It has been a whirlwind two weeks at Expedia Inc., the Bellevue, Wash.-based online travel company whose longtime chief executive, Dara Khosrowshahi, was hired away to lead Uber. But in contrast to the public and messy CEO succession process at the ride-hailing giant, the transition at Expedia has been noticeably smooth, as chairman Barry Diller and the company’s board selected longtime Expedia executive Mark Okerstrom as its new CEO.
Okerstrom, 44, is a native of Coquitlam, B.C., who has been at Expedia for 11 years, most recently as chief financial officer, working about six feet away from Khosrowshahi and helping to lead the company through a series of major acquisitions, including Trivago, Orbitz, and HomeAway. He sat down with GeekWire at Expedia headquarters Monday afternoon for one of his first interviews since taking the CEO job.
A few of the highlights:
- Okerstrom said the company does not see any major downturn in travel and the global economy, despite unrest around the world, but he is concerned about the impact of the Trump administration’s rhetoric on the brand image of the United States.
- He foresees a growing role for voice technology and artificial intelligence in travel — chatbots are more of an interim step, he says — but he believes that humans will continue to play a major role in the process of booking and managing travel.
- Okerstrom is bullish on Expedia’s future growth prospects even though the company doesn’t have as many options for acquisitions in the future. The company is now in a position to capture a larger portion of the travel market leveraging the brands it has acquired, he said.
- He sees Priceline — and especially its brand Booking.com — as the company’s biggest rival, even with growing competition from Airbnb, Amazon, Google and others.
- Expedia still plans to move its headquarters to the Seattle waterfront in 2019, but it will maintain a larger presence in Bellevue than it had originally envisioned, he said.
- And in a surprise twist, Okerstrom concluded the interview with a perfectly executed dance move on the floor of his conference room.
Read the edited transcript below for our entire conversation.
Todd Bishop: What’s been going on over the past week and a half at Expedia?
Mark Okerstrom: You know, interestingly, it’s been a lot of business as usual. … It was an orderly transition. I think the organization obviously went through a period of like, ‘Wow, Dara is not going to be here!’ and there certainly is a little bit of that still around but come Monday morning, the following week, it’s largely business as usual. Last week, I was in New York for a board meeting that went a lot like a lot of the board meetings we had in the past. And here we are this week, just back to business as usual.
TB: There’s something to be said for an orderly transition and succession plan?
Mark Okerstrom: Yes there is something to be said for that. This is a highly complex organization. There’s 20-some-odd thousand full-time employees. If you look at all the agents in our call centers and contractors you’re up to north of 35,000 people who are depending on this organization for their livelihood, who are doing their work every day, driving toward this mission — you have to have a way where you can transition at the top and not disrupt all the great things that are happening, and I think that our board of directors and chairman and the work that Dara I’ve been doing over the course of the last five years has just set us up very well for this very day.
Looking forward, what can people expect to change under your leadership?
Mark Okerstrom: I think we will all be watching just a little bit more hockey. I’m joking. I’m from Canada. Yeah, of course I’m joking. But not really. No, I think it’s an evolution. It’s not a revolution. My hope is that we can go a little bit faster or a lot faster on some of the things that we’re already doing. I think we are going to work on doing a much better job with our non-U.S. expansion efforts. I think we’ve done a great job planting flags — we are in most major travel markets that exists. Hotels.com is in 65 countries and we have hotels and 220 countries around the world.
But going forward, we really want to get locally relevant across the board. What does locally relevant mean? If you’re you’re sitting here in Seattle, if you go on any website you could probably book a decent hotel in London. But it’s not about that. It’s about the fact that if you go on Expedia.com right now you’ll find a vacation rental on Whidbey Island, and guess what, we’ll also have the Inn at Langley. That’s what being locally relevant on a global basis is, and that’s what we want to get to a go-forward basis.
