Expedia: Sluggish Growth Not Due To Direct Booking
Photo courtesy of Expedia
Expedia is taking a big mea culpa when it comes to their sluggish quarterly growth.
The online travel agent (OTA) is reporting only a 12 percent rise in dollar volume of room nights compared to 35 percent last year and is projecting a decrease of revenue-per-night over the course of 2016. Though the company was quick to point to plenty of other positive metrics, the fact remains: The company is not growing as fast as it has hoped in 2016.
The OTA was quick to blame themselves rather than competition, and in a conference call about the sluggish numbers, Chief executive Dara Khosrowshahi said:
“We haven’t seen any real correlation in our performance in chain-heavy markets versus chain-light markets. You would think that in a market that has lots of chains, you would see some commercial or performance degradation to the extent that inventory quality is lessening. But we haven’t seen any of that whatsoever….
“What we have seen is a shift of our bookings from some of the chains that are discounting to independents and chains that are not discounting. So there has certainly been a share shift, and that may be affecting Marriott average daily rates. The share shift, actually in an interesting way, is giving us a margin upside….”
Instead, the company points out that they have had some issues with integrating recent acquisition Orbitz, especially in the tech space. Overall, simply growing too fast and too out of control in the recent past, Expedia says, is slowing their current growth.
While Expedia is right to point out their average customer is brand agnostic and thus is unlikely to jump to direct booking, it’s possible that previous OTA customers who have stayed with big brands have been swayed by extensive direct booking pitches.
On the plus side, Expedia may not be growing as fast as they’d like, but they also reported a revenue increase of 32 percent year-over-year to a total of $2.1 billion. That, combined with the success of portfolio brands like HomeAway, CheapTickets, Trivago and now Orbitz means that Expedia is likely to continue pushing forward whether or not direct booking has become a real competitor.
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