Australia key to Expedia's global strategy
Online travel giant Expedia has sets its sights on capturing more of the lucrative Chinese travel market, and Australia looks set to play a key role in its strategy.
“Originally we entered Australia because it was such a strong outbound market to the US. That remains true but the rise of the Asian middle class, and especially the China traveller, means Australia as an inbound market has become much more important, much more interesting from a volume and profitability basis,” Expedia’s global chief executive Dara Khosrowshahi told The Australian in an interview.
“Australia is really performing well, inbound volume is up over 50 per cent on a year-on-year basis,” he said.
A focus on the outbound Chinese market has seen the $22 billion Nasdaq-listed group consider launching Expedia in China, though no firm plans have been decided as yet.
“Right now we’re looking at building our presence in China through hotels.com, we’re looking at launching Expedia [in China], and use Ctrip to build the business in the country,” Mr Khosrowshahi said.
Mr Khosrowshahi also outlined Expedia’s plans for local online travel agent Wotif, which it acquired for $703 million last year.
“I don’t think we have yet fully realised the potential at Wotif. But the two brands position nicely together. While Expedia is outbound-focused, Wotif is much more about domestic travel.”
After “stabilising” the business, the group is looking to grow the brand.
“We’re putting some serious money into marketing [Wotif] and we think we’re going to see a revitalised brand going forward,” CFO Mark Okerstrom told The Australian.
“We’d be disappointed if the Wotif brand didn’t grow organically,” he said.
Wotif is due to launch a new marketing campaign next week across TV, radio and online.
Meanwhile, Mr Khosrowshahi said the business was weathering the impact of the lower Australian dollar well.
“It is a negative, but in the end for us, we have such a strong US business and the US business is making up for some of the currency weakness outside. And the strong US dollar allows us to invest more aggressively abroad.”
Expedia is hoping that the weaker Australian dollar will boost its domestic business via Wotif.
“The timing was great. We’ve now got a much stronger Australian domestic business at a time when Australians are staying closer to home. We have access to a broader selection of hotels than we’ve ever had before, which is great for our inbound travellers as well,” Mr Okerstrom said.
Alongside the acquisition of Wotif, Expedia has been on somewhat of a buying spree recently. Earlier this year it acquired US group Travelocity, and last month it completed the acquisition of US-based Orbitz Worldwide for $US1.3 billion.
Commenting on growth plans Mr Okerstrom said there would likely be more acquisitions down the line.
“The strategy is to grow organically and when we find high-quality assets like Wotif and the fantastic brand they built in Australia we add that to the portfolio where it makes sense.
“We’ve been pretty busy recently so we’ve got our hands full right now but I think on a go-forward basis I think you’ll see us do more acquisitions in the future,” Mr Okerstrom said.
But Mr Khosrowshahi said nothing in Australia had sparked the group’s interest since Wotif.
“We see nothing interesting in Australia, no,” Dara said.
Commenting on the ACCC’s review into its pricing practises, Mr Khosrowshahi said Expedia was concerned.
“Any time there’s significant change there’s going to be some people who embrace the change and others who are against the change. So it’s not a surprise that there are some players who don’t like what we bring or how fast we’re growing.”
Expedia and its biggest rival Priceline, the owner of Booking.com and Agoda.com, control about 85 per cent of the online booking market for hotels in Australia and have come under criticism for insisting hotels sign up to “price parity” clauses that prohibit them from offering lower prices to consumers who book directly with the hotel.
The reporter travelled to Sydney courtesy of Expedia.
Source: The Australian, Cliona O'Dowd, 7th October 2015
Originally published as: Australia key to Expedia's global strategy
