The Expedia Partner Conference held in Las Vegas last week opened on a defiant and upbeat note. Mark Okerstrom, walking on stage after the opening rhythm and drum beats of Le Reve, The Dream, said that despite the crazy year of terrorism and natural disasters, the world travelled more in 2017 with $1.6 trillion spent, a 6% increase year-on-year.
Making his debut as the newly-anointed chief of Expedia Inc, he said that online travel has become travel with more than 50% of Europeans now booking travel online and markets in Asia catching up. “There’s leapfrogging happening and technology is allowing penetration” in hitherto-inaccessible markets in Asia.
Calling it a travel revolution, he said markets like China, Indonesia and India were showing phenomenal growth rates. “They never had desktops, all they have is the smartphone and everything they want is on it.”
At a “Game Changing Trends” workshop ran by Hotels.com, I learnt that China, once in 22nd position as a source market of international travellers to the US, is now in third place and will move to second spot by 2020.
International outpacing growth with Asia leading
These growth trends are reflected in Expedia Inc. As of third quarter 2017, the group recorded $86b worth of gross transactions, up 13%, and inching closer to its declared goal of becoming the first $1b travel company in the world.
Growth came from outside the US, with International markets growing by 22%. Japan saw a 46% increase, Vietnam 42% and Indonesia, where Expedia has invested in local OTA Traveloka, in the triple digit zone.
Okerstrom jested that it would have been tempting to say “now I can do what I want, yes, Dara (Khosrowshahi) is leaving”, but with a team of senior executives who’ve been working together a long time, “it will be an extension of what we have been doing, except we want to do it faster”.
That means accelerating the global push, being customer-centric and accelerating innovation.
Saying the industry was in the early stages of a digital revolution, he said hotels.com, which now offers 90 localised websites, was seeing 45% of transactions and 55% of traffic coming from mobile.
Betting on local relevance and new tech
With the global push, Okerstrom said the mission was to become locally relevant – “from payments to working in a voice that Malaysians can understand so that they feel like they are working with a Malaysian travel agency”.
Certain products are being developed in Singapore for global rollout instead of the other way round.
Voice, chatbots, machine learning, driverless cars – all are converging to drive accelerated change. “I used to be a sceptic (of driverless cars), but now this could happen in five years,” Okerstrom said.
Citing Phocuswright figures, he said funding in digital travel startups totaled $62b since 2005 and nearly half of that amount was raised in the last two years.
So what is Expedia taking bets on?
Singled out once again by chairman Barry Diller in his closing remarks as the most disruptive technology, Okerstrom said voice is real.
Arthur Chapin plays with Lego while booking a fwith the new voice booking service. Watch video here
Senior vice president, global product and design, Expedia Inc, Arthur Chapin, gave a live demo of the Expedia hotel booking service on Amazon Alexa at the conference.
It’s testing machine learning in its performance marketing, on which it spends $4b a year.
Powering hoteliers with new tools in revenue management, loyalty, meetings and operations
Beyond distribution, Expedia is investing in becoming a technology partner to hotel clients, rolling out new tools like RevPlus, a free revenue management tool, as part of its Expedia Partner Central services. (It has also launched a EPC platform for airlines.)
The signal is clear that Expedia is opening up its tech platform, on which it has spent $1.3b, to hotel partners, and enabling hotel partners to manage revenues, enroll loyalty members, drive direct business and increase their share of corporate and meetings business.
Marina MacDonald: Red Roof Inn driving loyalty with Expedia Partner Central.
At the conference, hotel partners extolled the benefits of their partnerships ranging from dynamic packaging to loyalty enrolment. Marina MacDonald, chief marketing officer, of Red Roof Inn, an economy hotel group with 515 properties, the majority franchisees, said that it saw a total of 115,000 new members sign up with its Red Card loyalty programme between September 2016 and October 2017. “I thought we’d see only 10% repeat but 36% came back,” she said.
MGM Resorts, the top user of EPC’s online guest communication tool for pre-arrival communication, has generated 270,000 conversations with guests and its chatbot test has had a 90% success rate. The group is also a LInkDirect partner which allows it to drive direct business to its website.
Best Western was launch customer for Expedia’s meetings product which has signed its first client in Asia, Thailand’s Minor Hotels
Expedia’s Felix Undeustch, head of MICE, showed off its new meetings product which helps hotels automate the sales and booking process for meetings of up to 20 people, cutting processing time from five hours to 40 minutes.
First introduced in Germany with test client Best Western two years ago, it’s signed its first customer in Asia, Thailand’s Minor Hotels and signals its intention to make a dent in the $400b market, most of it driven by small meetings of up to 30 people, and accounting for approximately one-third of room nights in hotels.
The meetings segment is closely tied with the corporate travel business with Egencia fighting the battle on that front. CEO Rob Greyber said the agency signed US$385m of new client business in third quarter 2017 and with $6.7b gross bookings, was now the fourth largest TMC in the world, surpassing HRG.
Egencia is pushing its business in Asia. In China, it’s rolled out a direct connect to Travelsky, the only TMC to do so, and it’s opened offices in Hong Kong and Singapore. It recently appointed Mieke de Schepper, who was lodging head for APAC, as CCO, and she will remain based in Singapore.
De Schepper’s appointment as a global head based in Asia is indicative of a more open culture to place global heads outside the US. In the last couple of months, a couple of similar appointments have been made – Singapore-based Gabriel Garcia has been promoted to global head of mobile marketing and hotels.com APAC head in Hong Kong, Abhiram Chowdhry, has been given the role of global retail.
Expedia is investing in hotel operations, having taken a stake in in ALICE, which it said will become the world’s first operating system for hotels. Think of it as like the IOS or Android to your phone, said Expedia executives.
Chapin also demonstrated Hotels.com’s new mobile key, its app that allows you to check in and out and generates your hotel room key. It is clear that OTAs are going beyond distribution to solve pain points of customer friction and if hotels aren’t going to do it, then it appears they will. In Asia, Agoda has also signaled its intention to go down this path, a clear strategy to keep customers within its eco-system for as long as possible.
It will be interesting to see if hotel partners will willingly surrender that last bastion of operations to a travel technology partner that also controls their distribution and other tech needs.
MacDonald, while applauding Expedia’s investment in ALICE, and saying the company was “doing amazing things”, stopped short of a commitment, when asked if her group would consider adopting ALICE.
In line with the conference theme, “Better Together”, Okerstrom declared, “We are innovating with our hotel partners on packages, hotel operations, revenue management and MICE. For customers, we will invest in mobile, voice, machine learning/AI and VR.”
He concluded that in the battle of man vs machine, so far man has won but “machine will win over time and we will really be able to put the A back into OTA.”