expedia brands
365 days ago
 

Expedia admits that TripAdvisor and Booking.com are hurting it hard

CEO Dara Khosrowshahi was somewhat on the defensive today in answering investor questions on a call for second quarter 2013 for Expedia, the world’s largest online travel agency.

The company saw a broad negative impact as TripAdvisor moved to metasearch, hurting Expedia on all metrics. In response, the company plans to tweak its bidding strategy for gaining position in the top slots of TripAdvisor’s metasearch results.

Consumers are no longer clicking on pop-up ads from TripAdvisor, as TripAdvisor replaced pop-up ads with hotel metasearch.

The top-line growth for Expedia Inc’s consumer travel brands were hurt worse than expected as a result. Said Khosrowshahi:

The significant headwind came on both revenue and profitability on referrals from TripAdvisor.

Over the past year, we’ve been working with TripAdvisor to work its click-per-commission CPC buckets. The early results are encouraging.

The click share results are not at the same level we were at same time last year, but results have been improving on a week-on-week basis and we don’t see any reason why that improvement wouldn’t continue.

Hotwire is spiraling downward

A key problem: The company found that its Hotwire brand had performance was worse than expected in the second quarter.

Hotwire made a mistake in running a big sale in May that cost more incremental spend than it recovered in revenue. That drove its worse-than-expected performance.

As a broader trend, there has been a combination of weakness for both hotels and cars. Khosrowshahi summarized:

Hotwire isn’t operating the way we want it to.

The TV war is rough

Repeatedly during the earnings call, executives came back to mentioning challenges in offline marketing of its direct channels. In particular, it appears that Booking.com is getting more aggressive within Kayak, within Google, and within TV advertising.

But executives say that what’s new is the higher spending by rival consumer brands on TV.

In June and early July, traffic to direct channels — the most profitable sources of customers — have been below expectations, which is something the company is watching closely.

The move to a new commission model is promising

Expedia Traveler Preference (ETP) — the company’s effort to move to a model where customers can pay at check out rather than up front — had some operational issues that has led to a short-term decline in hotel revenue margins per night.

By the end of the year, the company expects to have a significant share of its overall hotel business in ETP. By 2014, ETP will be an important driver of revenue.

Hotels that have transferred over to ETP are producing more than they did and more than their comp set. We want to make it a higher proportion of our overall revenue market. The large chains, like Marriott, are now converting to ETP.

expedia brands

Trivago may become a cash cow

On the plus side, Trivago performed well (growing 80% year over year) and eLong expanded aggresively in Asia.

Trivago added 11 points of growth to sales and marketing in Expedia Inc’s performance, so things would have been worse for Expedia Inc without its acquisition of the European brand last December.

Expedia Inc assumes that Trivago will become net profitable within the second half. Trivago’s model relies heavily on TV advertising to build up a brand, so right now it is requiring more incremental investment than it’s delivering in net revenue. Trivago is currently in 39 countries and the plan is to make it broadly global.

Expedia shifted marketing dollars away from TripAdvisor toward marketing its new acquisition of Trivago as well as of eLong.

Some odds and ends

Google carousel, which alters the appearance of search results, didn’t have any material impact, said Khosrowshahi.

The company said it hasn’t noticed a significant compression of the booking window in any markets. But, that given the increase in mobile bookings is ongoing, Expedia Inc’s executives are keeping an eye on whether mobile as a platform may cause compression.

Mobile is growing

Noted Khosrowshahi:

We have 50 million apps downloaded across our brands. We’re seeing strong app usage. It’s in the 20% range for many of our brands in many countries.

Higher than normal credit card fraud was also noted by the company’s executives.

Expedia manages 6% of all hotel rooms booked in the US alone, so while it’s the world’s largest online travel company, it still faces a lot of pressure from a variety of angles.

Closing impression

Overall, investors may feel the following way:

 
 
Sean O'Neill

About the Writer :: Sean O'Neill

Sean O’Neill is a New Jersey-based reporter for Tnooz. He's also a regular contributor to BBC Travel.

Follow him on Twitter, Google+, and his personal site .

 

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  1. Boquete Hotel

    As a new owner of 2 hotels, I can see why Booking.com is killing Expedia, especially outside of the U.S. I recently opened 2 hotels, neither of which had a record of success in my market. In fact both hotels had been completely closed for 2 years prior to our purchase and those comments that existed, were extremely poor.

    We started with both Expedia and Booking.com in December and 98% of our bookings come from Booking.com, with only 1% from Expedia-owned companies and 1% walk-ins. I am more than happy to pay Booking.com at the end of every month, though hopefully one day I won’t need them.

