* Archive page for historical reference only. This profile is no longer being actively updated. See active page here *

Expedia Group : company profile

Profile subscribers click here for full profile

Expedia is one of the world's top travel management companies, and now dominates the online market as the owner of multiple sites including Hotels.com, Trivago, Travelocity and Orbitz. Originally launched by Microsoft, it was later acquired by the precursor to what is now InterActiveCorp, who spun it off as an independent company in 2005, along with a collection of other travel services businesses. One such stablemate was TripAdvisor, itself spun out as as a separate company in 2011; another, Trivago, was separately quoted in 2016. Although it owns a number of different properties, the core brand within the group remains the main Expedia service. The group is the global #1 in online travel bookings, narrowly ahead of main rival Booking Holdings. The two companies between them now have an effective duopoly of the online travel market in developed markets, and combined share of almost half of total global bookings.

Advertising

Who handles advertising? Click here for agency account assignments from adbrands.net. Expedia declared advertising expense of $2.7bn in 2016, including €624m for its Trivago subsidiary. The bulk of that expenditure is online. In the US, Kantar (in Advertising Age) reported measured expenditure of $759m for 2016 out of an estimated total of $1.6bn.

Competitors

In 2015, Expedia had around 25% of the $246m global online travel market, according to Euromonitor estimates, with Priceline close behind at around 23%. Chinese company Ctrip (and its various subsidiaries including Skyscanner and eLong) had around 11%, with Airbnb at 4%. eDreams Odigeo and Lastminute.com had 2% and 1% respectively. However that still represents only a fraction of the total market. On a global basis, Euromonitor estimated Expedia plus Orbitz to have 6.3% of the global travel retail market to 4.9% for Priceline.

Brand & Activities

Expedia and its various satellites now dominate the global travel industry, especially online, with more than 200 travel booking sites in 75 countries, and a portfolio of more than 10 separate brands, mostly selling the same or similar services under a different name. In addition to its main US site Expedia operates local portals in 32 international markets including the UK, Canada, Germany, Netherlands, France, Australia, Spain and India. The group also houses several specialist units which supply corporate or related travel services. One of the biggest is hotel reservation service Hotels.com, which has an even bigger footprint than Expedia, with almost 90 localised sites in 39 languages. Others include discount travel resource Hotwire, corporate travel specialist Egencia and premium holiday service Classic Vacations. It also has 75% control of a joint venture reservation business across the Asia Pacific region with discount airline AirAsia.

In recent years, it has steadily consolidated its position with a series of acquisitions of rival services. In 2013, the group agreed to pay €477m for a 63% stake in travel metasearch service Trivago.com, which bundles travel results from different suppliers. As a result of aggressive global advertising, Trivago has emerged as the 3rd major brand within the portfolio with local sites in 55 countries. It generates pay-per-click referral fees from third-party (or Expedia-owned) sites when its users click though to those results. During 2016, it reported more than 535m separate referrals, more than twice the level two years earlier. At the end of 2016, Expedia floated a small quantity of Trivago shares, equivalent to just 8% of total equity and less than 1% of voting stock. Expedia retains 65% of voting shares, while Trivago's management team controls a little over 34%.

Wotif, acquired in 2014, is a leading operator of travel services in Australia, and that same year the group acquired AutoEscape, operator of the CarRentals.com service. In the space of two months at the beginning of 2015, Expedia acquired two of its main competitors. It snapped up Travelocity for $280m and Orbitz for $1.3bn, reducing the number of major players in the US online travel market from four to just two. The latter deal also added satellite brands including CheapTickets.com and eBookers.com to the portfolio. It also acquired a 20% holding in Latin America affiliate Decolar/Despegar. Later in 2015, the group agreed to acquire vacation rental service HomeAway.com, the main international competitor to Airbnb, for $3.9bn.

Another former subsidiary, the travel reviews and planning portal Tripadvisor, was spun off at the end of 2011 as an entirely separate quoted company. Until recently, Expedia also held a majority shareholding in Chinese service eLong, that country's #2 travel website. However, this business had been one of Expedia's weaker units, and in 2015 it agreed to sell its 62% stake in the business to a consortium of Chinese buyers led by regional rival Ctrip for $671m.

Financials

For 2014, Expedia Inc generated revenues of $5.76bn, up 21%. Gross bookings jumped 28% to just under $50.5bn. It generates commission and agency fees from reservation sales. The group reported huge losses of $2.5bn in 2008 as a result of a $3bn impairment charge. It has been back in the black since then. For 2014, net income soared by 71% to $398m, though that was still below 2010 and 2011 levels. Around 53% of company revenues were generated in the US. The sale of its eLong shares generated a substantial $509m gain in 2015, pushing up net profits to $765m, on revenues of $6.67bn.

In 2016, revenues hit a new high of $8.77bn, up almost 32% on the year before and more than double the level five years earlier. Gross bookings rose 19% to $72.4bn, or around 6% of the estimated total global travel industry. Without the benefits of the eLong deal, net earnings slipped back to $282m, the lowest level since 2013. Some 61% of revenues came from hotel reservations, with a further 8% from HomeAway.com and 9% from airline tickets. Most of the rest comes from car rental and corporate travel fees. What the group calls advertising sales, mainly from Trivago, accounts for a rising percentage of revenues, 9% in 2016, or $807m. The US remains the biggest market by far, accounting for 35% of revenues.

Trivago, now publicly quoted in its own right, reported revenues of €754m, but a net loss of almost €50.7m. Just over half of revenues were generated in "developed Europe", primarily Germany, the UK, Spain and Italy. Expedia Group sites accounted for 36% of revenues; Priceline Group sites for 43% and other advertisers for the remaining 21%.

Expedia worried investors with a weak end to 2017, caused by sharp rises in expenses. Even so, full year revenues topped $10bn for the first time at $10.06bn, on gross bookings up 13% to $88.41bn. Attributable net income jumped by more than a third to $378m. The previous year included a number of one-off impairment and restructuring charges, while 2017 was impacted by tax write-ooffs and other exceptional items. Adjusted net income excluding exceptionals slipped by 3%.

Although officially independent of IAC, Expedia is still overseen by IAC's chairman Barry Diller, who also controls around 59% of Expedia's voting stock. John Malone's Liberty Media has around 16% of equity, but its voting rights are pledged to Diller.

Background

Expedia was originally launched in 1996 as a subsidiary of Microsoft, and gradually established an international presence with local sites in Canada, the UK and Germany. Microsoft floated part of Expedia's equity in 1999, but sold a controlling stake in the business to USA Networks, the precursor to IAC, in 2002. The remaining shares were bought out the following year. Despite fierce competition, Expedia quickly established itself as IAC's best-known and most profitable business, and that prominence seriously overshadowed the group's other activities, limiting its diversification. As a result it was spun off as a separate entity in 2005.

Last full revision 16th June 2017

* Archive page for historical reference only. This profile is no longer being actively updated. See active page here *


All rights reserved © Mind Advertising Ltd 1998-2021