Internet Marketing Strategy Expedia.com and its main competitor Travelocity

Résumé du document

Taking a vacation has become increasingly easy as it is convenient to go online and book holidays. Probably more convenient than visiting a brick-and-mortar travel agency. The number of people booking holidays online is increasing as more and more people are becoming computer-literate, and confident about the entire process. This opens up new avenues for companies which offer travel services online, and hence, many companies are pursuing it. The difference between the brick-and-mortar world and the online industry is that the online industry has no natural barrier such as geographic location of customers to switch travel agents. Everybody is just a mouse click away.

Based in Bellevue, WA, Expedia, Inc. defines its business as "selling travel services to leisure travelers and corporate customers around the world" (page F-9) in its 10k (annual reports) filing for 2002.. Travel services are not only sold primarily through Expedia's own websites, but also through websites of other travel companies, through telephone and through affiliated brick-and-mortar travel agents. Expedia acts as a broker. It operates through off-line travel agencies, in order to address the needs of large commercial customers. Expedia's services comprise of air fares, lodging, rental cars, cruises, combination of these and complete travel packages.

Extraits

[...] S&P Daily News, March (retrieved via www.lexis-nexis.com on March 30, 2003) Barton, Richard. “Expedia”. Business Week, January (retrieved via www.proquest.com) Business Brief: Expedia Inc.: Online Division Is Launched For Use by Corporate Customers. The Wall Street Journal, Nov (retrieved via www.proquest.com) Chaparro, Barbara and Ashley Gibson. “Planning Your Next Vacation: Orbitz, Expedia, or Travelocity?” Usability News http://psychology.wichita.edu/surl/usabilitynews/41/travel_usability.ht m (April 2003) Expedia, Inc. Press Release: Corporate Travel single-solution combines powerful technology and full array of travel management services.” (retrieved via www.hoovers.com) Expedia, Inc. [...]

[...] Since customers, especially leisure travelers focus more and more on price, online competitors are eroding the power of the offline travel agencies. The competition between online players is intensive too. However, as the travel market is still growing very fast, competition does not jeopardize the existence of all players, at least at the moment Complementary Parts Complementary parts include all possible third parties that enhance the value provided to customers, and in turn help online players to capture more value. [...]

[...] In February 2002, US Interactive (former USA Networks) became Expedia's major shareholder, and in March 2003, its exclusive owner. Generally, booking travel online is convenient as it allows people to: Access a huge data base of service offerings, Compare prices and services instantly, Combine the booking of hotels, airfares, rentals cars etc., and Search for additional information like maps, driving instructions. Expedia's business model consists of four distinct parts: The First one is the transaction model, where it acts as an agent: Expedia sells without possessing inventory, and collects a fee. [...]

[...] and AOL (at $ 200MM for a five year term), and having cross-selling arrangements with Walt Disney Comparison of Financial Performance 1 transaction and merchant fees, excluding advertising and other revenue sources The fiscal year of 2001 showed that both rivals were not profitable. As mentioned before was Expedia's first profitable year. Until 2001, both companies were performing the same, with Travelocity having slightly higher gross bookings and revenue from their operations. The year 2002 was when Expedia exploded, nearly doubling their bookings and enjoying the advantages of scalability for the first time. Travelocity's growth was much more moderate. The big question is: How did Expedia gain shares so fast? There is no doubt that the market pie had become much bigger. [...]

[...] “Online Travel Still Soaring” Fool on the Hill, October from www.fool.com/news/foth/2002/foth021030.htm Richard Barton, “Expedia Inc, Scale and Profitability”, Morgan Stanley Internet, Software and Networking Conference, January from http://media.corporate- ir.net/media_files/NSD/EXPE/presentations/MorganStanley.pdf Scott H. Kessler. “Standard&Poor's Industry Surveys. Computers: Consumer Services and the Internet”. March URL http://www.netadvantage.standardpoor.com/ (Mar 30, 2003) Securities and Exchange Commission (SEC). 10k Annual Reports for Expedia, USA Interactive, Sabre (all 2002), and Travelocity (2001). [...]