Hotwire Needs to Pivot Toward Last-Minute and Mobile, Expedia CEO says

Expedia Inc. CEO Dara Khosrowshahi concedes that 2013 has been a “reset year” for its Hotwire business, and the discount site needs to pivot to become more last-minute and more mobile-oriented.

“Hotwire does need to pivot some of its dev spend [development spend], some of its design to be a smarter mobile product,” said Khosrowshahi September 10 at the Deutsche Bank Technology Conference in Las Vegas.

Hotwire’s performance disappointed in the first quarter, got worse in the second quarter, and now has stabilized under pressure from an improving economy (it’s harder for opaque sites to get supply in these circumstances), car rental consolidation and a more aggressive Priceline and its “copycat” Express Deals, Khosrowshahi said.

Khosrowshahi said Hotwire, which brought in a new president, Henrik Kjellberg, several weeks ago, will compete more directly against Priceline and apply “better tactical management.”

And Hotwire, with its deep discounts, will privot more toward last-minute offers and mobile, Khosrowshahi said, adding that Hotwire, with design changes, would be perfect fit for mobile.

Khosrowshahi didn’t provide additional details about the pivot, but it seems to have a HotelTonight-ish tinge.

Travelocity Deal

On other issues, the Expedia CEO argued that its recently announced Travelocity deal, in which Expedia will control Travelocity’s supplier relationships and power its North America sites, makes Expedia “more valuable for supplier partners.”

Khosrowshahi said the “early take” from some of Expedia’s supplier partners is that they are “pretty happy” about the Travelocity agreement as they will be getting wider distribution.

You can be assured, though, that there are plenty of hoteliers who are very wary about Expedia getting even more powerful through the Travelocity agreement, which is slated to be implemented sometime in 2014.

Metasearch’s Ascent

Khosrowshahi said the metasearch channel in general is growing faster than any other channel, and Expedia plans to increase its spending in Kayak (owned by Priceline), Google and Trivago, which Expedia controls.

“The meta channel can grow and thrive” and online travel agencies can grow along with it as long as the return on investment is good, and a healthy number of newly acquired customers come back directly to the OTA the next time around, he said.

In that regard, Khosrowshahi said TripAdvisor is a very important marketing vehicle for Expedia, although TripAdvisor’s switch to hotel metasearch from pop-up windows hasn’t worked out for Expedia to date.

Expedia has seen a higher percentage of lookers turning into bookers from TripAdvisor since the switch to metasearch, but traffic decreased substantially.

“The net was pretty significantly negative for us at the time,” Khosrowshahi said.

Expedia isn’t considering dropping out of TripAdvisor, though, as Expedia views TripAdvisor as “a very important channel,” Khosrowshahi said.

Expedia is currently studying its data on TripAdvisor, figuring out how to maximize return on investment, and hopes to have “better news” about it all in the third quarter, Khosrowshahi said.