I think secondly we want to continue this evolution towards being truly customer-centric. With this [smartphone] here we put the power in your hand to actually see all of the things available to you and book them. But when you compare that to what it used to be like, when you went down to your local travel agent who knew you, who booked your trip last time, they’d say, ‘Do you want to take your summer trip again? How did you find that hotel that I put you in in Maui? Did you like that? Do you want to go back to Maui? Kauai is nice this time of year, as well. We’ve had a lot of customers who are similar situation who like that.’ And then when you get to the hotel if there’s something wrong, they take care of you, or if a flight gets delayed, etc., that agent can take care of you. Why? Because they’re an agent, they’re your agent, they’re responsible, they’re looking after you. And I think that’s the place where to get to.
I think automation, machine learning is getting us there and we’re making that evolution. I think that will be combined with even better customer service on the phone — because travel is messy, things get messed up and sometimes people want to talk to a human. They want someone to complain to. They want someone who listens. But then also someone who will solve the problem. That’s where we want to get to. So better, faster on our global endeavors and even more customer-centric will be the two main thrusts that I’m going to want to push forward.
But listen, I’m only two weeks into the job so maybe I’ll change my mind. [Laughter.]
TB: But you’re a long time at the company so you have a lot of visibility that somebody just starting wouldn’t have.
Mark Okerstrom: Absolutely. And at the board meeting last week, that was my big message to them, which is, I’m two weeks into the job and actually I’m 11 years into the job. And Dara and I’ve been working six feet away for the last six of them.
Chatbots and competition in travel
TB: Specifically on machine learning and automation: How much potential do you see there with things like chatbots? I hear what you’re saying about needing the human element, as well, but how quickly could you expect that to become a significant part of the customer interaction?
Mark Okerstrom: In the next three to five years you’ll see a lot of change on that. Chatbots are actually somewhat meaningful in Asia already. My personal opinion is that chatbots are in an interim state. It’s an interesting step towards what voice will be like. Why do this [tap a smartphone] when you can just speak — it’s going to be easier. So I think that’s where this is all going now. That said, there are certain things that are not efficient to do in voice. I can’t tell you what this hotel is like as well as I could show it to you. Amazon is taking voice to where it’s a combination of voice and visual. I think that’s where ultimately this does end up which is some combination of voice — voice is going to be great for customer service, automated customer service, I think voice is going to be great for really simple things like, ‘Book me a flight in the morning to New York for under 500 bucks. I want an aisle seat.’ That’s easy, but ‘I want a great place for my family to go for summer vacation’? You want to see a photo of the pool.
TB: That raises a really interesting point. You’ve got these large tech companies, pure tech companies, Google, Amazon, etc., that are controlling mobile platforms in some cases, the voice platforms in others, and yet also either competing with you now or showing signs that they could compete with you. How do you have a relationship with them?
Mark Okerstrom: Well so far it’s easy because we’ve all had our separate roles. If you if you look at Google, for example, Google is you know amazing at being this search place for everything. They’re organizing the world’s information. But they don’t have the 5,000 people it takes to be on the ground, working with hotels, teaching them how to use our tools. I mean these are hotels that some of them keep their inventory on a notebook like that. We’re giving them devices and training them in how to upload photos and load their rates and inventory and that’s a dirty messy business, and it’s also one of personal relationships.
Also despite the fact that we’re an online travel company, we have over 12,000 call center agents around the world answering phone calls in I think now 41 different languages. I think last year we answered 50 million phone calls. Google doesn’t want to do that and I don’t think they’ll be very good at it, to be honest. They’re making more money off of travel than I think all the travel companies are making off of travel without having to deal with that. Our mantra has been, just innovate towards the customer, make their experience as good as possible, because the ultimate experience is searching for everything in one place, booking it in that place, if you’ve got a problem dealing with it in that place, and that end-to-end experience is incredibly complicated.
