Expedia Inc.: Company Strategy & Performance Analysis
Expedia, Inc. (Expedia) is an online travel company. Through its portfolio of travel brands, the company provides major hotels, airlines, packages, rental cars, cruises and destination activities worldwide. The company offers online travel services under various brands including Expedia.com, Hotels.com, Hotwire.com, Orbitz Worldwide, Travelocity, Expedia Affiliate Network, HomeAway, Egencia, Trivago GmbH, Venere.com, Wotif Group, CarRentals.com, Expedia Local Expert, Expedia CruiseShipCenters and Classic Vacations.
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Robust market position enabling improvements on its gross bookings
Expedia provides online travel services for business and leisure travellers worldwide. Its travel products and services provide access to over 350,000 properties and 1.2 million vacation rental services across 200 countries, 500 airlines, packages, car rentals, cruises and, destination services and activities. In 2016, the company witnessed more than 600 million monthly site visits. The company caters to over 75 countries worldwide offering 1.5 million lodging options for travellers. A robust market position coupled with continuous initiatives has enabled the company to improve its gross booking significantly over the years.
Declining operational efficiency affecting margins
The company’s higher cost structure led to the decline in operating income. The company’s operating expenses stood at US$8,324.0 million in 2016 as compared to US$5,749.9 million in 2015, indicating an increase of 44.8%. The operating costs as a percentage of sales increased from 86.2% in 2015 to 94.8% in 2016. This has affected the profitability indicators.
Technology initiatives to drive growth
The company has been continuously undertaking technology initiatives to drive growth. In February 2016, Egencia, the business travel company of Expedia, plans to launch a portfolio of expense management products for the modern business traveller. Through this product, travellers can consolidate receipts and credit card transactions directly in Egencia, and then store them in one-click into their expense system. The company uses its mobile apps to offer better services to its customers.