Expedia CEO expects Facebook to join online travel booking market

TORONTO — Expedia’s CEO is expecting more company in the world of online travel booking, predicting Facebook will follow Google into the business.

Facebook is already working on e-commerce, letting users save their payment information on the social media giant’s site and purchase products they see advertised there directly through “buy” buttons. It is just a matter of time before that also turns into booking holidays, said Expedia CEO Dara Khosrowshahi in a May 11 interview at the company’s headquarters in Bellevue, Washington.

“We do think that travel is such a significant portion of e-commerce that Facebook will have a travel-specific product,” he said.

A Facebook spokesman declined to comment.

Expedia and competitors such as Priceline Group have grown into massive companies over the last two decades by taking a cut from the hotels and flights travellers book on their websites. Google now lets users book trips and lodging directly through its search engine, a feature the United States Justice Department cited when it approved Expedia’s takeover of Orbitz last year, saying Google was increasing competition.

RISKS AND OPPORTUNITIES

The development would bring both risks and opportunities for Expedia and rivals, said Mr Khosrowshahi. The online travel agents could use the social network as a platform to sell their own products, but so could other entities.

“Social as a channel, Facebook as a channel, none of us have quite figured it out,” he said. “If there’s a player that figures out social in a big-scale way, that’s a player that is going to steal share over us and the other traditional players.”

For years, hotel companies have tried to find ways to drive more sales through their own websites so they can avoid the premiums paid to the likes of Priceline and Expedia when customers book lodgings and trips through them.

If Facebook pushes into travel booking it will most likely follow Google’s lead, building a tool that lets hotel chains and online travel agents show up in search results on the social network, said Mr Dan Wasiolek, an analyst with Morningstar, in an interview. It is a system that does not necessarily give either group a distinct advantage, he said.

“I don’t see one side benefiting more than the other here, it’s just another way to reach customers,” he said. “If you have good content, which I think Expedia and Priceline do, they should be fine.”

Facebook has already begun playing in the travel space, with a new product that allows hotels and online travel agents to advertise directly to Facebook users who have been talking about upcoming trips.

“This new targeted advertising platform in theory is supposed to offer a better way to target travellers when they’re planning a trip and when they’re in the destination,” said Mr Henry Harteveldt, founder of the travel industry research firm Atmosphere Research Group, in an interview.

Travel companies, including Hyatt Hotels and Air France-KLM, are using Facebook’s Messenger application to talk to customers. So is Expedia, said Mr John Morrey, vice-president and general manager of Expedia US.

That is another area that Facebook could expand its presence in, said Mr Harteveldt, either by getting more companies to do business on Messenger or building its own booking tool in the app.

OPEN TO ACQUISITIONS

Expedia, which celebrated its 20th anniversary last week, went on a US$6 billion (S$8.3 billion) acquisition spree last year by buying Orbitz and holiday rental company HomeAway. Now, Expedia’s focus is on integrating those two companies, but it is still open to smaller acquisitions if they make sense, said chief financial officer Mark Okerstrom.

One area of interest is activity-booking. Expedia is already working on building up an inventory of activities and attractions such as museum tickets and walking tours that travellers could book along with their flights, hotels and rental cars. Start-ups such as GetYourGuide, Vayable and Peek Travel have raised venture capital for their own tour-booking websites and applications.

“There actually are a few interesting start-ups that are doing interesting things in the space,” said Mr Okerstrom. “We’re always on the lookout for opportunities where we see something that gets traction to either invest in them or to acquire.” BLOOMBERG