Expedia
Expedia Group, Inc. is an American travel technology company headquartered in Seattle, Washington. It owns and operates a portfolio of online travel agencies and metasearch services including Expedia, Hotels.com, Vrbo, Travelocity, Hotwire, Orbitz, Ebookers, CheapTickets, CarRentals.com, Expedia Cruises, Wotif and Trivago, through which more than three million lodging properties and flights on over 500 airlines can be booked. It is listed on the Nasdaq under the symbol EXPE.
| Expedia Group, Inc. | |
|---|---|
| Type | Public |
| Traded as | Nasdaq: EXPE; S&P 500 component |
| Industry | Online travel, travel technology |
| Founded | October 1996 as a division of Microsoft; separated 1999 |
| Founder | Richard Barton |
| Headquarters | Seattle, Washington, United States |
| Area served | Worldwide |
| Key people | Peter Kern and subsequently Ariane Gorin (chief executive), Barry Diller (chairman and senior executive) |
| Services | Online travel booking, metasearch, travel technology, advertising |
| Revenue | Approximately US$13.7 billion (2024) |
| Employees | Approximately 16,500 |
| Website | expediagroup.com |
The name derives from a combination of exploration and speed. The company was among the first businesses to move the purchase of travel from telephone calls and high-street agencies onto the internet, and its history since has consisted largely of buying competitors as the sector consolidated and of periodic conflict with the hotels and airlines whose inventory it sells.
History
Microsoft division and separation, 1996 to 2005
Expedia began in October 1996 as a division of Microsoft, created under Richard Barton, who had joined the company as a product manager and had proposed that software for planning travel would be more useful delivered as an online service than as a CD-ROM. It launched as a website allowing customers to search airline schedules and fares and to book directly, a facility previously available only to travel agents through the Sabre and Amadeus reservation systems.
Microsoft separated the business as a public company in 1999 during the period in which it was disposing of consumer internet ventures that did not fit its software strategy. USA Networks Inc., the media company controlled by Barry Diller and later renamed IAC, acquired a controlling interest in 2001 and the remainder in 2003. IAC spun the company off again in August 2005 as Expedia, Inc., with Diller as chairman, a position he has held ever since and from which he has exercised an influence over the business greater than that of most non-executive chairmen.
Consolidation, 2005 to 2015
The decade after separation was one of acquisition. The company already owned Hotels.com, acquired by IAC in 2001 as Hotel Reservations Network, and Hotwire, an opaque discount site created by a consortium of airlines. It bought a controlling interest in the German metasearch engine Trivago in 2012 and increased it subsequently, acquired the Australian business Wotif in 2014, and in 2015 made two purchases that reshaped the market: Travelocity in January and Orbitz Worldwide in September for about US$1.3 billion, which together removed most of its remaining American competitors.
The same year it acquired HomeAway, the vacation rental marketplace, for approximately US$3.9 billion. HomeAway's principal brand, Vrbo, gave Expedia a position in private accommodation letting at the point when Airbnb was demonstrating that the category could be far larger than the industry had assumed. Integrating it proved difficult: HomeAway had operated as a listings service charging property owners an annual subscription, and converting it to a transactional model on which Expedia could take commission alienated a substantial portion of its supply.
In December 2011 Expedia had separated TripAdvisor, the review and metasearch business it had acquired in 2004, as an independent company, a demerger that reflected the divergence between selling travel and reviewing it and that created two companies whose subsequent fortunes differed considerably.
Expedia also bought a significant non-controlling interest in the Vancouver-based franchise CruiseShipCenters International in 2007, when that business had a hundred retail locations in Canada and booked a fifth of all Canadian cruise sales, and acquired it fully by March 2013. Renamed Expedia Cruises in 2020, it operated about 260 North American franchises in 2024 with several thousand vacation consultants, selling expedition and river cruises, land tours, safaris, resorts and insurance as well as ocean cruises, and is an unusual survival of the storefront travel agency within a company built to replace it.
Restructuring and the pandemic, 2016 to 2022
In February 2020 the company announced 3,000 redundancies, about 12 per cent of its workforce, following what Diller described as a disappointing 2019. Acting as executive chairman after the departure of the chief executive Mark Okerstrom and the chief financial officer, Diller said publicly that the company had become sclerotic and bloated and that its employees were all life and no work, remarks that were widely reported and that characterised the period.
The COVID-19 pandemic followed within weeks and removed almost all of the company's revenue. Global travel stopped, and an online travel agency, which takes a commission on transactions it does not itself fulfil, has very little revenue when no transactions occur and a very large obligation to process refunds for those already made. Expedia raised US$3.2 billion in emergency financing from Apollo and Silver Lake in April 2020 on terms that reflected the severity of its position, reduced headcount further and suspended its dividend.
Peter Kern, a board member, became chief executive in April 2020 and directed a simplification programme that consolidated the group's separate brand technology platforms onto shared infrastructure, on the reasoning that the company had spent fifteen years acquiring businesses without ever integrating them and was therefore operating a dozen versions of the same systems. The recovery in travel from 2021 was strong, and the company returned to profitability.
