What happens to Expedia if airlines and hotels opt to go it alone?
The online travel giant has been facing that ominous question through a series of recent contract negotiations and legal disputes with its longtime hospitality and transportation partners over the partnerships that let Expedia sell flights, hotel rooms and vacation packages online. But with new agreements now piling up, it appears the company will be able to largely avoid that fate by resolving the power struggles amicably.
The latest example: Expedia Group and United Airlines on Monday morning announced a new multi-year agreement that “ushers in an expanded relationship, meeting the strategic objectives of both companies and benefiting travelers around the world.”
The companies have been embroiled in a lawsuit since earlier this year, with Expedia accusing United of wrongfully threatening to withhold information about departing flights after the scheduled Sept. 30 expiration of their previous agreement.
In a statement this morning, Expedia and United said they reached a new partnership agreement, with an expanded scope: “The agreement continues Expedia Group’s leisure distribution with United, expands United’s relationship with Expedia Partner Solutions, builds on United’s relationship with Egencia, Expedia Group’s corporate travel business, and the companies will work to expand cooperation into other areas in the near future.”
The deal follows separate announcements recently between Expedia and European budget airline Ryanair and hospitality giant Marriott International.
Bellevue, Wash.-based Expedia Group includes brands and sites including Vrbo, Travelocity, Orbitz, HomeAway and many others, in addition to the flagship Expedia.com. Shares of both United and Expedia are down slightly in early trading following news of the agreement Monday morning.
Discussing the United lawsuit and negotiations in May on a conference call with analysts, Expedia Group CEO Mark Okerstrom sought to play up the company’s leverage and downplay its risk by pointing out that no one carrier represents more than 1 percent of Expedia Group’s overall revenue.
“When I look at the value that can be created by expanding the pie as opposed to focusing on dividing it, I think for both strategic and economic reasons, I would find it completely bewildering if United decided to not engage in that discussion,” Okerstrom said at the time. “But at the end of the day, they’ve got to make their choice and we will just move on. And I think United’s competitors would be very happy with the outcome, but I think it would be value-disruptive to both of us, and that’s not a place where we particularly want to end up. And I suspect that they really, in their heart of hearts, probably don’t want to end up there either.”
Expedia has giant competitors — notably Google, and Priceline and Kayak parent Booking Group. However, Okerstrom cited Expedia’s ability to provide “billions and billions and billions and billions of dollars of revenue” for carriers while lowering their costs related to credit card fraud and providing unique insights into their businesses.
In general, Expedia’s partners “have really started to work with us on a much more constructive basis, recognizing the value that we bring, the value that they bring and all of the different areas that we can work together to add more value,” Okerstrom said at the time.
Financial terms and other details of the United Airlines agreement weren’t disclosed, and neither company commented beyond their brief announcement Monday morning.
Expedia sued United earlier this year to preserve access to flight information after what was to be the upcoming expiration of their prior agreement. A federal judge in New York denied Expedia’s motion for a preliminary injunction in April, but that was just the first step in the case. Recent court filings hinted that the companies were working to resolve the dispute amicably, as scheduled conferences in the case were delayed to give representatives more time for talks.
Okerstrom was promoted to CEO when his predecessor Dara Khosrowshahi left to become Uber CEO two years ago. The company is scheduled to move its headquarters to the Seattle waterfront in the weeks ahead.
[Editor’s Note: Okerstrom will discuss Expedia’s business and the future of travel as one of the featured speakers at the GeekWire Summit, Oct. 7-9 in Seattle.]