E-commerce isn't easy, but neither is building up a large audience to sell to. Facebook has a wealth of the latter, so even if it doesn't do a great job selling to its audience, it can still sell a ton of travel. On the other hand, many travel brands launched booking engines on Facebook several years ago and abandoned them for lack of use.
Expedia Inc.’s chief executive officer is expecting more company in the world of online travel booking, predicting Facebook Inc. will follow Google into the business.
Facebook is already working on e-commerce, letting users save their payment information on the social media giant’s site and purchase products they see advertised there directly through “buy” buttons. It’s just a matter of time before that turns into booking vacations too, Expedia CEO Dara Khosrowshahi said in a May 11 interview at the company’s headquarters in Bellevue, Washington.
“We do think that travel is such a significant portion of e-commerce that Facebook will have a travel-specific product,” he said.
A Facebook spokesman declined to comment.
Expedia and competitors like Priceline Group Inc. have grown into massive companies over the last two decades by taking a cut from the hotels and flights travelers book on their websites. Google now lets users book trips and lodging directly through its search engine, a feature the U.S. Justice Department cited when it approved Expedia’s takeover of Orbitz last year, saying Google was increasing competition.
Risks & Opportunities
The development would bring both risks and opportunities for Expedia and rivals, Khosrowshahi said. The online travel agents could use the social network as a platform to sell their own products, but so could other entities.
“Social as a channel, Facebook as a channel, none of us have quite figured it out,” he said. “If there’s a player that figures out social in a big-scale way, that’s a player that is going to steal share, over us and the other traditional players.”
For years, hotel companies have tried to find ways to drive more sales through their own websites so they can avoid the premiums paid to the likes of Priceline and Expedia when customers book lodgings and trips through them.
If Facebook pushes into travel booking it will most likely follow Google’s lead, building a tool that lets hotel chains and online travel agents show up in search results on the social network, Dan Wasiolek, an analyst with Morningstar Inc., said in an interview. It’s a system that doesn’t necessarily give either group a distinct advantage, he said.
“I don’t see one side benefiting more than the other here, it’s just another way to reach customers,” he said. “If you have good content, which I think Expedia and Priceline do, they should be fine.”
Facebook has already begun playing in the travel space, with a new product that allows hotels and online travel agents to advertise directly to Facebook users who have been talking about upcoming trips.
“This new targeted advertising platform in theory is supposed to offer a better way to target travelers when they’re planning a trip and when they’re in the destination,” Henry Harteveldt, founder of the travel industry research firm Atmosphere Research Group, said in an interview.
Travel companies including Hyatt Hotels Corp. and Air France-KLM are using Facebook’s Messenger application to talk to customers. So is Expedia, said John Morrey, vice president and general manager of Expedia U.S. That’s another area that Facebook could expand its presence in, Harteveldt said, either by getting more companies to do business on Messenger or building its own booking tool in the app.
Open to Acquisitions
Expedia, which celebrated its 20th anniversary last week, went on a $6 billion acquisition spree in 2015 by buying Orbitz and vacation rental company HomeAway. Now, Expedia’s focus is on integrating those two companies, but it’s still open to smaller acquisitions if they make sense, Chief Financial Officer Mark Okerstrom said.
One area of interest is activity-booking. Expedia is already working on building up an inventory of activities and attractions like museum tickets and walking tours that travelers could book along with their flights, hotels and rental cars. Startups like GetYourGuide GmbH, Vayable Inc. and Peek Travel Inc. have raised venture capital for their own tour-booking websites and applications.
“There actually are a few interesting startups that are doing interesting things in the space,” Okerstrom said. “We’re always on the lookout for opportunities where we see something that gets traction to either invest in them or to acquire.”
©2016 Bloomberg L.P.
This article was written by Gerrit De Vynck from Bloomberg and was legally licensed through the NewsCred publisher network.
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Photo credit: Dara Khosrowshahi, CEO of Expedia, speaking at the World Travel and Tourism Conference in Dallas, Texas in April 2016. WTTC / Flickr