Expedia, the dream of a global platform

When Cyril Ranque, President of Lodging Partner Services for the Expedia Group, was asked about the chances of an online travel agency, such as Expedia, launching its own hotel brand or soft-brand in the near future, he said: “To be really honest, never say never”.

His statement reflects the ever changing dynamics between hotel brands, hotel owners, and online travel agencies: a complex relationship that continues to evolve, and which was unleashed by the direct-booking wars and the emergence of new distribution disruptors such as Google, Airbnb, and Amazon.

We discussed these changes with Ranque at the NYU International Hospitality Industry Investment Conference held last early June. Below, you will find some excerpts of our conversation.

WILL THERE BE AN EXPEDIA-HOTEL BRAND?

Although Ranque does not necessarily see Expedia launching its own hotel brands or soft-brands in the short term, he claims that the company would like to be perceived as a hotel partner.

“I would approach it slightly differently”, Ranque said. “I would say that we are paying attention to our hotel partners and property owners. In fact, we have an excellent relationship with independent, mid-size and large hotel chains, as well as with hotel owners. And, once again, we are listening to all the parties in the industry in order to solve their problems and improve their efficiency”.

“Therefore, we are developing a series of tools and functionalities on the Expedia platform, which we are offering to our hotel partners and property owners in order to make them more effective not only in the Expedia market, but also in other markets”.

Raque highlighted the development of the VIP Plus tool, which grants partner hotels a greater exposure in the Expedia market through the use of “banners and brands”, in addition to tools that help hotels to become better at marketing, distribution, operations and media solutions.

“Now, if you combine all this and say: ‘This looks a lot like a soft-brand…’, I would say that that is the way you call it”, Ranque said. “What we are doing is meeting the needs of the industry”.

WHAT IT MEANS TO BE THE WORLD’S TRAVEL PLATFORM

While several companies – including AccorHotels, Marriott and Airbnb – are competing to become mega platforms, Ranque, as it is only logical, claims that Expedia is in a privileged position to attain this goal, and he made some clarifications.

“We would like to be the world’s travel platform”, Ranque confessed, to what we replied: “But that is the goal of everyone in the industry”.

His reply? “Yes, well, we are working on it”.

While brands such as Accor compete against megabrands such as Google and Amazon to establish a direct relationship with consumers in their daily lives, Expedia is actually focusing on becoming a full-service travel agency. Expedia’s strategy to become a world’s travel platform implies offering consumers and their suppliers what they wish and need.

Ranque also reported that Expedia is working together with other hotel groups such as Marriott and Iberostar and their white-brand holiday packages. Furthermore, he highlighted how its investment in Alice is assisting hotels in their operations.

Expedia, in lieu of restricting its efforts to distribution, Ranque said, is developing products in order to face the challenges of its partners and clients. An example? The company has experimented with keyless hotel access, something on which many large chains such as Hilton have been heavily investing.

“This is an interesting upcoming product that will result in smooth check-in processes, etc.”, Ranque reported. “We are still at an initial stage, so we have decided not to work on its development just now. In the future, however, our commitment will revolve around providing customers with a truly flawless experience”.

What Ranque described is, in many ways, the same user-friendly experience that many lodging companies seek to offer.

“Therefore, in the end, we can imagine the Expedia or the Hotels.com applications offering a truly integrated experience, embracing different stages such as product search, booking, check-in, room service, customer opinions and how these are shared with friends, etc.”, Ranque announced. “This is our final goal because, to be really honest, the objective of travel agencies is working out customers’ problems and preventing friction – which can be really disappointing – in the travel process. What we are doing is use technology to address, one by one, each of these points of friction, thus contributing to smooth customer experiences”.

Ranque seeks to offer Expedia’s hotel partners the same smooth experience that his company wishes for their travelers.

WHAT IS GOING ON WITH DIRECT-BOOKING WARS?

Although Expedia sees hotels as “partners”, both players are competing against each other when it comes to platform strategies that will generate bookings.

Ranque perceives the effort made by hotel brands in order to boost direct bookings as an attempt to lure hotel owners.

