NEWS TRAVEL WEEKLY BUSINESS CONTINUED FROM THE BACK
the pedal” in terms of their investment in marketing. Expedia said Europe was a
growing part of its business, but acknowledges it faces a significant challenge from rival global OTA
Booking.com. However, Khosrowshahi said a strong presence in Asia is a necessity for growth, as is continued health in Expedia’s home US market. Expedia recognised that with consumers increasingly feeling overwhelmed with choice, one of the challenges it faces is to become more personal in how it markets and sells products. Khosrowshahi said Expedia’s
various brands will do this by controlling the message they convey to customers while taking advantage of the firm’s powerful technology platform and business scale. He cited
Hotels.com’s
customer loyalty programme as a successful industry-leading example. “It has a very distinct personality,” he said. “Loyalty customers now represent two-thirds of its customer base and it’s growing because of one-to-one connection-building with customers.”
Expedia is seeing independent
hotels winning increased market share despite high-profile campaigns from hotel chains such as Hilton encouraging customers to book direct. Khosrowshahi said this is because Expedia’s consumers were brand-agnostic and many independent hotels were exploiting the OTA’s algorithms to gain enhanced profile. He claimed hotel base commissions have been falling in recent years, although partners are able to bid more to raise their profile within the Expedia marketplace. “Our commissions are
very competitive with any distribution network out there,” said Khosrowshahi.
More than 4,000 delegates gathered in Las Vegas last week for E
Barton: Nauseating pace of change will speed up
The speed of change in the travel industry is set to quicken due to advances in technology, the founder of Expedia warned.
Richard Barton established Expedia 20 years ago after pitching the idea of creating the world’s biggest travel firm to Microsoft founder Bill Gates. He described himself as a
“technology optimist”, although conceded that the pace of change was “almost nauseating” and some people fear technology will make human beings subservient. But he said: “We are masters of
technology. It is going to augment us in all sorts of different ways. “We may have some fear of new
technology, but we are overcoming that fear to embrace the change. Expedia and its family of brands are leading that change.” Barton said he originally
hoped to establish Expedia outside Microsoft, but Gates persuaded him to set it up as an entrepreneurial unit within the technology giant. He said this meant he had his pick of talented people to help
BARTON: ‘Building consumer brands and products, that fires me up’
“We may have some fear of technology, but we are overcoming it to embrace change”
him build Expedia and before long it had overtaken market leader Travelocity in the US. “I was given enough room and
our team was co-operative enough with everyone else that they did not see it as a threat,” he said. Barton, who has gone on to
found and back a succession of technology start-ups, said what drove him and continues to inspire him today was the idea of giving power to the people. “I like building consumer
brands. Building consumer brands and building products that people want to use, that fires me up.” Expedia said it spent $1 billion
more on technology this year than last, with increasing budgets dedicated to systems for hotel, car hire, cruise, and tours and attractions partners to use.
Tech investment pays off for online giant
Expedia is reaping the rewards from a massive investment in technology that began before the 2008 global economic crash, chief executive Dara Khosrowshahi told the conference. He said in 2007 he went to the OTA’s board to ask
for the funds to “redouble and actually quadruple our investment in technology”. This had come after a “pretty tough” few years for Expedia and shortly afterwards the global financial crash hit. However, Khosrowshahi said the Expedia board
was steadfast in its commitment and over the past five years it has spent over £17 billion on technology and marketing.
70
travelweekly.co.uk 15 December 2016 He said Expedia’s growth “has not come by chance,
it’s come from direct investment” in technology. Today Expedia has more than 18,000 employees
globally and operates on 60,000 servers logging more than one billion consumer interactions a month. “We have the ability to learn from every single one
of them to optimise the company based on customer behaviour we observe,” Khosrowshahi said. “We are constantly testing ideas. The data will tell
us if that idea is a good one or a bad one. Two-thirds of tests we code as a company do not work. “It makes for a very humbling experience. We talk
about what went wrong. We are not afraid of making mistakes and we are not afraid of learning.”
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