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Speaking at the PhoCusWright conference in Hollywood, Florida, yesterday, Khosrowshahi expressed no TripAdvisor seller’s remorse.
That’s capitalism for you.
Expedia, after all, took a majority stake in Germany’s Trivago, which like today’s TripAdvisor is a metasearch site, a little more than a year after the TripAdvisor spinoff.
Khosrowshahi explained that Expedia and TripAdvisor investors “are absolutely ecstatic about the value it [the spinoff] created.”
Expedia Inc. pre-spinoff was a $6.5 billion company, and the market cap of Expedia and TripAdvisor combined today is $21.6 billion, with TripAdvisor ($13.57 billion) being the larger of the two.
Khosrowshahi said his job is to create shareholder value and “not create strategic value.”
China Is An All-Out War
On other issues, Khosrowshahi said Expedia Inc.’s eLong unit is making gains on the largest player in China, namely Ctrip, and has taken market share for 10 consecutive quarters.
Expedia is aggressively spending in China to gain share, he said, adding that Expedia is not making money in China, “and that’s OK.”
“China right now is an all-out war,” Khosrowshahi said, referring to market activities that include heavy discounting, couponing — and, obviously, lots of offline and search engine marketing.
Oh That Booking.com
Khosrowshahi said Expedia Inc. has to execute better to compete with Booking.com, and that Expedia is adjusting its margins, particularly in emerging markets, in order to compete.
Still, he seems resigned for now to Expedia’s number two position globally.
“It is not a winner-take-all market,” Khosrowshahi said, adding that both the addressable online and mobile market is growing exponentially.
HomeAway as a Resort Destination Solution
Khosrowshahi also provided some insight into Expedia’s new partnership with vacation-rental provider HomeAway, with HomeAway properties to become available on Expedia.com on an experimental basis in 2014.
Khosrowshahi said online lookers convert at a higher rate into bookers for properties in urban destinations than in resort destinations, where HomeAway has strength.
He said Expedia.com will display HomeAway’s vacation rentals “and we’ll see what consumers think.”
Khosrowshahi, who is bullish about Airbnb-like apartment rentals, said he believes the HomeAway vacation rentals on Expedia.com will create some nice additive business.
Says Khosrowshahi: “I think it will be a nice incremental business. It will never be bigger than the hotel business.”