Nothing seems to ruffle Expedia Inc. CFO Michael Adler as the globe's largest online travel agency is sitting pretty, at the top of the world.
Addressing analysts at the Friedman Billings Ramsey Capital Markets Investor Conference in New York Dec. 1, Adler calmly states how he likes where the trends are trending, and sort of sums up the whole thing thusly: "We think over the last several years we've proven we know how to run a travel company."
That may be true, but there was little pushback at all from the assembled financial gurus during a Q & A with Adler. There wasn't much said about Priceline's gains in Europe, about adverse hotel tax rulings in the U.S., or other competitive challenges, although Adler did mention how the fee-cut frenzy turned out OK as it stimulated a lot of traffic and transactions.
Adler believes Expedia has performed admirably, growing gross bookings and hotel room nights in the U.S. in the third quarter when much of the rest of the world was contracting, for instance, and is well-positioned to blossom in Europe and Asia-Pacific, where all of the action is.
At this juncture, Expedia has a stash of $757 million in cash and feels fairly fulfilled, according to Adler. That is, there are no gaping holes in the company's portfolio.
Adler says Expedia will plow some of that cash back into the company; will consider "tuck-in" acquisitions similar to its recent purchase of media-company Kuxun in China; and will aim to return capital to shareholders.
And, Adler says Expedia doesn't feel compelled to purchase a major competitor, although the company will remain "opportunistic."
"There is nothing that we think we are missing as a whole," Adler says, referring to mergers and acquisitions.
Asked about the push by Orbitz Worldwide and its CEO Barney Harford, an Expedia alum, to enter the hotel space in a meaningful fashion, Adler paints a picture of a situation where there is plenty of room for more beach chairs on the beach.
"Orbitz will be a good competitor," Adler says. "They've been trying for years to expand their hotel business. They now have somebody who maybe knows how to do it better since he came from Expedia."
Ya, that Expedia hotel charm can surely rub off.
Adler says Expedia has been gaining significant share in the U.S. Room nights grew 27% in the third quarter even as hotel occupancy as a whole was down. And, a hotels.com loyalty program, welcomerewards, drove incremental volume.
"We have a lot of things, I guess, in our quiver in terms of the hotel business," Adler says. "We think it is defensible. There is room for other players to come in and perhaps be successful, as well, but we are going to make it as hard as possible."
Oh, a little hardball may be in store, Barney.
But, the picture is very pretty for Expedia, in the view of its CFO. You sort of see his vision that the world will revolve on, unchanged, with Expedia remaining perched at the top for the forseeable future.
Adler sees it like this: Expedia Inc. has leading global brands like Expedia, hotels.com and TripAdvisor and mucho scale; it is playing in large, growing markets like Europe and Asia-Pacific where consumers are coming online; the company grew its business even during the economic downturn as suppliers realized they needed Expedia all the more; and the company has strong cash flow and margins with "modest" debt levels.
Expedia, says Adler, has stable economics with suppliers, has weathered the air and hotel fee cuts, is investing in search engine optimization and is even rolling out its own global SEM platform, replacing previously outsourced solutions.
For Expedia and the unflappable Adler, everything is clicking.