Wall Street analysts weren’t the only ones to weigh in on Expedia Inc. and Priceline Group’s stock prices during the recent Phocuswright Conference in Fort Lauderdale.
Glenn Fogel and Mark Okerstrom, the respective presidents and CEOs of the Priceline Group and Expedia, Inc., each took a turn on the center stage to discuss what the future holds for their travel tech businesses.
Fogel, who took on his current role with Priceline last January, was forthright in saying that the company still has much to accomplish since he joined the organization in 2000.
Named to his position in August, Okerstrom will leverage his prior experience as Expedia’s chief finance officer and executive vice president of operations, telling the conference audience:
“I’m focused on hard core operations, but I also ran the M&A team. So it’s in my blood; I can’t stop myself when I see something strategically and financially sensible.”
But if Okerstrom has is eye on a new acquisition, he didn’t let on. He did say, however, that one priority for Expedia is focusing on international market growth and moving into “the next one.”
Global expansion is of equal importance to the Priceline Group, according to Fogel who specifically called out the strategic importance that his company places on China.
Priceline made a $500 million investment in Chinese online travel agency Ctrip two years ago, which Fogel pointed out brings Priceline’s total investment value in Ctrip to more than $2 billion.
“The biggest area of growth in travel is associated with China and we’ve been there for sometime organically.
“We have three call centers in China now and we’re on the road to having 1,000 employees there.”
Priceline’s Booking.com culls its China hotel inventory from Ctrip while Ctrip users have access to deals from Booking.com and Agoda.com, Priceline’s Asia-based platform.
The symbiotic relationship between the US’ largest OTA and Ctrip became even more evident when Ctrip chief financial officer Cindy Wang told Phocuswright attendees from center stage that “Ctrip still has low market share in the hotel segment and going forward will focus on opportunities in lower tier cities” and also international growth opportunities for Chinese travelers who want to travel abroad.
Hotels are also a focal point for Expedia’s Okerstrom who noted that the company hasn’t seen any effects from the hospitality industry’s efforts to move consumers to direct bookings.
Rather, the Bellevue, Wash.-based company has benefited from the business of several hotel brands such as Red Lion Hotels, which partnered with Expedia in 2016 to attract more members to its loyalty program, Hello Rewards.
“We work with a number of chains that are more forward-thinking in how they use our platforms to acquire new customers,” he said. “It works and I hope that’s the direction we continue in.”
Along with hotels, Expedia has also invested in its air product over the last five years, allowing the company to offer a dynamic packaging product where customers’ individual selections are bundled together, somewhat similar to other e-commerce platforms’ “shopping carts,” ultimately creating a bespoke deal.
Okerstrom describes the platform as “a great opportunity to start targeting customers on a one-to-one basis for special deals while moving partners’ excess inventory.”
Over at Priceline, Fogel plans to bolster Priceline inventory with more alternative accommodation product, which he called “an important part of where we’re going.”
Although Priceline already carries bookable listings on Booking.com, Fogel said the company has made “a conscious decision to increase investment in the area and grow that part of the business because consumers want it.”
He plans to expand the breadth and depth of options available while additionally streamlining the sign-up and payment processes for hosts.
“One of the biggest problems we have in the U.S. is where consumers want to rent a home, not many would think of Booking.com and that’s something we’re going to change,” Fogel added.
The move is inline with Wall Street’s expectations as Mark Mahaney, managing director at RBC Capital Markets, said during Phocuswright’s Executive Roundtable: Street Talk, that there’s “a dramatic shift in the market and [products like Airbnb] have a huge impact for hotel stocks; it’s a clear growth category and growth opportunity for OTAs,” adding that “anyone retailing a really fragmented supply means really good economics.”
Expedia got behind that philosophy in 2015, when as CFO, Okerstrom was still the driving force behind the company’s M&A and Expedia acquired HomeAway for $3.9 billion.
But the trend is seemingly singular to US travelers as Wang attested that alternative accommodations are still in their infancy in China, both in terms of consumer and supplier behavior.
She also notes that Ctrip is a data-driven company and likewise, so is it’s US counterpart.
Fogel says:
“We try to avoid being dogmatic in anything we do. In God we trust; everyone else bring data. That’s a good way to think about our business."