Expedia wants to be the world’s travel platform. China is standing in its way.
Expedia faces fierce competition in the Chinese market, both from powerful domestic firms like Ctrip and familiar rivals such as Priceline. Its efforts in Asia have stumbled in recent years. The Bellevue, WA-based company sold off its majority stake in Chinese travel site eLong in 2015, and it ended a partnership with Malaysian airline AirAsia in August.
Ignoring China isn’t an option. Chinese travelers account for a fifth of all tourism spending worldwide. That amounts to 130 million international trips taken by Chinese travelers at a cost of $258 billion in 2017.
Speaking at the Phocusright travel conference in Los Angeles last week, Expedia Group CEO Mark Okerstrom acknowledged that, for now, the company doesn’t “have a real chance of winning” in the domestic Chinese market.
Instead, the firm is focused on capturing Chinese travelers bound for international destinations.
“We haven’t given up on China,” he said. “Our big brands — Expedia, Hotels.com — are absolutely serving Chinese travelers.” International customers account for 38 percent of Expedia’s gross bookings, a figure that Okerstrom would like to grow.
Despite challenges in the world’s largest travel market, the company has sought to expand elsewhere internationally, primarily through acquisitions and partnerships. Expedia invested $350 million in Indonesia’s Traveloka in 2017, and it has a long-running partnership with Despegar in Argentina.
But the dream of competing in China lives on. Asked about what types of acquisitions he’d like Expedia to make in the future, Okerstrom cited two areas: the corporate travel market, to bolster the company’s Egencia business travel company; and the growing opportunity in China.
“In a totally different world, where the U.S. and China relations are much better, boy, I would love to have a big player in China to be part of the Expedia family,” Okerstrom said.
Okerstrom, previously the company’s chief financial officer, became Expedia Group CEO last year, succeeding Dara Khosrowshahi when he left to become CEO at Uber. Okerstrom and Khosrowshahi had led the company through a series of acquisitions, including Trivago, Orbitz, and HomeAway.