As the world’s largest online travel company bringing in total revenue of over $6.6 billion last year, Expedia are a major player within the world of travel. And, with the ongoing successes of assets acquired back in 2015, this year’s impact on the travel industry is set to be greater still.
Last year saw travel giant Expedia splash out $6 billion acquiring rival businesses, a move that has secured their market share future in an increasingly competitive industry. Integrating organisations usually brings up a myriad of issues that require a fast resolution, and are therefore notoriously difficult to manage effectively. Fortunately, there have been no such issues with Expedia’s acquisitions which have predominantly gone off without a hitch, bar some minor network disruption.
Expedia's 2015 Acquisitions
Back in January last year Expedia acquired Travelocity for $280 million, and followed up this purchase in March, spending $94 million for a 25% share in AirAsia. September saw the addition of Orbitz Worldwide for $1.8 billion and a further $3.9 billion for HomeAway in December. These acquisitions mark a new stage in growth for the Expedia brand:
Travelocity remains one of the most recognisable travel brands in North America, offering thousands of travel destinations to more than 20 million travellers every month. The AirAsia investment saw Expedia get exclusive distribution rights to the airline’s flights and packages throughout Asia Pacific, creating difficulties for other online travel agencies to prove their comprehensiveness. HomeAway, the most recent Expedia purchase, saw the travel giant branching out and expanding into the alternative accomodation market, while the Orbitz acquisition brought with it a sophisticated computing system that has been key to much of the companies success.
With the integration of these recent acquisitions it is unsurprising that the Expedia network infrastructure has “wobbled a little bit,” according to CFO Mark Okerstrom. Fortunately, the hiccup occurred largely as a result of moving Orbitz away from its own back-end technology platform onto Expedia’s, and whilst this transition resulted in network downtime, the impact to global distribution systems was minimal. In spite of this nominal impact, the travel giant still reassigned a bulk of its tech and product teams to work on the task of on-boarding Orbitz and its multiple brands with no further network disruptions.
There was some speculation that similar problems were set to arise with the transition of HomeAway, however CEO Dara Khosrowhshahi has expressed that it is unlikely the travel company’s problems will continue now they have: “addressed the vast majority of these issues.” This has come as welcome news for many travel management companies who use an Expedia integrator plug-in to search for prospective customer hotels.
Travel Industry Challenges
These big business acquisitions form the pieces of a much bigger picture, one which shows Expedia securing not only a larger market share, but also ensuring that they have the best content within the competitive accommodation market. Airbnb has frequently been in the news, and you'd be forgiven for thinking that the San-Francisco based accomodation providers had impacted the earning potential of other businesses within the hotel sector. However, the reality may be much different to what you anticipated as there is very little to suggest that Airbnb are having a detrimental impact amongst other online travel agencies.
Unfortunately, this is not the only current challenge facing the travel industry as the threat of terrorism attacks looms large over the whole of Europe and beyond. The impact on targeted destinations has been “significant” according to Mark Okerstrom. In more promising news however, the total number of travellers continuing to holiday have remained largely unchanged, which suggests that travellers are not allowing the fear to prevent them from getting away.
In spite of the negligible interruption that resulted from the Orbitz integration, the acquisitions of both Orbitz and HomeAway have cemented Expedia’s position as a key player within the accommodation market. Time will tell whether the threat of terrorism and longevity of Airbnb will have a significant long-term impact, but for the foreseeable future at least, using an Expedia integrator for your travel management business remains the smart move.