But the only one that’s been innovating across that vector on a global basis, across all products, is Expedia. We feel pretty good about it, and I think if you look at where voice is going, right now you ain’t going to Amazon to actually look for travel. You’re not going to Facebook to look for travel. You’re not going to Apple to look for travel. You’re predominantly going to Google and you’re typing it in that box on the white screen. Voice changes that dynamic. Think about Amazon with Echo, yes Google, also Facebook, which is really present on that device. Apple with Siri. Maybe Microsoft with Cortana. Now you’ve got five players with a reasonably good shot at actually being in that top-of-the-funnel situation.
That’s fragmentation. That’s good for us because we are multi-product, because we are global, because we have connectivity with everyone in this ecosystem. We’ve got real-time rates and availability on everything. And so if we can become the place where all of those players have to go to actually get their answers for their customers about what is the best place to go, how much it costs, is it available, that’s a great thing. And then add that we can book it. Add to that, once you’re on your trip, we know where you are, if there’s a problem we can sort it out. We can sell you your scuba trip — that’s pretty compelling.
TB: Are you confident you can establish and maintain those relationships even if those players compete directly with you?
Mark Okerstrom: Well, yes, and the reason yes is that we’re growing very quickly and we’re driving real value to those partners right now. And it’s not just bookings. What we’re doing is also giving them revenue-management tools. We’re helping hotels make more money than they would make if it wasn’t for us. We power Marriott’s packages business — even the big chain hotels we’re helping them in other ways, so it goes much beyond distribution for us, and I think you’ll continue to see us innovate down that vector, making the relationship much more broad.
TB: So who do you see as the biggest competitive threat: the potential of the big tech companies, Priceline, or the hotels themselves, And the airlines in terms of direct booking? What’s the biggest competition for you?
Mark Okerstrom: Well, it is Priceline. It has always been Priceline. I think that particularly Booking.com has been an excellent competitor but they’re standalone hotel only. They’re not everything. And I think that’s where we have real structural advantages. And the goal for us over the next two years, five years is to really take advantage of those structural advantages that we have. I think as it relates to the big chain hotels, the dialogue has shifted in the wrong direction. I think that the reality is that the big online travel agencies are here to help all of these hotels are compete against each other for the 600 million visits that come to our sites every month, and the customer base that we have.
We have the ability to uniquely target customers out of China out of Japan out of Brazil, etc., and we’re trying to help our hotel partners make the most of that opportunity. This isn’t about us vs. the hotels. I mean Hilton has less than 40 hotels in Manhattan. We have a thousand. We spent a billion dollars in technology last year. They didn’t spend anything close to that. We spent $4 billion in sales and marketing globally. We’re just in a different business than they are and I think it’s unfortunate that some of the rhetoric and some of the television advertising has been around us vs. them because that’s not where we want to play. We’re a platform. We hope they harness it. We hope they see the value in the marketplace. I think they do. And that’s where I think the dialogue should be.
TB: Then there’s Airbnb. How’s the HomeAway integration going?
Mark Okerstrom: It’s great. It’s going great.
TB: Are you hitting your internal targets in terms of integrating what they’re doing into Expedia and all of your sites.
Mark Okerstrom: Absolutely. That team is firing on all cylinders, we’re now up to over 1.5 million properties that are online bookable. Hundreds of thousands of them are instantly bookable. If you spend any time on either the traveller side of their sites or on the owner supplier side of the site, it is just constantly changing and getting better and better. We’ve only had them in the family for really 20 months. So great progress. We’ve got about 60,000 of the HomeAway properties live on eleven Brand Expedia points of sale. And you know we’re testing. That one, it takes work. We’ve got to figure out, you know, when you’re going to Whidbey Island this weekend, do you want to stay at the Inn at Langley or you want to stay at the four-bedroom house? We’ve got to figure out how we present that to you in a way that doesn’t confuse you, in a way that’s easy to understand, and so we’re experimenting with that. So we think that’s a big opportunity ahead of us.
Global economic outlook
TB: How are you feeling overall about the global economy given everything that’s going on right now as it relates to travel?