     
  2. daniel

    Awesome! I am glad to have spurred so much typing. I might write something later, but I got to enjoy my weekend first.

     
  3. John Pope

    Apologies for the tl;dr message ahead of time, but this is too important a topic.

    I really like the cut of your jib, Mr Caldwell.

    Thank you very much for the referral to the “Serious Journalism” link from The Ditchley Foundation – it’s a mind and mouth full, but definitely worth the trouble to digest, completely.

    At the very least, we can ALL give “daniel” (and John Caldwell) credit for highlighting and instigating a really important topic for debate – that of the ethics and responsibility in journalism. More specifically, serious, authentic, objective journalism; which many would certainly say, Tnooz has had a solid record and history of providing its audience.

    But, let’s also not forget the importance and role of the voice of decent; because without it – from any perspective, whether we personally agree or disagree – we are just simply subscribing to Populism.

    You know, the type of thinking that used to believe it was not kosher for women to vote, that racial or ethnic minorities could be owned as slaves, or worse, sent to concentration camps; and that we should be able to justify wars because of the “certainty of weapons of mass destruction” – amongst thousands of other populist, reactionary viewpoints held by the powers that be throughout history. Including those views from many powerful former and existing media outlets; as all media, big and small, are still owned by skin and bones people, with their own set of biases – and, more often times by the special interests of those who hold power, control or influence over the media.

    “Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men.” Lord John Dalberg-Acton

    If we’re only supposed to subscribe to the opinions we agree with, that’s a perfect recipe and opportunity for tyranny to take control. So, to pile on “daniel” in this instance, would also lead to an environment where only the viewpoints of the editors and journalists of this fine media outlet would be heard – because most others would either fear being publicly ostracized by the politics of Populism, or simply a desire to fit in.

    And that would result in progress being stifled, because only those with the “Publish” or “Delete” button would ultimately have control of the microphone – as they would be solely responsible for framing the topic, context and substance of the debate.

    Whether it happens subtly, behind the scenes, or explicitly for all to see, makes no dramatic difference in the outcome – although, the type of “framing or censoring of debate” that happens behind the scenes is typically far more sinister in nature, than the voice of an open and public dissident.

    But ironically, it is usually those who frame the debate in secret, that Lord Acton aptly, and with great insight, describes with his iconic words of wisdom.

    So I propose a toast to “daniel” – not because I respect his viewpoint, but because I respect his right and courage to speak it.

    “TO DANIEL – LONG MAY YOU DISAGREE, AND LET US KNOW WHEN YOU DO!”

    P.S. With all that being said, how bout shifting the debate to something I highlighted on another recent Tnooz article:

    http://www.tnooz.com/2013/07/19/news/googles-waze-acquisition-and-some-eye-watering-numbers/

    I reckon there is no greater or more important topic of conversation on the table presently, in travel or digital media, in general.

    Yet, with all the mental giants in the Tnooz audience, nobody wants to touch my provocative, and less than conventionally subscribed to, argument. Neither for or against my stance, that Google is engaging in an unprecedented strategy to gather an astronomical amount and deeply personal nature of data on all of us they possibly can.

    And in return for this treasure trove of personal data, they provide their audience with an endless array of “useful tools” that are ultimately designed to gather even more, and deeper forms, of said data. So that they can then serve more personalized, targeted marketing and advertising messages to us all.

    To me, that seems like a pretty important topic for media outlets to discuss. Quoting from the Ditchley post Mr Caldwell highlighted:

    “it (serious journalism) was about telling the truth, in elegant words and ways that respected the intelligence of the audience, about things that mattered to society.”

    And even more poignant:

    “news thoroughly reported and elegantly told in a way which respects the intelligence of the reader; the systematic reporting of issues that matter to society in a truthful way; reporting which holds power to account; respect for evidence and temperate debate.”

    Surely, the issue relating to Google that I highlighted the other day fits all the above criteria from Ditchley to a “T” – No?

    Let’s continue to break the mold of emphasizing the hackneyed and banal that the majority of media brands engage in (like the AOL and Yahoo examples from John), and conversely suppressing the more provocative, dynamic and relevant topics of discussion, but for a select few brave souls at the media’s fringe.

    “Serious Journalism” – difficult but extremely important ideals to live up to, I’d say.

    I can’t think of anything more important or relevant to talk about.

     
    • John Caldwell

      ‘..that Google is engaging in an unprecedented strategy to gather an astronomical amount and deeply personal nature of data on all of us they possibly can.’

