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Despite stalled growth in China, Brazil and Russia, a wave of newly middle-class travelers from the BRICs and beyond will start visiting international destinations in the coming decades — dwarfing the numbers we’ve seen thus far.
Was the Expedia-Travelocity deal just a harbinger of things to come? Expedia thinks so and is looking for additional online travel agency partners who would consider outsourcing the hard stuff to Expedia.
Expedia Inc. isn’t satisfied with its ground-breaking deal to power Travelocity’s websites in the U.S. and Canada — Expedia wants more such deals.
“If there were more Travelocitys out there I think we’d be interested in that,” Mark Okerstrom, Expedia’s CFO, told analysts at the Goldman Sachs Technology and Internet Conference 2014 in San Francisco yesterday. “And, I think there are more opportunities going forward.”
Under the 8-year deal, Expedia handles just about all of the Travelocity business in North America, including technology and customer service, but not marketing. Travelocity gets access to Expedia’s hotel supply for Travelocity.com and Travelocity.ca, and receives a performance-based fee, with Expedia taking a good share of the spoils.
Okerstrom’s comments mean that Expedia is seeking other online travel agencies that want to essentially give in, and transition their hotel and air product to Expedia’s global platform.
Other candidates might include Travelocity’s LastMinute.com in Europe, which wasn’t part of the Expedia deal with Travelocity North America, and weaker online travel agencies such as Orbitz, which declined to comment about any such scenario.
Such a deal with Orbitz, which might trigger antitrust concerns, does not appear to be on the front burner, although there could be other online travel agencies around the world that might be candidates.
Expedia is feeling pretty good about itself these days as Okerstrom characterized the Expedia brand as “the only remaining full-service OTA that is truly global.”
In other words, Travelocity sold off its interests last year in Asia-Pacific and has basically ceded its North America operations to Expedia; Booking.com is slightly larger than Expedia, but focuses on hotels and lodging only, and the Orbitz Worldwide footprint, it can be argued, isn’t truly worldwide in terms of scale.
Okerstrom argues that Expedia’s global technology platform is attractive not only to suppliers such as hotels and airlines, but also to other online travel agencies that may desire an Expedia and Travelocity-like deal.
“Scale begets scale in this industry,” Okerstrom said.
Expedia Wants To Spend More With Google
On other subjects, Okerstrom said Google has been in involved in travel for a long time as an advertising vehicle, and hasn’t made any “transformational change in the travel industry.”
As long as Google stays out of transactions as a prime focus and remains essentially an advertising business and lead generator, then Expedia and Google will continue to have a fine relationship, Okerstrom said. [He didn’t mention the recent SEO penalty that Google levied against Expedia.]
Okerstrom said “It’s crazy [but] we are constantly looking at how we can spend more money with Google,” because of its efficiency as a way to acquire customers.
The TV Advertising Challenge
Okerstrom said the TV advertising market for online travel companies really heated up in 2013, and he expects a similar environment in 2014.
He said the challenge in TV advertising is not just to have great “creative” and optimum placements, but to see how good they are in the context of your competitors’ creative and placements.
Expedia’s hotel-metasearch company, Trivago, began TV advertising in the U.S. in 2013, and Okerstrom said you can expect to see a lot more of Trivago on the airwaves in 2014.
He said Trivago is winning share from Google and Trivago’s hotel metasearch competitors in every market that it operates in.