Mark Okerstrom: Overall the travel market remains healthy. I think we certainly see shifts in travel patterns around natural disasters, around terrorist activity. Generally though people still take the trips — they just go to a different place. So I’d say overall the economy, as it relates to at least the travel industry, looks pretty good to us still. But you know obviously times of geopolitical unrest, natural disasters, can have short-term impacts and we’re fortunate to be so globally diversified and take a long-term view that we don’t spend a lot of time thinking about them except for making sure that when we’ve got travelers in affected regions or where we can be helpful, we are helpful. We teamed up with Visit Florida around Hurricane Irma just to make sure that all of our hotel partners were making available all the possible inventory that they could. Making sure that there wasn’t predatory pricing going so that we actually made sure that all the prices were being fair for our customers. We try to take our responsibility within the overall global travel ecosystem seriously, and where we can help we do
TB: What about U.S. immigration policy and specifically Visas as it relates to travel and tourism. Are you seeing any impact from that?
Mark Okerstrom: Nothing broad that we could actually point to. With the initial launch of the laptop ban on Middle Eastern carriers we did see an impact to travel from the Middle East into the U.S., and I think some of the rhetoric that comes out, whether it’s actual or perceived, from the administration, could be hurtful, and I think it’s unfortunate. America just has so much to offer the world. We partner up with Brand USA to promote the U.S. globally. One in nine jobs in the United States are travel and tourism jobs. If you want to pump up the local economy the best thing you can do is open our borders and promote the economy, and I worry a little bit about some of the rhetoric — whether it’s perceived or actual — that it could be impacting the brand of the USA, which I think would be a terrible thing.
TB: Dara was especially outspoken in particular on some of the Trump administration policies. I think one of the greatest sign-off lines on an earnings call was, ‘if we’re still alive.’ Do you plan to be that outspoken as Expedia Inc.’s new CEO?
Mark Okerstrom: I come from a different background from Dara. I don’t have as much of a personal attachment to a lot of the issues. I think to the extent that he restricts travel from Canada into the U.S. you’ll see me be very vocal. No, but seriously, we’re not an overly political company, but what we will do and what I will do vigorously is that, to the extent that there are policies that are against the interests of Expedia, [I’ll speak out]. We’re a travel company. A ban on travel is generally not in our interests. To the extent things are seriously against the interests of our employees and our ability to attract and retain top talent here in Seattle, I will speak out against those things I expect.
TB: Do you expect partnerships between Expedia and Uber now that you have the Uber CEO’s mobile number?
Mark Okerstrom: I would hope so. We were just actually in New York together last week and I spent a couple hours with Dara. I think we’re both quite focused on, how do we make the most of the opportunities within our boundaries. But, you know I think it’s possible in the future. I’d love to see it.
TB: It makes a lot of sense.
Mark Okerstrom: Makes a ton of sense!
TB: Get your Uber day pass as you sign up for your Expedia travel package.
Mark Okerstrom: Exactly. When we know someone is going from Seattle to New York and they’re sitting in an Uber, what about popping a little free museum pass or something like that because we sell that too.
Expedia’s future growth
TB: Dara oversaw a lot of growth here with your help. He had the advantage of doing that in part through a giant acquisition spree. It’s kind of like when you’re the New York Yankees and you win the championship in part because you brought on three of the All Stars from the other teams. How are you going to grow Expedia, because it feels like there isn’t that kind of greenfield for acquisitions anymore.
Mark Okerstrom: I’ll tell you, as you know the guy running corporate strategy and M&A, the last five years were a lot of fun. Going forward I don’t anticipate there’s going to be that much activity, although I always say this and then something pops up and it’s super interesting and we do it. But we have, largely through the work we’ve done over the course of the last five years, assembled a portfolio of really world-class brands and assets. And despite all of that, this industry is 1.4 trillion dollars. Trailing 12 months, just over $80 billion in bookings, we’re basically the largest player in travel. You look at those two numbers and there’s just so much left to go. So what I’m going to be focusing on and what I think is an absolutely huge opportunity is around just expanding our footprint globally. We have 435,000 hotel properties on the platform right now.