      A short response for now,
      It seems that with the acquisition of Waze, Google continues to trump all competitors for controlling the business of anticipation. As Google, if I eventually control the tools that record your ‘every action in life’, I will eventually begin to dictate your ‘every action in life’ for the future. As Google I will determine who you are and who you will be, where you are and where you will be and I will formulate your mindset to affect those you encounter as well.

       
  4. Kevin May

    Kevin May

    @john caldwell – well, thank you very much, sir :)

     
  5. daniel

    Typical tnooz anti expedia article. I wonder how they want to create serious journalism with gif’s like that. Although humerous I can’t take tnooz seriously. So many biased articles that I can’t rely to find objective information on tnooz. I used to read it alot almost daily but not anymore, mostly i just read the headlines and almost never click into something. mobie site is bad too for a tech site.

     
    • Kevin May

      Kevin May

      @daniel – thx for the comment.

      Everyone is entitled to their opinion, but I would ask you to clarify the “typical” part of the rant in the first sentence?

       
      • daniel

        Really? I go into explaining why right after that first sentence. I have no time to dig up other examples but if you kevin may work for tnooz then you should know.

         
        • Kevin May

          Kevin May

          @daniel – for fear of being a pedant (but I kinda have the right given you are criticising our journalism)…>>>

          “I wonder how they want to create serious journalism with gif’s like that. Although humerous I can’t take tnooz seriously. So many biased articles that I can’t rely to find objective information on tnooz. I used to read it alot almost daily but not anymore, mostly i just read the headlines and almost never click into something. mobie site is bad too for a tech site.”

          Still can’t see where you explained how it was a “typical” anti-Expedia article.

           
          • John Caldwell

            I’m sitting here for days, reading and biting my bottom lip in trying to prevent my response from being negative and cynical, while creating run-on sentences……

            For those who have not fully educated themselves on the history and makeup of Tnooz,
            please read the following:
            http://www.tnooz.com/about/

            For the description of Tnooz via a serious journalism source PR Newswire,
            please read the following:
            http://www.prnewswire.com/bloggers/posts/Tnooz.html

            Now, this article is presented as an investigation beyond the surface of Expedia and their holdings, with the primary catalyst being quotes from the Expedia CEO Dara Khosrowshahi. This article is presented using examples of facts, number-crunching and other factual data that experienced and knowledgeable folk in the travel industry have access to and understand. This article is concluded with a ‘Closing impression’, a point of view(and Spanky) based upon the writer’s journalistic experience from Foreign Policy Magazine in 1997 to present-which includes dedicated travel industry work since 2007.

            Then along comes daniel……
            The easiest way to respond to a ‘daniel’ is to offer direction, such as
            Go Away
            Take A Hike
            Nie pozwól, drzwi uderzył cię po drodze.
            Не позволяйте двери ударить вас на выход.
            of course, nothing is really easy anymore.

            Before you offer any more of your ramblings, daniel, I suggest you educate yourself on some of the terms you toss out-simply because you can form these words from a keyboard:
            Serious Journalism
            http://www.ditchley.co.uk/conferences/past-programme/2010-2019/2013/journalism

            Biased Journalism
            http://www.niemanlab.org/2012/06/how-do-you-tell-when-the-news-is-biased/

            The Myth of Objectivity in Journalism
            http://public.wsu.edu/~taflinge/mythobj.html

            Now, the comment section here is titled ‘Speak Your Mind’
            -so daniel, how can you speak your mind in offering an unbiased, objective and serious response when
            ‘…mostly i just read the headlines and almost never click into something.’

            Sad to say, as I conclude my diatribe, is that Tnooz might be a travel industry source that is beyond your comprehension. I offer the following below that are more inline with your expectations-these offer catchy headlines and lots of pictures too!
            http://news.travel.aol.com/
            http://sg.news.yahoo.com/travel/

            BTW-I had the time to dig up other examples
            …You are welcome.

             
  6. John Pope

    How ironic is it that you used a “Spanky” from the “Little Rascals” GIF, considering how badly Expedia is getting “spanked” by the competition, these days.

    @John Caldwell – the problem you highlight will be over soon – faster than you can sing “Home On The (Missouri) Range” – just you wait and see.

    $EXPE down more than 25% from yesterday’s close. Barry D and the boys still ain’t seen nothing yet – there’s much more decline to come.

    #ShortEXPE

     
  7. John Caldwell

    Let’s hope the thieves at Expedia take a second look at their $20/23% price-gouging commission plan and restructure to be more industry friendly.

     
  8. Kunal Kalro

    That gif is simply amazing.

     
  9. RobertKCole

    Just wondering, is that animated GIF of Barry Diller as a kid? ;)

     
 
 

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