As Expedia turns 20, its focus is on expansion: by looking overseas, by making more acquisitions and by sharpening its mobile product.
Expedia CEO Dara Khosrowshahi thinks the travel industry is moving back to the model of customers visiting a travel agent. A digital travel agent, that is.
As the Bellevue online-travel company turns 20, it is still looking for how it can change the way people shop for travel options — developing personalization technology, for instance, that learns what types of hotels and flights a customer prefers and then showing similar results. In other words, a silent, online travel agent.
“As we understand what your habits are, where you stay, we can show you hotels and/or flights that interest people like you,” Khosrowshahi said Wednesday from his Bellevue office with a stunning westward view of Seattle, the company’s future home.
Expedia at 20
CEO: Dara Khosrowshahi
2015 revenue: $6.7 billion
2015 profit: $764. 5 million
Employees: 18,000 global, including 3,000 in Puget Sound region
Expedia announced last year it would move its headquarters to the former Amgen campus on Seattle’s waterfront by late 2018. The company, which has 18,000 employees globally, plans to house about 4,500 people at the campus.
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Expedia will add the employees to its 3,000-person headquarters over the next 2½ years, part of its larger plan to continue its booming growth.
Meanwhile, the company continues to expand and grow.
It scooped up four big companies during 2015 in deals worth more than $6 billion, including $1.6 billion for rival Orbitz and $3.9 billion for HomeAway, an Airbnb competitor. Vacation apartments and homes are in the same position independent hotels were 15 years ago, Khosrowshahi said, and Expedia plans to help them get business.
The company also absorbed rival Travelocity earlier in the year, solidifying its leading position in the online-travel industry.
It is still outpaced globally by Priceline, which owns brands such as Kayak and Booking.com.
The majority of Expedia’s business, about two-thirds, is centered in the U.S. It’s time for that to change, Khosrowshahi said. The company is working to flip that around, deriving two-thirds of its business from outside the U.S.
“We don’t necessarily think, ‘Hey, it’s us against Priceline’; we think it’s us bringing people online and opening the world up to more and more consumers out there,” he said.
That means Expedia’s aggressive expansion, now focused in Europe, Asia and Latin America, will continue. Much of the expansion will likely fit in to Expedia’s existing strategy: determine which companies are doing well, and buy them to combine resources.
Expedia has learned over time, said Chief Financial Officer Mark Okerstrom, that customers are loyal to sites they use to shop for hotels and flights. So much so that it makes sense to keep individual brands operating under their own banner, while sharing back-end resources and technology.
The process of bringing on new brands isn’t necessarily easy, he said, but the company has become efficient at it over time.
Okerstrom expects Expedia’s acquisition strategy to continue as it works on international expansion (though $6 billion in annual merger-and-acquisition deals won’t likely happen again soon).
“It’s in our DNA,” he said. “It would be hard not to.”
First came the Internet, then came mobile. That’s how John Morrey, Expedia.com vice president and general manager, describes the shifting technology.
More than 40 percent of Expedia’s visitors view travel sites from a mobile device, and among some brands that number is more than 50 percent. Expedia employees are figuring out ways to make travel easily bookable on the smaller screens, a task that generally involves showing customers what they need to see, and nothing else.
In a lab in Expedia’s massive Bellevue headquarters, user-experience engineers study what information customers want to see online by studying their emotions.
Customers hooked up to sensors on their forehead and cheeks sit behind a one-way mirror and search for tickets on Expedia.com. They are actual customers planning trips.
Designers in the next room study the customers’ tension and smile lines to see what features work and which ones are confusing. The research, which started about three years ago, has led to several changes on Expedia’s sites, including automatically saving customer’s past searches and allowing them to delete trips they no longer consider relevant.
Finding the newest technical ways to connect with customers is always at the forefront of Expedia, Okerstrom said.
The company is focusing on personalizing travel results and introducing social-media and messaging features to reach a broader range of customers.
More than 50 percent of the global travel business now happens online, said Khosrowshahi, the chief executive officer.
“It looks like it just keeps going,” he said. “When will it stop? Will it be 80 or 90 percent? I don’t know. But that’s good for us.”
Expedia reported last month that its revenue grew 39 percent during its first quarter to $1.9 billion, crushing analysts’ expectations.