“If I remove the term ‘direct-booking war’, the whole industry will cry: ‘we want direct bookings and high-repetition-rate sales’. And I compare this to a very populist spiel, just like in politics”, Ranque reported. “It is easy to say what people want to hear. What usually happens in a populist election is that the people who choose a certain person become disappointed at the results because reality is different from the idea portrayed by populist approaches. And I think that the same happens with direct-booking wars”.

Even though the hospitality industry regrets to have to resort to OTAs as a distribution channel, this continues to be the most efficient way to make new customers.

“Hotels showing their loyalty rates on Expedia and Hotels.com actually win market share over those who do not do it”, Ranque said, alluding to Red Lion Hotels Corporation and Red Roof Inn. “Those who refuse to show our customers their loyalty rates tend to lose market share when compared to those who actually do. That is fine, it is their decision”.

Brands may think they are winning the direct-booking war, but this may not be the case.

“Then, whereas it seems that their strategy is starting to work, what really happens is that they are losing their share in our market. Their direct share compared to that of the OTAs is automatically changing and, to say the least, the share of the OTA is growing at a lower pace than it used to”, Ranque explained. “But this does not necessarily occur because the direct-booking strategy is really working for new customers as they are turning less of our customers into theirs”.

“I would not say hotels actually feel dissatisfied”, he confessed. “I think hotel partners actually seek greater demand and more production at the lowest cost possible. And they gradually see us as a company that offers assets from which they could eventually benefit”.

WHAT HAPPENS WITH GOOGLE?

Ranque said that Google might be Google… but it is not a travel agency.

“They are great companies that spend much more in technology than we do. In fact, although in the last 12 months we have spent $1,500 million in technology, we are probably way behind them”, Ranque reported when asked about Google and Amazon.

“So, it is not a matter of money”, he added. “I think it is a matter of approach and DNA. Take Google, for instance. It has the DNA of a technology company, but DNA cannot handle customer problems the way we do. Our call center is staffed with thousands and thousands of individuals taking care of our customers”.

“There are 4,500 call-center representatives in my company, in hospitality associations, working with hotel partners and managers of holiday-home companies”, Ranque added. “Being a travel agency requires people working hard for other people, and right now Google is not set up to be a travel agency. That is why I do not think they will become one… I believe them when they say they do not have the intention to”.

Nonetheless, he mentioned that he is watching closely Google’s product expansion and whether it will become a “fair play field”.

HOW ABOUT AIRBNB?

According to Ranque, the efforts made by Airbnb to look like an OTA thus luring more hotels to its own platform have not had an impact on Expedia.

“They are small in number, offer very specific typologies and are tapping into the hotel industry. I think Arbnb has been very eloquent with regards to its position as a possible competitor in the full-service OTA market”, he concluded.

“It will be interesting to see how they manage”, he added. “The hospitality market is highly intensive and competitive, and it will be a challenge for them to apply to hotels the same type of operating model that they use with alternative accommodation”.

Although he mentioned that Airbnb “has generated a lot of traffic just through brand value”, something that Morningstar Equity Research also included in a recent report, Ranque said that hotels are a “more complicated” issue to deal with.

“I guess the questions Airbnb should be asking are: what do I stand for? what am I here for?”, he added. “Coming back to my reference to DNA, this company is based on a principle”, he said, when asked about home stay sales. “Expanding and trying to sell all there is to sell may represent a challenge for them”.

However, for a company like Expedia, currently working with HomeAway and VRBO, “expanding into alternative accommodation represents a more natural process”.

“We are responding to the needs of customers who travel mainly with their families and who wish to stay for longer time periods, need more rooms, and are interested in having access to alternative-accommodation products”.

Does Expedia offer any other advantage over Airbnb? The answer is experience in the management of holiday rental properties, an area in which Airbnb has been striving to grow in the last year.

“By purchasing HomeAway, we have incorporated a team of experts who are developing tools aimed at small property managers and expected to fully meet the needs of this segment. This is really interesting if we think about the future, because it will give us the opportunity to play a relevant role in the hotel and holiday-rental-owner segments”, Ranque explained.

The reference information is available on the Skift Website.

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