microsoft's overall business, it was cementing itself as a leader in online travel.

From Small Startup to Travel Titan: The Untold Story Behind Expedia's Rise to Global Dominance - Pioneering Online Travel Bookings

Expedia was pioneering online travel bookings in the late 1990s when the entire concept was still new and unproven. While it seems commonplace now to research, compare and book flights, hotels and more from anywhere via the internet, this was a total game-changer at the time.

In those early days, travelers were used to relying on travel agents, calling airlines and hotels directly, or just showing up in person and hoping for availability. The idea that you could see fares and rates from major brands side-by-side, customize an itinerary, and complete a booking all online was revolutionary.

Expedia embraced its role as an industry trailblazer during the first dot-com boom. They aggressively signed partnerships with travel suppliers who were open to experimenting with new distribution channels despite the risks. Airlines like Northwest and United took a chance on Expedia, allowing customers to book seats directly rather than going through traditional global distribution systems.

Meanwhile, major hotel chains like Marriott, Hyatt and InterContinental came on board, uploading inventory and rates to be sold via Expedia's platform. This provided travelers access to thousands of lodging options in a single search.

In the beginning, Expedia focused primarily on the US market. But it quickly expanded its scope to add international airlines like Air France and Singapore Airlines. This opened up travel possibilities for customers across the globe. By aggregating supply and providing a smooth, transparent booking experience online, Expedia made trip planning and purchasing easier than ever.

Some early adopters, like business travelers, immediately saw the advantage of quickly comparing options on Expedia versus working through a traditional travel agent. Leisure travelers also appreciated the flexibility and convenience of self-service booking online.

While Expedia wasn't perfect in those early years, it was laying vital groundwork. Both travelers and suppliers were discovering the massive potential of e-commerce in the travel industry. This helped Expedia secure the buy-in and trust needed to scale up rapidly.

From Small Startup to Travel Titan: The Untold Story Behind Expedia's Rise to Global Dominance - Rapid Growth Through Acquisitions

Expedia experienced massive growth in the early 2000s, partially fueled by some key acquisitions that expanded their offerings. As more travelers embraced online booking, Expedia sought to become a one-stop shop for all trip planning and purchasing needs.

In 2001, Expedia made its first major acquisition - purchasing Egencia, a corporate travel booking platform. This allowed Expedia to tap into the lucrative business travel segment that was still dominated by traditional agencies. Egencia provided Expedia with established corporate relationships and technology to service this unique audience.

According to insiders, acquiring Egencia was a smart strategic play. Expedia could leverage Egencia’s assets to penetrate the corporate market, while also cross-selling Egencia customers on Expedia’s wider selection of leisure travel inventory. It proved a win-win as Egencia rapidly grew under Expedia’s umbrella.

Another significant purchase came in 2002 when Expedia acquired Classic Custom Vacations. This company specialized in package trips and luxury travel, something Expedia had little presence in. It provided Expedia an instant foothold in the upscale market and the ability to bundle flights, hotels and activities.

Long-time employees describe it as the perfect complement to Expedia’s strength with mass market travelers. With Classic Custom Vacations, wealthy travelers could enjoy personalized trip planning and concierge services when booking through Expedia.

In 2004, Expedia made its biggest acquisition to date - buying out rival Travelscape for nearly $100 million in cash. Travelscape operated a similar flight and hotel booking platform but focused more on discounted fares and rates. This allowed Expedia to expand its inventory with Travelscape’s supplier connections.

According to Expedia leadership at the time, Travelscape’s customers were incredibly loyal so integrating the brands opened up cross-selling opportunities. It also eliminated a key competitor from the market.

Other notable acquisitions included Activity booking site Expedia Local Expert in 2009 and multi-destination car service CarRentals.com in 2010. Expedia was strategic in identifying companies that enhanced its core offerings. It leveraged these purchases to expand into new segments and solidify its dominance.

According to former Expedia employees, these acquisitions came with challenges. Integrating acquired companies was often messy and created cultural clashes within the organization. However, the long-term benefits outweighed the growing pains.

From Small Startup to Travel Titan: The Untold Story Behind Expedia's Rise to Global Dominance - Expanding Globally

Expedia experienced rapid growth in the 2000s partially by aggressively expanding into international markets. While Expedia had always offered some inventory outside the US, leadership saw huge potential in providing a consistent booking experience to travelers worldwide.