Recent history, 2023 to 2026
In 2023 Expedia launched One Key, a unified loyalty programme spanning Expedia, Hotels.com and Vrbo, replacing the separate schemes each brand had operated. The consolidation was commercially logical and was received poorly by customers of Hotels.com, whose previous programme had offered a free night after ten stays and was widely regarded as more generous than what replaced it.
In February 2024 the company announced a further reduction of about 1,500 positions. Ariane Gorin, who had led Expedia for Business, succeeded Peter Kern as chief executive in May 2024, with Kern moving to vice chairman.
In 2024 it introduced Travel Shops, allowing content creators and influencers to earn commission by recommending hotels and accommodation, and an artificial intelligence trip planning tool built into its applications. Both reflect the central strategic question facing the sector, which is whether travel discovery will continue to begin on a booking site, on a search engine, on a social platform or in a conversational assistant.
Business model
Expedia earns revenue principally as a merchant or agency intermediary. Under the merchant model it purchases room inventory at a negotiated rate and sells it to the customer at a marked-up price, retaining the difference. Under the agency model it takes a commission on a booking made directly with the supplier. It also earns advertising revenue, principally through Trivago and through sponsored placement within its own results, and licenses its booking technology and supply to other companies through Expedia Group Solutions, whose partners have included airlines, banks and retailers wishing to sell travel without building the infrastructure.
Commission rates charged to hotels have typically ranged between 15 and 25 per cent, and the relationship with suppliers is structurally adversarial. Hotels resent paying a substantial share of a booking's value to an intermediary that the customer would in principle have found anyway, and have campaigned for direct booking through loyalty programmes and rate guarantees. Expedia and Booking Holdings respond that they supply demand the hotel could not reach and bear the cost of acquiring it, which is largely paid to Google in search advertising.
That last point defines the economics of the industry. The online travel agencies are among the largest advertisers in the world, and a very substantial proportion of their revenue passes to Google to purchase the traffic on which the business depends. Google's own travel products, which place hotel and flight results directly in search pages, compete with the agencies while also being their principal supplier of customers, a dependency that has featured in regulatory complaints in Europe and in the American antitrust proceedings against Google.
Rate parity clauses, which require hotels not to offer lower prices on their own websites than through the agency, have been prohibited or restricted by competition authorities in France, Germany, Italy, Austria, Belgium and elsewhere, and the European Union's Digital Markets Act has further constrained them. Their removal has not visibly reduced the agencies' share of bookings.
Competition
The sector is dominated by two groups. Booking Holdings, whose principal brand Booking.com is far stronger in Europe and in the agency model, is substantially larger and more profitable than Expedia, and the gap between the two widened during the 2010s. Airbnb competes in private accommodation and has built a direct consumer relationship that the agencies lack. Trip.com Group dominates China. Google, Tripadvisor, Kayak, owned by Booking, and Skyscanner compete in metasearch. Hotel chains and airlines compete directly for the same bookings through their own channels and loyalty programmes.
Expedia's position is strongest in North America, in air travel, where it has a larger share than its rival, and in packaging, the combination of flights, accommodation and cars into a single transaction, which produces higher margins and which its systems handle better than most competitors'.
Criticism and legal issues
The company has been the subject of consumer complaints and regulatory action concerning drip pricing, in which mandatory fees are disclosed late in a booking process; the display of scarcity messages indicating limited availability; the accuracy of discount claims measured against reference prices; and the handling of refunds and cancellations, which became acute during the pandemic when suppliers, agencies and customers each sought to place the loss elsewhere.
Hotel associations and individual operators have challenged the use of their trademarks in search advertising, the ranking of properties according to commission paid rather than merit, and the requirement to pay for bookings the hotel considers it generated itself. Regulators in several jurisdictions have required clearer disclosure of how results are ranked, and European rules now oblige platforms to state whether payment affects placement.
Expedia has also been involved in litigation over the collection of local occupancy taxes, in which numerous American municipalities argued that the company should remit tax on the retail price it charged customers rather than on the wholesale rate it paid hotels. The cases produced inconsistent outcomes across jurisdictions over more than a decade, and several states legislated to resolve the question.
Corporate affairs
Barry Diller has been chairman since 2005 and, through his relationship with IAC and his personal shareholding, has exercised control disproportionate to his economic interest. He has intervened directly in management on several occasions, notably in 2019 and 2020, and his willingness to say publicly what he thinks of the company's performance is unusual among chairmen of large public companies.
Chief executives have included Dara Khosrowshahi from 2005 to 2017, who left to lead Uber and who presided over the acquisition programme that assembled the group; Mark Okerstrom from 2017 to 2019; Peter Kern from 2020 to 2024; and Ariane Gorin since 2024, the first woman to lead the company.
The headquarters moved from Bellevue to a waterfront campus in Seattle in 2019, a building programme begun in more expansive circumstances than those in which it was completed.