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Expedia Inc.’s new CEO Mark Okerstrom thinks the emergence of artificial intelligence, voice-based digital assistants, and chatbots could provide the fragmentation that would weaken Google’s dominance in online travel advertising.
Okerstrom, in a phone interview with Skift on Wednesday, said Expedia is actively working with Amazon, Microsoft, Apple, and Facebook on the evolution of travel search, and is “very interested” in collaborating with all of these players on travel applications or partnerships.
Unlike the early days of online travel when portals such as AOL Travel, Yahoo Travel, and the Microsoft Network became must-have partnerships, Okerstrom said it is too early to tell if any of the major players would do exclusive travel deals. He said Expedia would be an attractive partner because of its full range of flights, lodging and cars, but also because the company has the pricing and customer service capabilities.
Companies such as the Priceline Group are undoubtably having similar conversations with Amazon, Google, Microsoft, Facebook, and Apple.
The evolution of mobile, artificial intelligence, voice search, and messaging chatbots could provide increased fragmentation today, and that would be a positive for Expedia, he said, as it would break Google’s hold on travel advertising.
The Mergers and Acquisitions Environment
We mentioned the sometimes-wild merger-and-acquisitions talk and rumors — the possibility of Uber buying Hotel Tonight or Amazon acquiring one of the big online travel agencies — underway since then-Expedia CEO Dara Khosrowshahi left for Uber. Okerstrom slid into the CEO office from his CFO position at Expedia at the beginning of September to replace his predecessor.
Asked whether the travel industry is poised for a repeat of the merger frenzy of 2015, Okerstrom said it’s hard to predict “but never say never.” He thinks, though, that companies will be much more internally focused.
During that period, Expedia bought Travelocity, Orbitz Worldwide, and HomeAway, while Ctrip purchased Qunar and eLong, among other buys by both companies.
“I think of the last five years as deal-guy heaven,” said Okerstrom, who was a key player in all of Expedia’s recent acquisitions.
It was an attractive climate for Expedia, Okerstrom said, because the company had strong organic growth, and could leverage its balance sheet and technology assets to make the deals it did.
In that regard, Okerstrom doesn’t see Expedia’s recent deal with Thomas Cook to provide hotel sourcing and selling as necessarily a repeat of the the SilverRail pattern, where Expedia partnered with the rail provider in 2016 and acquired it this year.
The SilverRail deal was unique, he said, because SilverRail had the technology to get really deep into rail distribution. Thomas Cook’s “technology is dated, compared to ours,” Okerstrom said, adding that the tour operator will be the first major player to be integrated into the new Expedia partner platform.
What About Trivago and Priceline?
The Priceline Group has seemingly been downsizing its spending on the Expedia-controlled Trivago hotel-metasearch platform, and Trivago recently lowered its financial guidance.
Okerstrom wouldn’t comment on Priceline’s actions directly, but noted that Trivago this year made bidding platform changes, such as taking into account an advertiser’s landing-page quality.
“I wouldn’t take the last nine months as an indicator of the future for Trivago,” Okerstrom said, noting that there has been similar disruption during transition periods in the past in metasearch, such as when TripAdvisor abandoned pop-up advertising to a great degree, and Google introduced Hotel Price Ads.
Hello Airbnb — Make Room for HomeAway?
Okerstrom said Expedia was currently doing planning for 2018, and he left open the possibility that Expedia might not reach its target for getting $350 million in earnings before interest, taxes, depreciation, and amortization out of its HomeAway unit.
He said Expedia will look at the $350 million target and would raise it if HomeAway’s business exceeded expectations and would lower it if Expedia decided to make larger investments instead.
Asked whether Airbnb is sucking the air out of HomeAway in terms of buzz and reach, Okerstrom said he’s “confident the opportunity (for Expedia) is absolutely large.”
“There’s always room for number 2,” he said.
Okerstrom said the key for HomeAway’s expansion would be providing consumers with an engaging customer experience in its websites and apps, and on the supply side getting compelling inventory.
“That’s the path we’re on,” he said.
The Wild Transition
Okerstrom said his sudden ascension to the CEO suite would come with a learning curve on his part, but he doesn’t see it as a distraction. It is not a matter of his having to learn parts of the business he isn’t up to speed on; instead, Okerstrom said, the learning curve would revolve around how can he be the most effective in his new role.
Asked what kind of counsel he’s getting from Expedia chairman and controlling shareholder Barry Diller, Okerstrom said the advice is: “Do it better and faster.”