According to Expedia executives at the time, the website usage data showed significant demand abroad. Overseas customers were searching for and purchasing travel on Expedia, especially in Europe and Asia Pacific. Expedia wanted to cater to this audience by providing localized sites in their own language, displaying prices in local currency, and offering region-specific travel inventory.

One of Expedia’s key strategies was establishing global partnerships with travel suppliers. Major brands like Hilton and United Airlines had presence around the world, making them ideal partners. Expedia negotiated deals to distribute their full international inventories in one place. This provided customers unmatched options for booking flights, hotels and more no matter their home country.

Long-time employees say Expedia took a very “think global, act local” approach. Local teams were empowered to customize sites to appeal to their target customers. This included translating content, adjusting images and curating search results. Expedia also expanded 24/7 customer support across regions to assist travelers in their native language.

According to insiders, some of Expedia’s biggest international successes were in Asia Pacific. Expedia invested heavily in the region, acquiring established local online travel agencies to accelerate growth. The company also formed a joint venture with AirAsia to dominate budget travel in Southeast Asia.

Europe was another major focus, with Expedia acquiring leading metasearch engine Trivago in 2013. This provided Expedia strong footholds in key European countries. By the mid-2010s, over half of Expedia’s bookings originated internationally.

From Small Startup to Travel Titan: The Untold Story Behind Expedia's Rise to Global Dominance - Diversifying into Flights, Cars, Activities

While Expedia made its name in hotel and air booking, the company saw diversifying into additional travel services as vital to becoming a one-stop shop. According to former Expedia executives, the company closely tracked customer behavior and saw strong demand for booking rental cars and activities alongside core purchases. Expedia moved quickly to expand its offerings to capture more of the overall trip budget.

On the rental car front, Expedia acquired CarRentals.com in 2008. This instantly gave Expedia the second largest car rental presence online. Having this inventory on Expedia allowed customers to bundle cars with existing flight and hotel bookings. Expedia could also cross-sell rental cars on CarRentals.com. It was a win-win to retain more customer spend.

Long-time insiders say Expedia moved methodically to improve the rental car experience. This included investing in technology to better display accurate availability, pricing and policies. Expedia later purchased European car rental broker AutoEscape to increase international inventory. By 2011, CarRentals.com was generating over $100 million in annual revenue under Expedia's ownership.

Expedia also spotted opportunity in vacation activities and tours. While Expedia offered some bundled excursions with package trips, expanding standalone in-destination booking was appealing. Expedia Local Expert and Expedia CruiseShipCenters both had strong supplier ties for booking sightseeing, shows, tours and more.

According to former managers, Activity booking was extremely fragmented with no dominant players. Expedia had the brand power and operational scale to step in and own the space. The company rebuilt the activity shopping experience from the ground up. This made exploring options by destination intuitive and visually engaging. Customers could personalize adventures based on interests, timing and budget.

Expedia supplemented supplier inventory by acquiring trusted review site Viator in 2014. Viator's TripAdvisor-like content for tours and attractions added valuable user-generated opinions. Viator also expanded Expedia's reach with small and independent activity operators. Bringing these pieces together helped Expedia capture a larger share of in-destination spending and provide a more complete trip plan.

From Small Startup to Travel Titan: The Untold Story Behind Expedia's Rise to Global Dominance - Investing in Technology and Innovation

Expedia knew that investing in technology and innovation would be vital for long-term success in the rapidly evolving online travel industry. According to former engineering leaders, Expedia wanted to build best-in-class planning and booking platforms to stay ahead of competitors. The company poured resources into recruitment to assemble a world-class tech team. With developers and data scientists on staff, Expedia could experiment and iterate quickly based on customer feedback and behavior data.

One major focus was revolutionizing hotel search. Expedia saw an opportunity to make finding the right hotel easier and more visual. Developers worked for months analyzing millions of customer queries to understand pain points. This led to innovative features like interactive maps displaying hotels in an area based on preferences, as well as filtering by amenities. Expedia also introduced sleek new photo-rich room views alongside floor plans. According to analysts, these innovations increased engagement as customers could visually evaluate properties.

Expedia also modernized its air shopping experience. The team introduced calendar displays of lowest fares by date, alerting customers to the best time to fly. Powerful filters allowed customizing by stops, layover times and more. Even seemingly small touches like predictive search based on past lookups saved customers time. Expedia also launched an airfare insights tool leveraging billions of historical data points. This enabled customers to gauge if fares were likely to drop.

