Hardly shocking to read that IAC-controlled Expedia is possibly looking to buy-back $3.5 billion in stock or up to 42% of the company at an offer of $30/share. The Financial Times also reports that there are rumours the company may spin out it’s TripAdvisor unit and eliminate up to 400 positions. In an odd turn, given that they don’t normally comment about such things, the company has denied these rumours.

Given that Expedia’s domestic growth has essentially stopped (1% revenue increase in Q1) and it’s international growth is underwhelming (25% growth looks fine, but it’s a far cry from the triple-digit stuff of not-too-long ago and on a small base, to boot) you can easily see why it’s valuation might be under scrutiny.

Layer in the fact that the only real share price growth Expedia has seen since it was spun out the second time, about two years ago, appears to have been the last stock buy-back, and that IAC’s principle investor and Diller’s friend John Malone’s Liberty Media might well be wondering where their money is, and you can easily see why another buy-back might be in the cards.

Finally, the pressure on the model itself is intense. Strong competition from Travelocity,Orbitz and other third party players, the growing power of suppliers who want to control their distribution, the rise of meta-search tools like Kayak and SideStep, plus overall category maturation and you don’t have to squint too hard to see why getting the price up and getting out of Dodge might work out just fine.

UPDATE: Expedia has issued a release confirming this buy-back. However, this quote from Diller is beyond my ability to wrap my head around:

"With this action, we couldn't be clearer that the management and the Board of this company are confident in the value of Expedia and in its long term future," said Barry Diller, Expedia, Inc.'s Chairman and Senior Executive."

I guess maybe I'm just slow...

Congratulations to my former Expedia Europe colleagues on the launch of TVTrip.com, a bilingual (so far) video rich travel comparison site. The team, including Marc Ruff - former head of Expedia France, Anja Keckeisen - former head of Expedia Germany, and Fabien Bourdier - Marc's Number Two at Expedia France, are some my favourite, and among the most talented, members of the original Expedia team (I actually interviewed Marc and Fabien Back In The Day), so I am very pleased to see them getting back in the saddle.

More comment about the service itself once I have had a chance to spend more time with it. It looks pretty solid from a content perspective for a beta, though. They have been busy.

I don't know why I'm noticing more travel related stuff these days, but I am. This one caught my eye, from The Canadian Travel Press, a travel industry publication, with a primarily retail travel agent readership. The piece asks several travel agents across Canada the following question (and for the record, I am a huge fan of traditional travel agents, and think that the good ones are worth their weight in gold). Here is the question and one very telling answer:

Q: Do you believe that Internet booking companies like Expedia are cutting into your business significantly?

A: "I know we [travel agents] lose sales. It's a problem, but what can we do?"

- Suzanne Goyer, Suzanne Goyer Travel, Montreal

Well. I'm just not going to say anything further. That quote alone speaks volumes in many, many ways.

I share a few thoughts about WestJet's challenge to expand distribution in the US, and add new routes. The story is here.

The Star Alliance comment is true, but the real issues are deeper than what the reporter was able to fit into the story.

Firstly, the real strength of Star Alliance for Air Canada on transborder is the United codeshare, which ensures that US originating passengers flying to Canada see Air Canada flights, since they carry usually carry a United flight number. Same with US Airways (which includes the former America West now, too). This is huge, because it guarantees visibility (albeit under another name) for these services in a market where Air Canada is not well known, ties in to other connecting flights providing additional source passengers, and gives points on the other airline's loyalty program.

Secondly, WestJet's challenge isn't just in securing interline and codeshare partners (to provide valuable inbound connecting passengers, and allow it to feed same on the outbound) but in talking to and working with them. As a low cost carrier model, WestJet has had a mostly closed system in which they operate the airline and distribute their seats. I hear that they have tried to make a change to use technology provided by Travelport, which I have been told has been a real mess (if true, I'm far from surprised. Travelport has been a major disapointment almost since it's inception). Working with other carriers and other distributors means more technology investment and increased pain of "participation" in various platforms used to sell airline tickets, all of which complicates the WestJet model. Plus, they end up having to pay all the various parties for this distribution, much like full service carriers do, reducing their overall yield per ticket sold. This is as opposed to carriers like Ryanair who simply don't use any distribution and keep costs low and control in-house.

A smaller issue is that WestJet doesn't offer a First or Business Class service, which makes it harder for it to offer interline, or connecting, services to Asian or European carriers who do.

The real question, for me, is why WestJet seems hell-bent on going the full-service-type distribution route. They need to expand, sure, but this way of distributing their product adds cost and reduces control, especially in a world of increasing online distribution where the suppliers should hold the cards.

I certainly wouldn't be going that way. But that's just me :)