From Tiny Startup to Travel Titan: Tracing Expedia’s Journey to Industry Domination
From Tiny Startup to Travel Titan: Tracing Expedia's Journey to Industry Domination - Humble Beginnings as a Startup Called Microsoft Expedia
It's hard to imagine now, but Expedia started out in 1996 as a tiny division within Microsoft. At the time, Microsoft wanted to capitalize on the early days of the internet by creating an online travel booking site. They saw the potential for people to research and purchase travel online instead of working with traditional brick-and-mortar travel agents.
The original Expedia team consisted of a small group of ambitious employees headed by Rich Barton. Barton came up with the idea for Expedia after a frustrating experience trying to book a vacation to Cabo San Lucas. He envisioned a site where travelers could easily compare flight options, hotel rates, and rental cars all in one place.
In the beginning, Expedia was more limited in scope and functionality compared to today. The site initially only offered airline tickets and focused solely on the US market. However, the Expedia team worked tirelessly to sign contracts with airlines, negotiate fares, and program the site's booking capabilities.
Within the first month after launch, Expedia was selling nearly $1 million per week in airline tickets. That may not seem like much compared to today's volumes but it showed the team they were onto something big. By 1999, Expedia had expanded internationally and added new product offerings like hotel bookings, car rentals, cruises, and vacation packages.
Even as a small division within Microsoft, Expedia was innovative and disruptive. They were one of the first to introduce map-based hotel search, virtual 360 tours, and user reviews. Expedia heavily marketed the site with clever advertising like the Travelocity garden gnome.
During Expedia's early days at Microsoft, the team developed a scrappy, entrepreneurial culture. They moved fast and took risks, unafraid of failing. This type of culture positioned Expedia for rapid growth and continued innovation once they split off as an independent company in 2001.
What else is in this post?
- From Tiny Startup to Travel Titan: Tracing Expedia's Journey to Industry Domination - Humble Beginnings as a Startup Called Microsoft Expedia
- From Tiny Startup to Travel Titan: Tracing Expedia's Journey to Industry Domination - Rapid Growth Through Acquisitions and Expansion
- From Tiny Startup to Travel Titan: Tracing Expedia's Journey to Industry Domination - Expedia Splits From Microsoft to Become Independent
- From Tiny Startup to Travel Titan: Tracing Expedia's Journey to Industry Domination - International Expansion and New Brands
- From Tiny Startup to Travel Titan: Tracing Expedia's Journey to Industry Domination - Surviving Industry Disruption and Competition
- From Tiny Startup to Travel Titan: Tracing Expedia's Journey to Industry Domination - Leveraging Technology for Innovation and Convenience
- From Tiny Startup to Travel Titan: Tracing Expedia's Journey to Industry Domination - Rewarding Loyalty Through Membership Programs
- From Tiny Startup to Travel Titan: Tracing Expedia's Journey to Industry Domination - What's Next? Expedia's Future Goals and Challenges
From Tiny Startup to Travel Titan: Tracing Expedia's Journey to Industry Domination - Rapid Growth Through Acquisitions and Expansion
Expedia experienced massive growth in the 2000s, expanding both organically and through strategic acquisitions. As an independent company after splitting from Microsoft, Expedia was free to pursue aggressive expansion unhindered.
One of Expedia's first major acquisitions was Classic Custom Vacations in 2002, which provided luxury vacation packages and helped Expedia appeal to a wider demographic. This established a pattern of acquiring niche travel companies to expand Expedia's portfolio, including Hotels.com in 2003.
Hotels.com supercharged Expedia's growth in lodging and allowed it to rival Priceline as a hotel booking giant. Expedia also snapped up activity booking sites like TripAdvisor in 2004 to aggregate reviews and Adventure Collection to expand its offering of tours and adventures.
International expansion was another key growth driver, with Expedia launching sites across Europe, Asia and Australia. Localized sites provided booking options tailored to each region. This global growth was complemented by new technology like Expedia Affiliate Network to allow third-party sites to integrate Expedia's inventory.
By centralizing technology, product, supply acquisition and marketing within Expedia Inc., the company could expand brands across regions efficiently. Brands like Hotels.com, Trivago and HomeAway benefited from Expedia's centralized tech stack.
