Consumers crave information. “They crave data,” said Expedia, Inc president and CEO Dara Khosrowshahi. “The more information we feed to consumers, the better they react.”
He knows what he’s talking about. In 11 years, he has led the online conglomerate to become a leading global player in today’s absolutely massive US$1.4tril (RM5.6tril) travel market.
Expedia, Inc has a fast-growing US$6.6bil (RM26.4bil) annual revenue, operates more than 150 travel booking sites, has more than 450 million monthly site visits, serves travellers in over 75 countries, and offers more than 1.5 million lodging options and 8.6 billion flight searches. That’s a lot of numbers.
Expedia is essentially an online marketplace with a glowing portfolio of travel brands with global reach – including core groups Expedia, Hotels.com and Egencia, as well as sub-groups such as Hotwire, Travelocity, Venere, trivago and Wotif.
To a newbie, the business of this company would seem like butter – spreading quickly in all directions, from airlines and lodgings to corporate travel, car rentals to on-ground activities and insurance.
In April, media from around the world were invited to Expedia’s office complex in the beautiful city of Bellevue, Washington in the United States, for a Global HQ Tour. There, we learnt from various leaders in the organisation what exactly goes on behind the scenes – from the technology-driven business module to the very inclusive work culture, as well as its mission to engage and delight the consumer.
Khosrowshahi revealed: “Consumers want the real and raw data. We tend to want to package it, and present it in a simple and clear way, but our consumers are telling us ‘don’t edit me, give me everything and I will do the editing’. This has been quite a surprise for me – they seem to trust data from other consumers more than something that’s neatly packaged.”
For this reason. Expedia is intensely focused on providing real-time data (which Khosrowshahi feels is going to be the key differentiator between companies, in five to 10 years) and is already preparing for a time when machines are able to not just analyse but also understand when to act on data.
The 46-year-old (who, according to the Puget Sound Business Journal, was paid around US$95mil, or RM380mil, last year) is a commanding presence, and fielded questions posed by journalists not just with ease, but humour and style.
When asked what his thoughts on space travel were, Khosrowshahi jokingly said that though he wouldn’t be responsible for it, Expedia would definitely sell it! “Space tourism will happen sooner than people think, and I’m hoping the commissions will be very high!” he said, drawing laughter from all present.
According to the Brown University alumnus, the world has become such an unpredictable place with new technologies moving from inception to mass market much faster than they ever have.
He detailed how it took the colour television 25 years to be adopted by at least 50% of consumers, while it took the Internet only 11 to 12 years, Facebook seven years and WhatsApp just three to make that leap.
“The time-frame for mass market adoption has become shorter and shorter, and as a result one’s ability to plan for the future has become less predictable. For us as a company, this has resulted in our gearing Expedia, Inc to be much more agile, and faster to react to external changes,” he said, sharing what he feels are key traits for success.
“We focus on three things: recognising and reacting to changes that are happening around us; making sure we have a culture that can face these changes no matter how difficult; and creating structures within our company so that we are not just ‘one big company’ but a series of smaller entrepreneurial groups which are able to react and change direction very, very quickly.”
Khosrowshahi said that as the pace of change continues to accelerate, the companies that are going to win in the end are those that structure themselves to prepare for these changes, act on them and be first to market.
“We plan to be one of those companies,” he said firmly.
When asked what the heart and soul of Expedia is, Khosrowshahi – who also serves as a member of the board of directors for Fanatics.com and the New York Times Company – metaphorically alluded to finding one’s North Star.
“It starts with the product, then we need great technology to make a great product for the consumer; and we need great people to build that technology. So it is an absolute line. We all recognise that our ‘religion’ has to be our product. That’s our North Star.”
Test and learn
One thing you’ll hear from anyone who works at Expedia is how vital data and experimentation is to decision-making. The staff adopt a “scientific method” – an approach to work kick-started by Khosrowshahi and Aman Bhutani, president of the Brand Expedia Group.
Aman, 39, hails from Delhi, India, trained as a software engineer, has a degree in Economics and an MBA, and previously led the company’s global engineering team.
Aman waxes lyrical about how at Expedia, they have a culture that accepts failure! That might sound odd, but to him and the rest of the team, there is something very scientific about this and it enables them to move forward quickly.
“When people feel they are part of a safe environment, they are not afraid to take risks with ideas. Then we test and measure these ideas, and we learn. In our Expedia culture, we minimise time debating on what should and shouldn’t be done. We are focused on testing out ideas and going by the data,” said Aman.
He added that, as they aimed to learn faster and faster, they realised that the way forward was for people to self-organise; as opposed to anyone telling others what to do.
“In 2010 we took away all the internal debates that used to happen between various executives and teams and said you can’t think about it in terms of hierarchy driving decisions. Tests had to come from an observation, hypotheses had to be formed, and then the results would dictate if we invested further.
“Once we had everyone aligned internally, we started seeing velocity grow; the Brand Expedia Group has gone from 50 tests in 2010, to 1,375 tests in 2015! Our commitment to maniacal testing places a huge emphasis on embracing failures, to drive rapid iteration and future innovation across the business.”
Aman also feels that Expedia is still in the early stages of becoming more intelligent.
He said: “Just like we did 20 years ago by giving people the ability to book travel online, we’re currently on track to doing incredible things for the future of travel around the globe. As new players enter the market every day, from startups to legacy brands adopting new technologies, we believe we are just getting started in terms of pioneering advancements in the travel industry.
“From continued innovation on mobile to developing new ways suppliers interact with our consumers, we remain deeply motived by our customers’ constantly evolving appetite to travel better, smarter and more efficiently.”
At Expedia, mobile is its leading channel for conversion (namely, the number of website visitors turning into customers by completing a transaction).
The figures today are grand – 55% of travellers engage in cross-device shopping, more than one in four room nights are booked on a mobile device, 40% of traffic arrives via mobile devices, 130 million cumulative app downloads worldwide, and more than 150 mobile websites in nearly 70 countries, in over 35 languages!
This wasn’t always the case.
“Early on, a significantly smaller number of customers were using their mobile phones for converting. So the more traffic went to mobile, the worse the conversion rate became. And if you ran the math, it was pretty bad,” admitted Khosrowshahi. “The cost of acquiring the mobile customer was also higher than the cost of acquiring the desktop customer.”
According to Khosrowshahi, however, the company very quickly recognised those trends and started talking about what would happen if mobile penetration moved faster than anticipated.
“We, as a team, were able to flip this over and really invest in our mobile product ahead of the contribution of mobile for business.
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“And now if you look at our mobile apps, and our mobile web, mobile is the leading conversion channel. What’s more, we think because we are selling multiple products – certainly on Brand Expedia, our headline brand – we’re able to use a context that mobile gives us to upsell additional products to consumers which can be downright delightful!”
Core app features include being able to search and book quickly, receive travel alerts and access trip details, save with mobile exclusive deals, reserve a rental car with no cancellation fee, and even get tickets for tours, shows and theme parks.
“For example, if you are taking a flight to Seattle, we can tell you what gate to check in to, where your bags are going to show up, if you have an afternoon free, we can tell you lots of fun stuff to do in the vicinity … that’s the context that we have because we are a multi-product business,” Khosrowshahi said. “And that’s how we differentiate ourselves from some of our competition.”