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Expedia CFO on Google Relationship — The Positives and Negatives Balance Out

Skift Take

Google’s paid-search and product practices enable the big — like Expedia — to get bigger. So what’s not to like? Although other businesses that aren’t as well-positioned as Expedia and the Priceline Group undoubtably take a more critical view.

— Dennis Schaal

Expedia Inc. has actually benefitted from Google’s switch from 10 blue links to instant answers in the form Google Flights and Google Hotel ads and the relationship between Google and Expedia is “very instructive” and has “never been stronger,” according to the Expedia CFO.

Addressing investors at the Goldman Sachs Technology and Internet Conference in San Francisco Thursday, Expedia CFO Mark Okerstrom said Expedia participates as an advertiser in those metasearch features, adding “we do well.”

The downside, however, is that Google has “shrunk” free traffic (as it uber-monetizes the top, half-page or first screen of search results), he said. “It will be a headwind for us for a long time to come.”

In Expedia’s earnings call last week, CEO Dara Khosrowshahi said Google’s monetization efforts hamper Expedia’s desire to expand its HomeAway unit’s audience.

Overall, though, Okerstrom said yesterday, the positives and negatives balance out and Google is a “solid” channel for Expedia.

Okerstrom said Expedia’s spending in variable marketing channels like Google continue to grow faster than direct marketing, and that’s positive because it is “evidence of a growing business.”

Skift Research estimates that Expedia spent roughly $3 billion with Google in 2016, about a 20 percent increase over the previous year.

Many travel companies that don’t have Expedia’s scale would take a less positive view of the changes that Google has made to its search practices.

Blurring the Differences Among Lodging Types

On other matters, Okerstrom mentioned that Expedia has added about 20,000 properties, including some traditional lodging inventory, to HomeAway.com.

“We think it’s a big opportunity for us,” Okerstrom said.

That could be very advantageous to HomeAway and parent Expedia Inc., he said, arguing that eventually the distinction between alternative and traditional lodging will blur in the minds of consumers.

He argued that Airbnb hasn’t had a broad impact on Expedia’s business other than during “isolated instances” when there is a huge event in a particular city and Airbnb provides excess capacity when hotels fill up.

On the other hand, one could argue that Expedia might not have spent $3.9 billion to acquire HomeAway in 2015 were it not for the rise of Airbnb.

 

Tags: expedia, google

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