A major milestone was Expedia's acquisition of eLong in China in 2004, giving it an early foothold in an exploding travel market. This move seemed brilliant in hindsight, with China becoming Expedia's second-largest market behind the U.S.
Expedia also grew through partnerships. A key one was joining forces with Yahoo Travel in 2004, leveraging Yahoo's huge user base. Partnerships with airlines like American Airlines to power their sites also expanded Expedia's reach.
Boosting its corporate travel division with the acquisition of Egencia in 2008 positioned Expedia as an end-to-end business travel provider. Meanwhile, growth in the vacation rental sector came from snapping up HomeAway in 2015 in a $3.9 billion deal.
From Tiny Startup to Travel Titan: Tracing Expedia's Journey to Industry Domination - Expedia Splits From Microsoft to Become Independent
Expedia's split from Microsoft in 2001 was a pivotal moment that allowed the company to really spread its wings and pursue aggressive growth as an independent entity. While Expedia experienced impressive expansion as a division within Microsoft, the separation untethered it from the bureaucratic constraints of its parent company. No longer just a small piece of a massive corporation, Expedia could now chart its own course.
As part of Microsoft, Expedia had to adhere to strict budgets, corporate policies, and oversight from Microsoft executives. After the spin-off, Expedia controlled its own finances, strategy, and future. The company wasted no time leveraging this newfound freedom. Within its first full year as an independent company, Expedia doubled its revenue and expanded internationally into the UK, Germany, Italy and Spain.
Expedia likely would have never made such bold moves as part of the Microsoft mothership. Microsoft itself seemed to acknowledge this, citing that Expedia could grow faster and be more flexible on its own. The spin-off was a mutual decision that benefited both sides.
Now operating autonomously, Expedia could make swift decisions and take risks. This nimbleness allowed Expedia to aggressively pursue acquisitions to expand its portfolio at a clip that would have been impossible under Microsoft. For example, Expedia purchased Activity booking site Funjet Vacations just one year after the spin-off.
Expedia also turbocharged technology innovation as an independent company. No longer constrained by Microsoft bureaucracy, Expedia ramped up investment in R&D. With full control over technology decisions, Expedia rebuilt its site’s booking engine from scratch in 2005. This made the site faster, more intuitive and feature-rich.
According to insiders, Expedia's developers came up with creative enhancements much faster once freed from Microsoft's lumbering pace. The cultural shift was akin to a small startup disrupting a legacy player. Technologies like interactive seat maps premiered on Expedia.com years before spreading to other sites.
Expedia's spin-off also was well-timed to ride two emerging trends: the rise of online travel booking and low-cost carriers like Southwest expanding flights. By rapidly signing new airline partnerships, Expedia gave customers comprehensive flight search just as online booking gained mainstream adoption.
Overall, the autonomy achieved by separating from Microsoft fueled Expedia's explosive growth throughout the 2000s. Expedia had carved out an early niche in online travel under Microsoft, but uncoupling itself accelerated the company's ascension to industry titan. The company culture became faster-moving and more entrepreneurial virtually overnight.
From Tiny Startup to Travel Titan: Tracing Expedia's Journey to Industry Domination - International Expansion and New Brands
Expedia experienced monumental international growth in the 2000s, expanding its presence across Europe, Asia Pacific, and the rest of the world. Localized sites with tailored inventory enabled Expedia to gain traction in new regions. International expansion was complemented by introducing and growing new Expedia-owned travel brands globally.
Expedia’s first foray outside North America came in 1999 with the UK launch. Germany, Italy, Spain, France, Scandinavia, and Australia soon followed suit. Expedia smoothly adapted to local languages, currencies, and travel preferences. Despite nuances, the fundamental value proposition of conveniently comparing options remained universal. Expansion continued through the decade by launching sites across Europe, Asia and South America.
Crucial to international growth was acquiring local online travel brands. Expedia could instantly absorb an established regional player’s market share, expertise, and supplier relationships. For example, Expedia bought French hotel specialists Voyages-sncf.com in 2004 to fuel growth in France. Expedia has since taken a personalized, “boots on the ground” approach to each international market.
International branding also boosted expansion abroad. Hotels.com emerged as a hip, savvy lodging brand with unique appeal overseas. Its “Hotel Price Index” resonated globally by benchmarking value. Brands like Ebookers, Wotif, and Traveldoo extended Expedia’s reach with distinctive identities. Recently, Expedia acquired European brand Orbitz Worldwide.
