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Over the last year, Expedia Inc. has acquired Travelocity, Wotif, Orbitz Worldwide and soon HomeAway, and CFO Mark Okerstrom thinks Expedia has honed its mergers and acquisitions skills in the process and “can move incredibly, incredibly quickly” once it identifies a target.
Okerstrom talked about the secret sauce behind Expedia Inc.’s mergers and acquisitions skills at a recent investors conference, the RBC Capital Markets TMT Investor Conference November 10.
“Yes, I think our competencies have improved a few fold,” Okerstrom said during a question and answer session with RBC’s Mark Mahoney. “I think one, we view the mergers and acquisitions team and that function within Expedia as a real competency. We’re absolutely able to screen and identify targets very quickly. We know most everyone in the industry. We know what they are up to and when we decide to go after an acquisition, we can move incredibly, incredibly quickly.”
Several years ago when TripAdvisor was still part of the fold, Expedia didn’t do a lot of acquisitions but now it is getting really good at integrating companies, Okerstrom said.
“And secondly is our capabilities around integration have improved dramatically,” Okerstrom said. “When we were back in the day doing roll up around TripAdvisor, for example, we weren’t doing a lot of integration. It wasn’t really a core competency for us. But as we have done acquisitions like Travelocity, like Wotif and most recently, Orbitz, we’ve really developed some capabilities around integrating completely these businesses, both organizationally but also technologically.”
There is a technology factor at play behind the series of acquisitions, Okerstrom said, and that is the huge, multiyear effort that Expedia carried out to move its brands onto new technology platforms.
“Well, I think, firstly, we wanted to make sure that the core business was strong,” Okerstrom said. “This is not a situation where we set out to do grand roll up. This is a situation where we built an incredibly powerful asset, which is modern technology platforms in brand Expedia, modern technology platforms in Hotels.com, and that opened up a huge opportunity for us to do transactions, which were revenue accretive and had huge cost synergies associated with them as well. So it’s a byproduct of organic strength combined with opportunity and that’s added up to the activity.”
Asked which of the recent acquisitions would be most impactful to Expedia Inc., Okerstrom said he believes it will be Orbitz Worldwide. “I think it’s going to be Orbitz,” Okerstrom said. “It’s a big scale business. It’s a business that was doing $12 billion in gross bookings, it was doing — I think this year — we’ve said on a run rate 135 and we think there are very meaningful synergies that we can add on top of that.”
With the technology in place and the integration experience behind it, Expedia may not be finished after its latest bombshell, the $3.9 billion acquisition of HomeAway.
While Expedia had long been rumored to be interested in acquiring HomeAway, the timing was surprising because Expedia still has the integration of Orbitz Worldwide to get through.
But apparently Expedia management thinks it is getting so good at these integrations that it could handle more.
Now, let’s see if Expedia is done.