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Expedia is best known for bringing pioneering technology to the vast travel market.

Now, nearly 20 years later, the Bellevue online travel giant is leveraging improvements in that technology to help it weather recent economic storms and looming challenges.

The story shows up in the company’s financial statements: After a so-so first half of 2013, Expedia reported a 17 percent increase in revenue in the third quarter, and an 18 percent increase in the fourth quarter over the same periods the previous year. For all of 2013, the company reported revenue of $4.8 billion, maintaining the leadership of online travel-agency market with Priceline Group.

Analysts think the performance was not a fluke. JPMorgan noted the revenue improvement was driven by “solid performance in Expedia’s core brands.” The company’s revenues are derived primarily from hotel-booking fees and digital advertising by airlines, car-rental companies, hotels, cruise lines, tourism boards and other travel businesses.

“In 2007 Expedia was ranked the fifth-largest travel retailer in the world and by 2012 it had climbed to No. 1,” said Michelle Grant, travel and tourism research manager at Euromonitor International, a London-based market-intelligence firm. “It’s had a very strong rise. It’s been able to grow against weaker competitors, like Travelocity and Orbitz.”

Expedia — which owns Hotwire, corporate travel agency Egencia, Chinese travel agency eLong and more than a half dozen other brands — credits strategic investments in technology and acquisitions for the financial boost.

“We have, over the course of the last couple of years, transitioned our technology platforms from platforms that were built in the late 1990s and early 2000s,” said Mark Okerstrom, chief financial officer. Instead of being able to add features and applications to platforms three or four times a year, for example, the company can release new features on a continuous basis.

Okerstrom said Expedia has about 40 to 50 test applications on its platform now, and users can vote with their clicks what features they like best.

“If we find something that works, we can deploy globally,” he said.

One example of an app is Things to Do, which is on the site. Enter a city and a date, and the applet will return a listing of available events, including tours, dining and music.

Platform upgrades

Expedia’s new platform infrastructure has also allowed the company to be a service provider to strategically selected companies. For example, Expedia hosts loyalty-redemption services for some banks, and last year struck a deal to host all the Travelocity websites in the U.S. and Canada.

“Travelocity will continue to market that brand,” Okerstrom said. “They will continue to have the finance and analytics organization, but everything else that they do will ultimately be to the aim of driving their users to a website that is actually sitting on top of the brand Expedia platform.”

Grant contends the Travelocity deal amounts to a bit more than that. “What you have now in the online travel space is two competitors — Expedia and Priceline,” noted Grant. “Travelocity basically admitted defeat by teaming up with Expedia.”

Priceline is rival

Priceline Group, which went public nine months before Expedia in 1999, includes,, Kayak and rental Based in Norwalk, Conn., Priceline has nearly 8,000 employees and provides online travel services in more than 190 countries.

For 2013, Priceline reported net income of $1.9 billion, up 35 percent over 2012, on gross bookings of $39.2 billion, up 38 percent.

Okerstrom declined to disclose how much Expedia invested in upgrading its platform infrastructure. He did note, however, that the majority of the company’s 14,750 employees are in Bellevue, while most of the physical infrastructure is at a server farm in Arizona.

“Since they started out as a technology company, it doesn’t surprise me that they are putting a lot of emphasis on that and it is a competitive advantage,” Grant said.

Going mobile

Another aspect of Expedia’s tech upgrade has been in developing mobile applications.

“We think mobile is a huge opportunity,” Okerstrom said. “It has gone from a theory to reality, and I think it is done so faster than we and everyone in e-commerce thought it would.”

Already, Okerstrom reports, Expedia brands have had more than 90 million downloads of their mobile applications and, in December, 20 percent of current transactions were taking place via mobile devices.

The mobile applications have delivered new capabilities to consumers. One application, for example, allows users to locate and book a hotel room from the road for check-in at midnight the same night. “That type of technology didn’t really exist before,” Okerstrom said.

Grant said spending on that technology is “necessary to capitalize on that shift to tablets and smartphones for bookings.”

Making acquisitions

One key benefit of the platform upgrades, says Okerstrom, is that “it also enables us to integrate partners very easily.” And the company has moved aggressively to acquire and integrate partners, most recently with the acquisition last March of the hotel search engine trivago.

“They all have their own specific strength,” said Okerstrom of Expedia’s broad array of brands. “We have really no brands that are directly head to head.”

For example, while the flagship Expedia brand offers multiple products — hotel rooms, car rentals, surfing lessons — offers just discounted hotel rooms.

Each strategy, says Okerstrom, “resonates with certain types of consumers.”

Another Expedia brand, Hotwire, follows yet another strategy by offering deeply discounted rooms “opaquely.” That is, the consumer knows the star rating and the general location of the hotel, but not the specific facility.

Riding out ups, downs

Expedia’s expansion through acquisitions gives it two major advantages. First, it can ride out ups and downs in the various travel markets.

For the past few years, for example, economic trends have resulted in poorer performance at Hotwire. That unit’s discounts depend on airlines, hotels and car-rental companies’ having lots of excess inventory to unload, Okerstrom said.

“When you are faced with an industry dynamic where things are pretty healthy in the air industry, occupancy levels are relatively high in hotels, and in the car industry you have had significant amount of consolidation, that makes it difficult for Hotwire to get copious amounts of excess inventory,” he said.

Preference program

Expedia’s expanding reach also gives it advantages of scale. One current example is the company’s new Expedia Traveler Preference Program, which allows consumers to pay in advance for a hotel room or at the end of their stay. That can be especially desirable for international travel when reservations are often made in advance and when currency fluctuations can make a big difference.

Of course, offering that choice means taking on the additional burden of managing credit-card transactions and assuming the risk losses if the currency depreciates.

“It is a part of our business,” said Okerstrom, adding that Expedia has extensive foreign-exchange hedging operations and the scale that allows the company to minimize the risk.

Okerstrom said the company is optimistic about the future, having faced the head winds brought on by the economic downturn in 2008.

“Travel is one of those industries that is pretty darn resilient,” he said. “Of course, there have been pockets of weakness in Europe, as obviously that region has had economic troubles.

“If you look at the United States specifically, the airline industry is healthier than it is ever been. Occupancy levels in hotels are nearing the peak of where you like to see them.”

Generally, Trefis, a corporate-analytics firm, agrees. Still, Trefis warns that Expedia faces competition from Priceline, as that company turns its focus increasingly toward U.S. markets.

And trouble can also come from unexpected directions. In late January, shares of Expedia slid 4.3 percent after a blogger made public a report showing the company’s online visibility falling significantly, possibly a result of actions taken by Google to punish companies that were gaming its search algorithms. Neither Google nor Expedia would comment on the issue.

Expedia stock closed at $74.20 Friday, down $1.01.

Grant says Expedia will need to keep developing its technological edge. “It is a very competitive market and there are a lot of people who like to invest in travel startups, and you see a lot of innovation coming from outside the industry,” he said. “To retain their own competitive advantage they really can’t be complacent.”

Patrick Marshall is a freelance writer in Seattle and a regular contributor to The Seattle Times.