Travel EBusiness Models - Expedia

Sabre and competitors Cendant and Expedia, owned by Barry Diller's IAC/InterActiveCorp, are carving up the Internet travel industry as more people buy airline tickets and hotel rooms over the Web. A third of bookings may be made on line by 2009 compared with 23 percent in 2004, according to forecasts by JupiterMedia Corp. [Bloomberg.com]

Expedia Overview

Expedia is the most popular website brand in the Internet travel marketplace. Expedia.com is the 245th most popular website in the world, Expedia.co.uk is the 1981st most popular website in the world – whilst Expedia.ca is the 4361st most popular. [Alexa.com – September 2006]

Offering services such as fare tracker and fare compare, Expedia encourages its customers to focus on cost and at least offer then the perception that they are getting the best deal.

Founded in 1994 as a division of Microsoft, Expedia was ‘spun off’ on 1999 and purchased by IAC / InterActiveCorp in 2001. The brand itself hasn’t changed a great deal since 2000 which is unusual with a website led business. This emphasises that Expedia focus on efficiency rather than image.


Expedia Position

An efficient, logical, knowledgeable yet cold looking website and brand, Expedia focus on offering best value Internet travel deals.

Expedia's $50 coupon for all-inclusive bookings and its recent focus on all-inclusive getaways — is the thinly veiled fear among online agencies that consumers will shop around. [USAToday.com]

Whilst focusing on the all-inclusive travel deal, Expedia have decided to use this method to try and ensure that customers stay with them. Diminishing airline ticket margins have encouraged them to focus on the ‘bundle’.

Expedia’s strengths include its history of operating underneath the Microsoft ‘net’. This has not only enabled Expedia to maximise its technological know-how, but also offered it the opportunity to capitalise being part of one of the most trustworthy software brands in the world. Although efficient in manner, because Expedia hasn’t undergone any image reinvention since 2000, it could be argued that it has allowed Travelocity to overtake it in terms of being visually appealing.

The fact however remains that Expedia have now held the number one position in the online travel marketplace for a number of years? Will this change in the near future? It doesn’t look too likely.

Expedia Core Competences

Expedia’s core competency is the superior understanding of technology within the Internet travel marketplace. This has enabled for them to gain first mover advantage in the sector by forming appropriate strategic alliances.

Expedia Competitive Advantage

Expedia have decided to go down a dangerous route by choosing a cost advantage as their competitive advantage. They have chosen to do this because they know that they already have the most popular Internet travel portal. Time will tell whether or not other companies such as Travelocity will be able to ensure that online travel customers are willing to spend more to receive greater service, facilities or perceived brand value.

However, in addition, Expedia have an extensive affiliate marketing portfolio of partners. Through CJ.com (Commission Junction) Expedia are continually offering other websites the opportunity to market their services in exchange for a percentage of the final booking fee. (Commonly around 5%) Compared with their nearest competitor, Travelocity, Expedia have been much more aggressive with their use of affiliate marketing.

The fact however remains that Expedia have now held the number one position in the online travel marketplace for a number of years? Will this change in the near future? It doesn’t look too likely.


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About the Author: David Bain is founder of the UK tourist information website http://www.TREKtheUK.com. TREKtheUK is a comprehensive UK tourist information guide featuring lots of places to go and things to do. Why not consider Scotland travel?