Skift Take

An Expedia acquisition of Thomas Cook? While problematic on many fronts, including buying all of those offline agents, it isn't out of the question. Consider that Expedia would gain access to a customer base in Europe that it hardly touches. Expedia's Barry Diller has made a ton of acquisitions. He and Okerstrom are hardly done yet.

There’s been some sentiment that Expedia Group is in an internally focused phase, digging in on expanding its hotel inventory, planting deeper roots globally, and working out the kinks in integrating its 2015 acquisition of HomeAway rather than going out and looking for a sexy, big merger.

But whether it’s trying to buy Thomas Cook in a partner-then-buy scenario like Expedia did with SilverRail, or pulling the trigger and acquiring Latin America’s Despegar, where Expedia is a minority investor, deal-making is never a taboo subject at company headquarters.

Asked at the Skift Global Forum last month if Expedia was interested in buying Thomas Cook and what the company’s attitude toward acquisitions is these days, Expedia Group CEO Mark Okerstrom said mergers and acquisitions will always be part of the plan.

“It’s in the DNA,” Okerstrom said. “We’re always going to look at stuff.”

[You can view the Skift Global Forum videos here.]

Okerstrom pointed out that he headed mergers and acquisitions under the Dara Khosrowshahi reign at Expedia over the past dozen years or so.

“Whether we need to buy Thomas Cook or any other player to augment some consumer segment that we can’t get at … Listen, all this stuff is on the table, but our partnership with Thomas Cook is really about us externalizing the technology and centralizing the benefits of the platform to an iconic brand which Europeans love,” Okerstrom said.

Thomas Cook, a partner, currently uses an Expedia API for lodging inventory access.

Asked about Okerstrom’s comments, a Thomas Cook spokesman declined to comment.

Okerstrom said he respects what Despegar is doing in Latin America, but also wants to expand his Expedia and brands in the region.

“Listen, we have a minority position in Despegar, as you know,” Okerstrom said. “We’re on their board. We’ve got a great relationship on the supply part of the business. We’re also building big businesses in and Expedia in Latin America.”

Okerstrom added that “at some point, if the time is perfect and the price is perfect, we would look at it (buying Despegar). But we’re only going to do something if it’s additive to the platform. Again, we really believe in these global brands that we’ve got, Expedia and, particularly, HomeAway, so we don’t need to buy anything.”

Homesharing business models

Meanwhile, on the homesharing front, Airbnb has drawn a lot of publicity for charging hosts and hotels a mere 3-5 percent commission while Expedia and charge much more. The take rates, or the full amount collected, though, when adding in traveler fees on the part of Expedia/HomeAway and Airbnb, are fairly similar, around 15 percent, among the parties.

Neither Okerstrom of Expedia or Booking Holdings CEO Glenn Fogel, who likewise appeared on stage at the Skift Global Forum, seemed particularly concerned, though, about Airbnb’s low commissions.

Okerstrom acknowledged that the business model for homesharing will evolve, and Expedia has the flexibility to respond flexibly and accordingly.

“There are consumer fees,” Okerstrom said. “There are supplier fees, and our solution to it is, we’ve got both. So, we’re able to monetize whatever way the customer is willing to pay, or the supplier is willing to pay.”

He noted that a consumer might want be willing to pay a relatively high fee to rent a one-of-a-kind home in Hawaii, but not as much for an apartment where there are 100 other similar units on property.

“So, our approach has been, let’s have a flexible model and we can adapt it how the marketplace needs,” Okerstrom said.

Okerstrom said business models will evolve. “Whether the supplier pays you or the consumer pays you, in the end, it doesn’t matter,” he said.

Fogel of Booking Holdings, which doesn’t currently charge travelers a fee, argued that most of the parties end up generating roughly the same amount of money for alternative lodging bookings, but a more important factor is how much demand can a platform bring to partners.

“When you have demand, suppliers will want to do business with you,” Fogel said. “We believe we are providing a very fair price building a good long-term friendly relationship. I don’t worry too much about somebody trying to do some sort of game. Well, we’ll charge three percent here, or 15 percent there. Not going to worry about that.”

Fogel said price is extremely important, but added that travelers will also consider the convenience factor when choosing where to book a hotel or home.

“The fact that we do everything in 40-something languages,” Fogel said. “When you have a problem, maybe you speak a second language. Let’s say English is your second language and you can get by on it, but you happen to speak Catalan as your primary language and you’ve got customer service in Catalan, you would spend a little bit more because that makes it so much more convenient, and easy if something were to go wrong. That’s one of the things and, having that 47 languages 24/7.”

It’s clear that the homesharing sector — and it’s business models — will undergo many twists and turns as it matures.

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Tags: airbnb,, despegar, expedia, homesharing, m&a, mergers and acquisitions, sgf2018, thomas cook

Photo credit: Expedia Group CEO Mark Okerstrom (right) won't rule out acquisitions. Skift Executive Editor Dennis Schaal interview Okerstrom at the Skift Global Forum September 28, 2018. Skift

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