There’s like one and a half million (in the market). And guess what, people are staying in those hotels right now. So we have to introduce the hotels onto the platform, introduce the consumers on the platform. Where we do that, one thing we’re really great at, is finding the perfect hotel for the traveler, enabling the hotel to get demand they wouldn’t otherwise get, so it’s super-compelling for our hotel partners. It creates a huge amount of value for travelers and all we need to do is just execute. And so I think we’re going to have a huge runway ahead of us just through just operations. We’ve been very focused on acquiring these companies and getting them on the platform and now we can really focus on taking advantage of what we got. You know HomeAway is a big opportunity; Egencia, the fourth-largest corporate travel business in the world. Who has heard of it? Not many people, but it’s gaining share like crazy. I think there’s tons of opportunity across the portfolio.
TB: Dara handed you another big project and that is the move to Seattle proper. Is that still going to happen?
Mark Okerstrom: Yes! Well is the secret part of that was that it was kind of my project anyway. “Mark, you take care of that.” I was very involved in the acquisition of the property. I’ve been very involved in the development of the plans, along with our chairman [Barry Diller] who’s been very involved in it as well.
TB: I know that there have been some changes to the plans ‚— some of the timeline has been pushed back a little bit. Do you envision Expedia being split on both sides of Lake Washington or will this be a wholesale move still.
Mark Okerstrom: We’re going to move the bulk of operations over there. We are going to have a Bellevue presence though. … Right now the thinking is that we’ve got a lot of folks that, maybe they’ve got to pick up their kids three times a week or they’ve got coverage only you know on certain days. And what we want to do, at least what we’re thinking, is having bookable space — so it’s not necessarily a certain team that’s here full time but actually people may be able to book 10 days a month, or two days a week and actually help ease the burden of having to move over there, and then we’ll have similar space over there. And the great thing is these things work (video conference equipment) so we don’t have to be physically in the same place always at the same time.
TB: As you think of yourself as a leader, is there is CEO you model yourself after?
Mark Okerstrom: Boy. You know, I don’t know if there’s anyone particularly I model myself after, I think that you know first of all, I think as a leader of a company like this, you’ve got to be humble because you don’t have all the answers — you can’t have all the answers. You’ve got to be willing to listen and learn, and you’ve got to be passionate about what you’re doing because this is a time-consuming job. And you’ve got to love people. And I have all of those things, those are part of what I believe in. Honestly I think there’s a lot of great CEOs that exhibit those qualities and I think there’s obviously a lot of them that don’t. But I think you know those are the four attributes, and I think that leaders that have taken companies from you know one to 100, then 100 to a thousand employees and a thousand to 10,000 and ten thousand to 100,000 — the likes of Bill Gates, and Jeffrey Bezos, and Eric Schmidt at Google — I can’t help but look at those leaders and say, they must have gone on an incredible journey of learning, and to be that successful, they must have been people that listened and people that were at least in some respects humble, and so I’d probably put those three names up, if my belief about those attributes is true, of people that I would aspire to be like.
TB: What do you do in your spare time, do you play sports? You’ve got kids.
Mark Okerstrom: In the winter I like to ski or snowboard. I grew up spending a lot of time at Whistler. And so I love doing that. The kids kids generally love skiing as well. I love to spend time on Whidbey Island. It’s so peaceful, and something happens when you take that 15 minute ferry ride — it’s just different. Different worlds.
TB: Anything else that people would be surprised to know about you?
Mark Okerstrom: I’m a pretty good dancer. (Laughs) In my own personal way.
TB: What kind of dancing do you do?
Mark Okerstrom: I can do the worm reasonably well. I’m not joking. Watch this right here.
TB: Oh my God. Wait, wait, wait! … I don’t have my camera out!
Mark Okerstrom: You just saw it. [Laughter.]
TB: I missed the picture! Wow. Well, for the record, that was an actual worm performed on the floor of the conference room, by the new CEO of Expedia, Mark Okerstrom.
[Editor’s Note: Spelling of Egencia corrected since original post.]