Expedia closing in on $100 billion as it aims to be world’s largest travel platform
Okerstrom called on hotel owners and operators to “learn from what’s happening in the alternative accommodation” space.
At the opening of the partners’ conference, Mark Okerstrom, president and CEO of Expedia Group, said, “We are now the largest travel platform, covering 75 countries in all segments of travel. We are truly sitting at the centre of the industry and the rebranding of the group as well is an articulation of our purpose and clarification of our strategy.”
With its purpose being to “bring the world within reach”, the group is certainly within reach of becoming the world’s first $100b travel company. In the 12 months ended Q3 2018, total gross bookings reached $97.5b, on a tech spend of $1.5b and sales and marketing spend of $5.7b.
And while 2019 may bring challenges such as concern over trade wars, the slowing down of China, the mixed outlook on Europe and volatility in Latin America, the group remains optimistic about the year ahead.
With travel growing ahead of GDP, and a rise in consumer confidence, Okerstrom said there were strong fundamentals in travel. Car business is still growing, despite talk of how ride-sharing would impact it; there are destinations that are showing air ticket sales growth of 50%, and the shift from offline to online continues to grow, with a current global average of 44% penetration, according to Phocuswright figures.
Adding to the optimistic outlook, Alan Pickerill, CFO of Expedia Group, said that other than the massive potential yet to be tapped in the $1.6 trillion global travel market, the lodging business was powering ahead with the group achieving 14% year on year growth to reach 343.5m room nights as of Q3 2018.
The highest growth, 19%, was in the international segment and 45% of room nights booked were from a different country than the destination. One in three global room nights was booked via mobile.
To push its international business, the group has opened nine new points of sale – four in Latin America, three in the Middle East and an updated Chinese point of sale through Brand Expedia.
Clearly, a big bet is on the alternative accommodation market with HomeAway powering away. In its Q2 2018 results, HomeAway recorded a 33% jump in stayed property nights compared to the second quarter of 2017. It now offers more than 1.7 million online bookable listings, up about 100,000 since March 2018, but it is its more than 800,000 instantly bookable listings that are expected to provide the tailwind of more growth.
The rise in alternative accommodation is certainly raising concern on the part of hoteliers as to whether the group’s attention will be distracted away from its core lodging business. Cyril Ranque, president, lodging partner services, said it was important to note that the vast majority of bookings for HomeAway was for four people or more.
Okerstrom called on hotel owners and operators to “learn from what’s happening in the alternative accommodation” space. “They are letting an incredible opportunity go by not showcasing what they have more of – for example, connecting rooms, availability of kitchen facilities.”
Pickerill, who said the group was “creating the marketplace for everything” also spoke about the growth in package room nights which were showing healthy growth as well as achieving 1.3 times longer booking windows, 1.5 times longer length of stays and a 40% lower cancellation rate versus standalone hotel bookings.
Commented Okerstrom in his opening, “News make us feel down, but numbers make us optimistic. We are clear-eyed about the future and our role.”
Its role is to continue to open up partnerships, accelerate its global push and be as customer-centric as possible.
In breaking news delivered during the day, Expedia Group announced an executive exchange programme that will kick off in the first quarter of 2019 globally and deepen partnerships. This new programme will allow its executives, for two to four weeks at a time, to work at the front desks of partner locations, while partner executives will be given the opportunity to sit within Expedia’s product, technology or marketing teams.
While Okerstrom is concerned about the slowing down of China, the good news, he says, is “we are not that big in China” and as such, the impact will not be huge.
What he is bullish about is Asia Pacific, a market where he believes earlier barriers to growth have been removed. For instance, broadband wifi and mobile have changed the game in Asian markets and low credit card penetration has been solved by alternative payments and the rise of electronic wallets.
To plug missing pieces in its mission to be the travel platform, he’s also made no bones about Expedia Group’s interests in acquisitions in the corporate travel space to support the growth of Egencia, investments that enable it to be “locally relevant” as well as in new tech that supports its overall strategic growth.
Commenting on strategies by its competitor Booking Holdings’ investments in companies such as Didi and Meituan, Okerstrom said, “China is a different world with different eco-systems. We have an incredible relationship with Uber and we don’t have to spend millions of dollars in offering Uber to our travellers or food delivery. If there are connective tissues, we can do it commercially.”
As for who he considers the bigger competitor – Booking Holdings or Google, he cited the latter who “though they are an incredible partner, has certain advantages over us, but we also have a lot of advantages over them. We have amazing products they don’t have, and we have 6,000 engineers fully focused on travel”.
He concluded his opening by noting that while yesterday’s words were about “big data, data science and human intelligence”, the words of tomorrow will be “streaming real-time data, AI and automation and human creativity”.
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