Source: The Evening Standard
Author: James Ashton
Never mind Tech City. On the fringes of Islington, at the other end of City Road from Old Street’s dotcom hub, another party is going on. In an imposing grey building that used to be a BT telephone exchange, the champagne is flowing and the canapes are being passed around. The mini scotch egg halves are rather good.
What’s the occasion? In the midst of a recession, Expedia, the website that profits from people being bitten by the travel bug, is putting down fresh roots.
The floor is festooned with the kind of dotcom accoutrements you imagine have been in storage for a decade: several red telephone boxes, wacky slogans painted on the wall (“up, up and away”) and meeting rooms decorated to reflect top destinations such as Liverpool (The Beatles), London (tube maps) and Paris (Moulin Rouge).
Weaving in between the revellers, most of them partners from hotel and travel groups and a handful of the 700-strong staff who haven’t been dragged back to their desks yet, is Dara Khosrowshahi, Expedia’s chief executive, in town to mark the new London office opening.
“I think it’s our best office frankly in the world now,” he says, glancing round. “The work space, it’s spectacular. The only negative thing we’ve had is that the lights turn off too soon in the men’s loo.”
Cool and unflappable, with chiselled features and thinning on top, Iranian-born Khosrowshahi isn’t a bad advert for Expedia, which lays claim to being the largest travel company in the world. Not only did he last jet in from Seattle to London only two weeks earlier, but he loves to test out the hotels his website offers customers, particularly the luxury ones.
“The place I’m staying at happens to be top-end, the Renaissance in St Pancras,” he says.
“It’s new, it’s beautiful. I just walk in here in the morning, it’s 15 minutes, I can get some fresh air.” Khosrowshahi, 43, isn’t the only one heading to London this year. Some 70 percent of the bookings Expedia takes for the capital are already from outside the country, and thanks to the Olympics and Diamond Jubilee, interest has risen sharply. Search volumes for London coming out of Russia are up 400 percent on a year ago. Brazil, Colombia and Uruguay are up too. After the searches come the bookings, he predicts confidently.
“London is really healthy as far as a destination goes,” Khosrowshahi says, adding that Beijing, Singapore and Hong Kong are also having good years.
Expedia is pretty healthy too. The Nasdaq-listed company, which has a $6 billion (pounds sterling 3.9 billion) stock market value and includes brands Hotels.com and Egencia for corporate customers, saw profits rise 12 percent last year to $472 million.
Khosrowshahi is firmly on the growth path as consumers seek better deals from the 80,000 hotels and 450 airlines he aggregates business for. “The travel market in Europe is larger than that of the US and it’s quite fragmented so an online player like us can add a lot of value to consumers.
“We have a goal for the company to grow to $40 billion (from just under $30 billion now) in gross bookings and Europe is absolutely key to getting to that target for us,” he says.
Didn’t anyone tell him about the eurozone crisis before he jumped on the plane to come over? “We found that travel, especially online travel, has been quite resistant to economic cycles. Consumers may put off buying a car but they don’t put off buying a vacation. We see an increase of interest with consumers during difficult times which allows us to gain share in a market place so we view this as an opportunity to the extent that you take a long-term view of the business.”
Set up by Microsoft, Expedia has long been controlled by veteran digital dealmaker Barry Diller, who is married to fashion designer Diane von Furstenberg. His other investments include dating website Match.com and search service Ask.com.
Khosrowshahi first worked for Diller as an investment banker at boutique media adviser Allen & Co, but was plucked to join his empire, that once straddled Ticketmaster and a home shopping network, in 1998.
“Barry has a very clear view of where he wants to go,” he says. “He’s got the best bullshit meter that I’ve seen in ages. He just zeros in on the issue and the great thing is he’s interested in getting to the right answer. Much more often than not he does.”
As a trusted lieutenant, he was tapped to lead Expedia when it was being spun off from IAC/InterActiveCorp in 2005. Diller, plus his proxy support, still controls 63 percent of the company. For someone who exhibits an air of restlessness, Khosrowshahi has been remarkably loyal ever since.
How he made it to America is an amazing story. The nine-year-old left Tehran with his family for a holiday but the revolution that rocked his country that year meant he never returned.
“We went to France to let things settle down and things still haven’t settled down,” he says simply. “Maybe one day we’ll go back.”
Though his family eventually settled in a nice part of New York, you could say he’s been on holiday ever since. In truth, he feels right at home as part of a small club of American internet executives with Iranian roots that includes Salar Kamangar at YouTube and Ebay founder Pierre Omidyar.
Khosrowshahi has a front-row seat for how technology is changing his industry. Of consumers that make a hotel booking on their smartphone, 70 percent are booking somewhere to stay that night. “These are people who maybe once drove into town in need of a hotel, maybe they would look around for a sign. They’re now picking up their phone and finding hotels.”
So where’s the competition? There are the traditional travel agents of course, but Khosrowshahi cites Priceline.com, which has a subsidiary called booking.com. “They’re building as we’re building a global infrastructure. They’re doing the same thing. But it’s a trillion dollar worldwide market, so there’s room for many more.”
He feels less threatened by Lastminute.com, which he regards as “more of a local brand”.
The worry might be that someone in the holiday industry can never really take a rest, but Khosrowshahi doesn’t seem overly concerned.
“I think we’re selling the best product that you could possibly sell, and you get to meet incredible people from all over the world. To me, it gets my passion going and keeps me pretty darn happy.”
LIFE AND TIMES
- 1991 Allen & Co associate, rising to vice-president
- 1998 USA Networks (later IAC) strategic planning vice-president
- 2002 IAC/InterActiveCorp chief financial officer
- 2005 Expedia chief executive
Separated from wife, two children. Relaxes by working out in the gym and playing computer games
“What Barry Diller told me is to follow your passion and follow your curiosity.”