Business school students can probably debate this question endlessly and there would be merit in either position: Should smaller companies copy their larger rivals or vice versa? In the Google era, marketing power often wins the day — but differentiation still counts.
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With Uber CEO Dara Khosrowshahi, who headed Expedia for a dozen years, speaking at Skift Global Forum in the Big Apple in September, I went back to peruse my interview with him five years ago at that event —and I found a lot of wisdom in one particular portion.
In the sequence, which begins at 18:58 in the 2016 video [embedded below], there was banter about hardball and softball questions, including my asking Khosrowshahi in the softball-question category whether Booking Holdings people had called him about taking the-then-open CEO position over there.
“No they did not call me,” he quipped. “I would expect them to never call me.”
But then Khosrowshahi surprised me when he took the bait and actually answered my question about what rival Booking should be doing differently than what was in its playbook at the time, including potentially adding flights to Booking.com (now in progress) or going on an acquisition tear. Just imagine the dread among his public relations handlers when he weighed in on that one.
“So this is going to seem like a softball answer, but I’d say, nothing,” Khosrowshahi said. “Listen, they’ve got a great formula. I think you have to understand what makes you strong, what makes you different. They’ve been very very disciplined about how they run that company. You can’t argue with their success.”
“Disciplined” is a key word in that answer, and we’ll come back to it as it relates to the strategies of Expedia, Vrbo, Booking, and Airbnb.
“We are the smaller player,” Khosrowshahi said. “We’re pretty big, but we’re the smaller player compared to them, and we have to do something different. When you have a player who is bigger than you, for you to do exactly what they do is a recipe for death.”
It was his view that Expedia’s larger rival, Booking, should stay the course.
“So they have their strategy,” he said, referring to Booking. “They should stick to it, in my opinion. And, we have our strategy, and it’s different. And, we’ll try to stick to it.”
You can see these existential strategy questions playing out for corporations everyday in online travel and beyond.
To a great extent today, Expedia CEO Peter Kern’s Vrbo, with its relatively diminutive footprint when measured today against Airbnb, is mostly sticking with offering whole homes when it might easily be tempted to be undisciplined and copy Airbnb and start adding urban apartments.
Would that be a “recipe for death?” That’s the $100 billion question, but at least we can say that Vrbo knows who it is, and is keeping its head down —mostly — pursuing that strategy, for better or worse. Vrbo is, however, going beyond whole homes and opportunistically adding hotels in places like beach or resort areas because consumer demand exceeds whole-home supply.
Brian Chesky’s Airbnb faces similarly vexing issues. Until the onset of the pandemic erased Airbnb’s plans, the company was poised to become a little more like a traditional online travel agency, with a goal of adding flights and vastly increasing its roster of hotels. No, it wasn’t Airbnb’s intent to become a Booking Holdings clone, but with HotelTonight now in its portfolio, Airbnb was going to tilt in that direction.
It’s interesting to note that under the Khosrowshahi regime — and current CEO Kern was on the Expedia Group board for the whole ride — Expedia declined to mimic Booking Holdings’ buy of OpenTable with the acquisition of a restaurant reservations platform of its own. Expedia did test a partnership with Reserve, but avoided Booking’s until-now disastrous $2.6 billion overpriced expenditure for OpenTable.
Similarly, Expedia declined to parrot Tripadvisor and Booking, which bought Bokun and FareHarbor, respectively, and didn’t sign the papers to acquire a tours and activities connectivity platform of its own. Again, there’s ample room for debate on the wisdom or lack thereof in Expedia’s abstention.
It’s unclear who copied whom, but both Booking and Expedia tried out launching hotel-technology services and largely abandoned them.
Today, Booking.com, which rose to power based on its accommodations business, is seemingly unavoidably becoming a bit more like Expedia in adding flights, and strives to resemble Airbnb a bit more by digging into alternative accommodations.
Expedia’s Kern, meanwhile, knows there’s one aspect about Booking’s business that he’s ardently chasing — those big profit margins. And in a differentiator from Booking, Kern is directing Expedia to expand its business to business services, like its powering of American Express Travel, where it has a substantial advantage over Booking.
That’s the game plan — “do something different” — and survive to compete for another day.
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