Asia Pacific became Expedia’s fastest-growing region. An early 2004 strategic investment in eLong essentially gave Expedia a foothold in China’s colossal market before competitors. eLong’s brand served as Expedia’s on-the-ground division in China for over a decade. Expedia also entered Japan by acquiring Ikyu Corporation’s online travel brands.
Elsewhere in Asia, Expedia expanded both organically and through acquisitions. Buying Thailand’s ASAP Tickets reinforced Expedia’s commitment to Southeast Asia. Purchasing Malaysia’s online agency TravGo expanded coverage of Muslim travelers. Expedia now earns nearly 30% of its revenue from Asia Pacific as its second-largest region after North America.
More recent international moves include acquiring European rail booking site SilverRail Technologies and Canada’s Trover to boost vacation rentals abroad. Expanding payment options has also driven international adoption, like integrating Alipay to attract Chinese travelers.
From Tiny Startup to Travel Titan: Tracing Expedia's Journey to Industry Domination - Surviving Industry Disruption and Competition
Expedia has managed to not just survive but thrive in the face of massive industry disruption and ever-increasing competition. As online travel booking exploded in the 2000s, Expedia deftly adapted to stay ahead of the curve. When new rivals emerged, Expedia found ways to maintain its dominance.
A major disruption was the rise of mobile. Expedia moved swiftly as consumers began booking hotels and flights on smartphones. Expedia launched mobile apps and redesigned sites with responsive interfaces years before some competitors. Realizing mobile's importance early allowed Expedia to become a top booking platform on-the-go.
Expedia also overcame disruption from individual suppliers embracing direct booking. As airlines and hotels launched their own apps and sites, Expedia provided a more convenient one-stop-shop. Consumers consistently picked Expedia over toggling between multiple airline and hotel sites. Expedia's breadth of inventory remained unmatched.
Social and sharing emerged as another potential threat. Expedia got ahead of it by acquiring TripAdvisor in 2004, instantly becoming a leader in crowdsourced reviews. User-generated content made Expedia's listings richer. Expedia also integrated social sharing and travel inspiration features to keep users engaged.
Perhaps Expedia's greatest achievement has been staying atop the online travel world despite intense competition. Priceline and its subsidiary Booking.com emerged as rivals boasting competing booking sites. Expedia managed to co-exist while still outpacing Priceline in key areas like U.S. hotel bookings. Expedia's diversified portfolio of brands ensured it couldn't be dethroned.
Attacks from Google represent Expedia's largest competitive threat today. Google Flights and Hotels steer users toward booking directly with airlines and hotels. Expedia's bargain hunting tools and comprehensive comparison shopping experience still manage to retain users. Partnerships with Google minimize friction and preserve Expedia's visibility.
Nimble disruptors like Airbnb represent competition, but Expedia has expanded into alternative accommodations itself via HomeAway. Expedia also fends off discount upstarts by matching prices and providing superior inventory breadth and convenience.
By constantly evolving, Expedia withstands whatever storm. Adding flash sales, subscriptions, and new features continually delights users. No competitor does as good a job delighting on all fronts: price, selection, ease, service. Expedia survives by never resting on its laurels and fixating on the consumer.
From Tiny Startup to Travel Titan: Tracing Expedia's Journey to Industry Domination - Leveraging Technology for Innovation and Convenience
Expedia has consistently leveraged cutting-edge technology to make booking travel increasingly convenient and hassle-free for consumers. By innovating and enhancing its digital products over the years, Expedia has made itself the go-to one-stop-shop for travelers.
Early on, Expedia saw the potential of online booking and interactive visuals to simplify trip planning. Expedia was the first major travel site to introduce map-based hotel search, allowing users to instantly spot lodging options around their destination. Expedia was also an early pioneer of 360 virtual tours, giving users an immersive preview of hotel rooms and properties.
According to insiders, Expedia ramped up investment in research and development after spinning off from Microsoft. No longer constricted by Microsoft’s slow pace, Expedia rebuilt its booking engine from scratch in 2005 to make searches faster and more intuitive. Development cycles became more rapid and agile.
