Expedia Inc. sold 16% more hotel-room nights in the third quarter, but it still has to stand back and admire Booking.com's execution from afar.
"Their room night growth is signficantly above the room night growth of really any other player out there," said Dara Khosrowshahi, the Expedia CEO, referring to Priceline's Booking.com.
Khosrowshahi, speaking during the company's third quarter earnings call, said Expedia is satisfied with its room night growth overall, but believes Booking.com's room night growth is even higher in new markets. Priceline reports its numbers Nov. 7.
Expedia is working hard to close the gap as it optimizes conversions on its new global hotel platform, which is paying dividends for Expedia units Hotels.com, Expedia Affiliate Network, Venere and Expedia.com, Khosrowshahi said.
One advantage of the platform, he explained, is that it enables the company "to iterate and introduce new feature sets more quickly to the site and test the efficacy of those feature sets..."
Expedia plans to introduce a new airline platform in 2012, and is working on a new platform for vacation packages, as well, Khosrowshahi said.
In the third quarter, Expedia saw its airline ticket sales decline 10%, although it was basically a wash because average fares sold on its sites were up 12% compared with the same quarter last year.
Overall, in the third quarter of 2011, Expedia saw its net income increase 18.2% to $210.4 million on revenue of $1.14 billion, a 15.5% rise.
The AirAsia joint venture, which gives Expedia exclusive online travel agency access to the airline's inventory, already is profitable, Khosrowshahi said, and could be a model for Expedia strategy in other markets.
"And in Asia, obviously, we've started the AirAsia joint venture, and we're getting the exclusive inventory there, which we think is an incredible long-term asset for building out the Expedia brand on a Pan Asian basis," Khosrowshahi said. "I think this positions us in a unique way to win that race..."
In other news, Expedia provided some more color on how Google's increased role in travel is impacting the company.
For example, TripAdvisor, which Expedia intends to spin off as a separate public company in the fourth quarter, has had to spend more on search engine marketing to compensate for plunging traffic from Google, Khosrowshahi said.
Interestingly, Expedia, which is a member of FairSearch.org, took a softer tone during the earnings call about the Google-ITA Software launch of Google Flight Search than did FairSearch recently.
"We are happy to see OTA links at the bottom of the Google Flight result, so having that marketplace be a more open marketplace is a positive result for us," Khosrowshahi said.
He added: "I think Google is an innovative player. They have a dominant market position. And I think we'll be hoping that they don't abuse that power and abuse that market position. And otherwise, we'll be watching their products on a go-forward basis."
Expedia, meanwhile, is also closely monitoring its Groupon Getaways with Expedia partnership, wondering whether the sales are incremental and whether customers eventually migrate to Expedia for their future travel needs.
Expedia is taking a diverse approach to the deals space, offering Expedia ASAP, Hotwire Travel-Ticker and mobile-only deals in addition to the Groupon partnership, Khosrowshahi said.
"So our approach in this area is multipronged," Khosrowshahi said. "Groupon has been a strong partner for us. And I think over time and especially into next year, we're going to figure out what the best approach is going to be."
By next year, what officials referred to as the "new Expedia" will be born: namely, as a transaction business, leaving the media business largely to an independent TripAdvisor.