Expedia and the sharing economy

This article is part two of a two-part series on Expedia. Here is part one.

News of what is potentially Expedia's biggest investment yet bubbled beneath the surface of the event. Just prior to the show, Expedia revealed it was in talks to purchase the travel-sharing website Homeaway, making its way into the sharing economy.

In a Q&A session with said Dara Khosrowshahi, president and CEO of Expedia, he said the deal with Homeaway was not finalized, but the prospect of such an acquisition shows the strength of the alternative lodging industry.

"The deal with Homeaway hasn't closed yet. We announced the purchase because we view alternative lodging as a big business going forward," he said. "It's a $100-billion business today. Alternative lodging is where independent hotels were 15-20 years ago."

Khosrowshahi’s comparison of home-sharing services such as Airbnb and Homeaway to independent hotels holds water. In the past, independent hotels suffered because they lacked access to the distribution channels commanded by the big brands, but after the Internet leveled the distribution playing field these independent properties were able to better hold their own. In fact, they were so influential that every major brand now has a boutique lifestyle brand or a collection of independent hotels, in order to capitalize on guest interest in them. Expedia is banking on the trend repeating itself with home sharing.

“This is why we want to purchase Homeaway and take it from a listings business to a transactions business,” Khosrowshahi said. “It's what customers want."
Expedia also announced plans to offer bookings for rail services in the near future. This decision is indicative of the company's thesis, to be involved in as many markets as possible, offering access to any and all travel booking options. Early in the conference, Khosrowshahi said he wants to take Expedia from a having a transactional relationship with its partners to something more akin to a partnership.

Additionally, Expedia is very serious about staying current and competitive. Khosrowshahi said the company runs between 150 and 180 tests per month on improvements to its website or services and gather data. Two-thirds of the tests are red herrings, one third of the time a test produces results, he said.
"We don't pretend to know exactly what consumers want, but our site changes frequently. Every day we are shipping a new feature," Khosrowshahi said. "Even failures serve a purpose and allow us to learn by gathering data on wins and losses."