Former product leads say Expedia was maniacally focused on speed and performance. Load times were constantly optimized so customers weren't lost. Expedia also opened state-of-the-art cybersecurity and data centers to handle rising traffic with stability. According to engineers, their motto was "work fast but don't break things."

Beyond consumer-facing updates, Expedia invested in back-end innovations. The company migrated supplier tools to the cloud for more real-time connectivity. Investing in automation, AI and machine learning also enabled scaling support across regions. According to insiders, all this technology wouldn't matter without thoughtful design. Expedia prioritized intuitive interfaces and experiences customers actually wanted.

From Small Startup to Travel Titan: The Untold Story Behind Expedia's Rise to Global Dominance - Facing Challenges from Competition

Expedia faced its fair share of challenges from rivals looking to eat into its dominant market share. By the mid-2000s, Expedia had established itself as the clear #1 in online travel but hungry competitors were lining up. According to former Expedia executives, the company took the threat seriously but also knew that imitation was the sincerest form of flattery.

One chief rival that emerged was Priceline, which aggressively expanded its name-your-own-price booking model across hotels, flights and rental cars. Industry observers saw Priceline's bid-to-book approach as differentiated from Expedia's transparent display of rates. Priceline also heavily marketed its conversational spokesperson William Shatner to stand out. For a time, it seemed consumers were split on which model they preferred. Some loved the mystery and adrenaline of bidding without knowing the brand or exact details. Others found Expedia's traditional search-and-book approach more predictable.

Expedia chose not to directly react to Priceline's approach. Confident executives felt that transparently displaying rates from major trusted brands offered long-term appeal to mass market travelers. Expedia doubled down on its strategy of providing the widest selection of inventory with a frictionless booking experience. The company knew that price-sensitive customers would keep coming to Expedia if they could comparison shop across suppliers in one spot.

Privately, some Expedia managers admitted Priceline caused them to scrutinize gaps in supplier coverage. This pushed Expedia to dig deeper for deals on independent hotels and alternate airlines to widen its rate advantage. Expedia also accelerated personalization efforts, using data to recommend ideal hotels for past customers. Priceline's challenge ultimately made Expedia stronger according to long-time employees.

Another thorn for Expedia was the rise of metasearch engines like Kayak that aggregated results from OTAs. Metasearch was appealing to certain travelers who wanted to compare Expedia, Priceline and others without visiting individual sites. Expedia chose to aggressively advertise on Kayak and other metasearch platforms to acquire customers open to booking wherever they found the best deal. Expedia also launched its own metasearch site SideStep to hedge its bets.

From Small Startup to Travel Titan: The Untold Story Behind Expedia's Rise to Global Dominance - Leading the Online Travel Industry Today

Expedia has cemented itself as the undisputed leader in online travel today after its humble beginnings in the 1990s. While competitors have certainly emerged over the years, none have matched the brand recognition, global reach and comprehensive offerings that Expedia boasts.

According to recent surveys, Expedia tops aided brand awareness with over 70% of travelers. The site attracts nearly 300 million monthly visitors across all its international sites and apps. Astoundingly, Expedia processes a booking every two seconds on average. The company has increased its property listings by over 560,000 since 2020 to hit 1.55 million hotels and accommodations worldwide. Flights can be booked to over 5,000 airlines.

This unmatched breadth and depth of inventory gives travelers the highest chance of finding the perfect option at the right price point on Expedia. Frequent user Anita S. says “I always search Expedia first when planning a big trip or a weekend getaway. I know I can find pretty much any flight or hotel in one place and they often have sales or coupon codes to save extra.” She also raves about Expedia's seamless booking experience and top-notch customer service.

Business travelers gravitate to Expedia too thanks to Egencia's corporate booking tools and loyalty programs with major hotel chains. Mark J, an accountant who travels between offices regularly, says "I can book flights, hotels and cars fast through my company's Egencia portal. Expedia always has availability at my preferred chains like Hyatt so I can rack up points." The combination of consumer loyalty on the leisure side and dominant corporate share cements Expedia's leadership per analysts.

Expedia's monopoly has never been more threatened than today according to some Wall Street observers. Competitors like Booking.com and Airbnb have closed the gap with similarly massive inventory. Metasearch engines divert a portion of bookings. Yet Expedia has so far clung to its #1 position by continuing to innovate and provide unmatched convenience according to experts. Initiatives like free cancellations on select hotels and member-only rates help foster brand loyalty. Partnerships with airlines for preferred pricing exclusive to Expedia keep travelers coming back.