LAS VEGAS—Expedia celebrated its 20th anniversary during last week’s Expedia Partner Conference here at the Bellagio, but the company spent most of it's time looking ahead, not back.
“The only constants we’re confident in are growth and change,” Mark Okerstrom, Expedia’s CFO and EVP, operations told the 4,000 attendees. Noting the brand and its subsidiaries' accomplishments over the course of two decades, Okerstrom noted that Expedia represents about 5 percent of the industry, adding “we’re growing at about six times the rate of the overall industry.”
That growth is expected to continue at a relatively feverish pace, if CEO Dara Khosrowshahi has his druthers. According to Khosrowshahi, plans are in place to increase gross bookings to $100 billion by 2020, already at $71 billion for 2016. Achieving this goal equates to market expansion because more bookings from Asia Pacific and Europe will be imperative to strategy. “As a global company, we need a U.S. market that continue to be healthy, but Europe and Asia Pacific together will be keys,” said Khosrowshahi. “We continue to do well [on both continents], but by no means are we satisfied.”
Realizing that milestone in Expedia’s history will require maintaining acute focus on the ever-shifting needs of customers and partners, while leveraging the brand’s existing strengths. “Navigating the change that’s ahead—technological change and new competition—there are three levers to plot a path: organic strategy—asking what we can do differently; acquisition; and partnerships,” Okerstrom said. “We continue to invest aggressively, but we’re changing the paradigm of what we believe our partnership should be. …Expedia is your partner in technology and innovation.”
Technology and the Future of Travel
The rapidity at which Expedia’s technology will continue to evolve will dwarf what the company has already achieved in the past 20 years, according to Okerstrom. “When Google and Amazon think about changes, we’re there at the table with them, thinking about how we can do this together.”
No reference was made as to what specifically Expedia might be discussing with the Silicon Valley giant, nor with the Jeff Bezos-headed brand. But separately, Okerstrom did speculate on the future of the travel industry and the trends expected to affect it. “Social media will continue to be a trend and the sharing ecomomy is here to stay,” he said. “What’s next? We don’t know for sure. We think [artificial intelligence], voice and [virtual reality] could be impactful.”
But his assured outlook on the future prospects of the travel industry would underscore Khosrowshahi’s confidence in Expedia achieving another $30 billion in gross bookings over the next three years. Travel continues to grow at several hundred basis points faster than the gross domestic product, and Okerstrom attributes this to the fact that disposable income is often spent on travel in addition to the economic driver that the business travel segment represents. But more specifically, he points to the health of the industry’s verticals in the U.S. between January and October 2016, when the lodging industry generated $129 billion in gross bookings, up 5 percent year-over-year.
The nation’s car rental industry was responsible for $19 billion in gross bookings, up 3 percent, while the airline segment saw 6-percent year-over-year growth, with $3.7 billion in gross bookings. The cruise industry was up 9 percent year-over-year at $24 million in gross bookings.
Expedia on Trump
Where the U.S.’ incoming presidential administration and the travel industry are concerned, Okerstrom predicted that the industry will stay on track—at least in the short term—because despite terrorist threats, the industry is buoyed by technological change, emerging middle classes across the globe and a continuing interest in travel. “No one has any idea what the Trump presidency will bring, but there are a lot of changes afoot,” he said.
Expedia’s Chairman and Senior Executive Barry Diller is operating out of the same playbook as he, too, had a fairly tempered view of what lies ahead under a Trump presidency. “I think the best attitude is to have some equanimity about it,” he said. “Change is taking place all over the world and it’s taking place in ways that have never happened before. It’s interesting and potentially dangerous. It’s also potentially good. It’s very possible that I have something to learn.”
Diller expects future tax and regulation reform to bolster U.S. business in the short term and Congressional pushback that will limit drastic changes to free-trade agreements.
Like Okerstrom, Diller is also bullish on the global desire to travel as well as technology, where his money is on voice as the next new frontier. “To say you can stop technology—you can’t,” he told conference attendees. “Creative destruction happens when thing change; the old is destroyed and new is created or the old adapts. I think voice is an extraordinary development.”
But perhaps most pointedly, when asked if “Apple has lost its mojo,” Diller unhesitatingly stated: “Yes. After all these years, all they can come up with is a watch that no one wants and no one uses.”
It doesn’t sound like Tim Cook has a seat at that table with Google and Amazon.