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Transcript of Expedia
To provide an overview of Expedia's position within the online travel market, and to make an informed recommendation for investment
The analysis will be based on internal and external factors and includes an industry comparison of the major players in China, The UK and India
Arith Ranasinghe 10860536
Indigo Page 11467281
Julia Maure 11253200
Melissa Stojcevski 11427414
Established in 2005 as a separate entity in the USA, Expedia has grown its operations to a global scale across the Asia-Pacific region, Europe and Latin America
+1 Above Average Recommendation
Reasons: Expedia is a global company and it has numerous opportunities to expand its brand outside the USA. Within the USA it is the #1 OTA which signifies their revenue is only set to grow further.
OTA MARKET USA
OTA MARKET UK
OTA MARKET CHINA
OTA MARKET INDIA
Competitors to Expedia:
ctrip.com, qunar.com, mangocity.com, kuxun.com, go.qq.com
Fastest Growing sector
Worlds Largest Sector
Macro Environmental Factors:
Increasing mobile phone consumption.
14 million people to travel abroad by 2016.
Natural Disasters (-)
EXPEDIA HAS PRESENCE IN INDIA
Major Competitors include Makemytrip.com, yatra.com and cleartrip.com
Makemytrip is currently the largest OTA in the market.
Internet penetration is poor and broadband capabilities are insufficient. (-)
Highly competitive market(-)
Macro Environmental Factors
- The state of world economies (and value of currencies)
- Ecological and Environmental disasters
- Cultural trends, more wealthy Baby Boomers now buying tickets online
Expedia has a competitive advantage over other agencies within the USA as it is the largest and most well known brand. it has consistently been ranked as number one among OTAs in the US, thus more people are prepared to continue using them as they are reliable and prominent.
- Regulation: Current laws written before the time of internet. (-)
- Moderate economic growth (+)
Expedia is the largest OTA in the Market
Macro Environmental Factors:
Economic Climates - currently favorable in india
Cultural and demographic Trends - Young population as well as more people taking holidays is excellent for the industry .
In 2010 36% of Expedias worldwide gross bookings and 38% of worldwide revenue were generated outside the US.
The majority of all sales still come from within the US - 66% in 2010 compared with 62% in 2008
Withdrawal of American Airlines as a booking option on Expedia will prove to be a threat in the short run as consumers book directly with the Airline
Increased pressure on hotel business
Google places may become a threat to overall profitability
Expedia Remains No 1 in the US
Tripadvisor is emerging as a major player in travel social media
Expedia's decision to cut booking fees in 2009 helped increase customer traffic
Egencia- the business trip booking system has not been as succesful as expedia hoped
Majority of revenues, experience and thinking is firmly placed in the US market.
Tripadvisor is providing numerous opportunities in advertising and media- revenues, which are expected to surpass USD$1 billion
Working on making their services available on a mobile platform through the acquisition of the mobiata team in 2007
expedia owns Chinese brand elong.com which is the 2nd largest competitor in the market.
Expedia has presence in the UK
Expedia is currently ranked 3rd behind competitors Priceline.com and OdigeO. (euromonitor 2012)
Other competitors include Thomas Cook and Travelocity (Sabre Corp.) and TUI.
The UK is the largest European market for online sales growing 8.8% in 2011
Expedia is currently Ranked 4th (comscore.com)
GFC and Eurozine crisis (-)
Profitable entry into the market, whilst not impossible, will be difficult (-)
Industry not immune to external shocks such as environmental factors (Iceland Volcano) (-)
Macro environmental factors:
Inbound tourism flows increased in 2010, after marked declines in 2008 and 2009.
Development of European Union has reduced restrictions for people within that region and travelling within the region.
Despite the GFC, Expedia's sales have continued to grow both domestically and globally. We consider the global nature of Expedia's business to be vital when discussing their investment opportunities. Therefore due to the numerous opportunities presented within the domestic and global markets we recommend Expedia as +1.
Expedia owns an impressive portfolio of brands including:
Tripadvisor, hotwire, hotels.com, elong (china) and Egencia (Business Travel)
Increases in number of air service providers
Increases in tourism expenditure
APAC region is the Fastest Growing Sector
makemytrip is already outperforming other competitors within the market, and is set to cross US$1 BILLION in
Recommendation: +1 above average
+ 1 Above Average
Recommendation: 0 average