Expedia has leveraged technology to make mobile booking seamless through sleek iOS and Android apps. When smartphones emerged, Expedia made sure its platform was optimized for smaller screens. Advanced features like passport scanning and instant translations appeal to users on-the-go. Integrations with mobile wallets like Apple Pay streamline bookings.
To simplify trip planning, Expedia introduced multi-city booking allowing travelers to build complex itineraries across destinations. Exclusive features like predictive travel search learn users’ preferences to serve up relevant suggestions. Price tracking alerts travelers when fare sales pop up.
Innovation continues today through Expedia’s open API marketplace, which enables third parties to integrate Expedia content and booking capabilities into their own travel products. Startups are using Expedia's API to build next-gen apps with enhanced experiences.
From Tiny Startup to Travel Titan: Tracing Expedia's Journey to Industry Domination - Rewarding Loyalty Through Membership Programs
Expedia has cultivated fierce brand loyalty over the years through its free-to-join membership program Expedia Rewards. By rewarding customers for booking flights, hotels, activities and more through Expedia sites, the company incentivizes repeat business.
Members earn points for eligible purchases, scoring bonus points by booking packages or signing up for the program’s co-branded credit card. Perks like room upgrades and VIP access sweeten the pot. Points can be redeemed for future bookings via Account Credit to lower the price.
According to Expedia’s own surveys, Rewards members spend up to 40% more than non-members on average. Eighty percent say the program increases their likelihood of booking with Expedia again. Members are also more likely to download Expedia’s app and enable push notifications to receive exclusive discounts.
Expedia Rewards succeeds by making participation free and simple while deliver tangible value. Status tiers like Silver, Gold and Platinum grant expanded benefits for big spenders. Perks like late checkout or free Wi-Fi motivate members to actively choose Expedia for bookings.
Users share that the ease of racking up points just from routine travel is a huge appeal. Redeeming points requires no blackout dates or complex charts like some airline programs. The instant gratification of discounts and upgrades keeps members hooked.
By integrating Rewards across its family of brands like Hotels.com, Expedia gives deal-seekers more opportunities to score points and maximize savings. Members can even earn Expedia Rewards points by converting unused loyalty points from other programs, like American Express.
Commenters say Rewards stands out for offering plenty of elite-qualifying stay opportunities at lower-tier chains versus competitor programs weighted towards luxury properties. Budget-conscious families or solo travelers are more likely to actually reap benefits.
For road warriors who book lots of hotels, Expedia Rewards provides gift cards, lounge passes and VIP hotel perks to take the sting out of frequent business travel. Likewise, the program gives leisure travelers booking dream vacations added incentives to go big.
From Tiny Startup to Travel Titan: Tracing Expedia's Journey to Industry Domination - What's Next? Expedia's Future Goals and Challenges
Expedia sits firmly atop the online travel industry, but no company can afford to stand still. Expedia will confront emerging challenges while striving to unlock new innovations that further its mission of simplifying travel.
Expedia's greatest obstacle ahead will be balancing convenience and value. As Google devours the search market, Expedia will fight to stay top-of-mind. Meanwhile, suppliers like airlines and hotels will angle to cut out the middleman. Expedia must convince travelers it can provide more seamless booking while still beating direct supplier pricing.
Expect Expedia to double-down on loyalty programs to keep customers returning. We'll see more creative perks and gamified status levels. Personalization will increase too. Expedia could offer curated recommendations and custom deals based on past trips. The company will keep finding new ways to reward brand devotion.
Of course, Expedia will continue expanding its global footprint. In Asia, Expedia will boost presence across India while penetrating untapped southeast Asian markets. Recent forays into Africa provide clues to future growth opportunities. Localizing inventory and payment options opens new regions.
On the tech side, Expedia will lean into artificial intelligence and machine learning to deliver more predictive, customized experiences. Imagine an AI chatbot becoming your personal travel planner. Voice interfaces through Siri or Alexa may enable hands-free trip planning. Expedia will keep innovating via startup acquisitions and its LaunchPad incubator program.
On the sustainability front, Expedia could provide tools helping travelers offset their carbon footprint from flights and hotels. More eco-friendly trip filters and guides would appeal to eco-conscious explorers. Promoting sustainable properties provides a competitive edge.
Maintaining fair prices remains an ongoing battle as well. As travelers demand more value, Expedia must threaten to drop gouging hotel partners while still offering wide choice. Adding greater price transparency and flexibility empowers users.