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...

The Economist has a quick, solid piece covering the increasing fortunes of the old-school US commercial airline business. In short, the US$35 *billion* they have lost over the past five years (yes, you read that right) seems to have finally, possibly, just maybe, driven them to gain a closer to competitive and cost-based footing with the upstart and low-cost carriers.It also mentions JetBlue's recent challenges, including a loss making Q3 and resulting equipment sales, which I had not been aware of.

Always fun in the airline business, isn't it? I can only imagine how challenging it must be for third-party guys like ExpediOrbiLocity and others to be earning any appreciable compensation from those carriers these days, given the carriers' improving fortunes, search and metasearch (more on that in a future post - lots of action in that world), fenced inventory and CRS changes moving more power and money into their camp.

It might still be the milk at the back of the store and responsible for driving a lot of cross-sellable traffic, but increasingly the third party guys have to be looking at the air category itself in terms of revenue from booking fees and very little else. Everybody knew it was coming - it now must be close to here.

I've thought a lot about Google taking a serious run at the Travel category over the past few years. Mostly because that's part of what I was paid to do, and also because it makes a lot of sense. So I was interested to see Mathew Ingram's piece in today's Globe and Mail (which seems to have spun out of this blog posting) where he talks at length about the prospect. For the most part, I think he got it right.

For one thing, Google certainly has designs on being a portal, if their recent moves with Finance and Real Estate are any indication. Beyond that, their competitors are already there in Travel, sorta, with Yahoo!FareChase leading the way and msn Travel (in typical Microsoft fashion) representing a half-step towards a fully integrated travel "thing". As well, there is a lot of money at play, both from an ad and a distribution cost perspective, and they have reason to want to maximize it. Finally, if they have been nervous about upsetting the ad-revenue apple cart in the travel category (huge numbers) that nervousness has likely been reduced by things like IAC's purchase of Ask.com. IAC maintains a controlling interest in Expedia, and with this purchase is both a big customer of, and a direct competitor to, Google.

However, I think that there is a big difference between Google ramping up their travel "experience" and them actually fully taking on the OTAs. In terms of them having some multi-site search experience and sending traffic from that to an OTA or a supplier (airline, hotel etc.). that seems like a pretty obvious thing. Suppliers would love it, and the competitive gauntlet has already been thrown down.

But actually selling travel? Yikes. Why would they? Call centres, rules and regs, etc. etc. Easier to just further solidify their role as gate-keeper, and take advantage of the lack of loyalty and brand meaning that these guys have to crank out the ad money.

Also, worth noting that most of this applies less here in Canada. For a bunch of reasons, the OTA and Supplier landscape is different and it is less likely that the existing dominant players here (Expedia.ca, AirCanada.com and WestJet.com) would suffer or benefit much from such a move by Google. Why? Well, the competition is lighter here, they often have exclusive inventory, offer pricing of global inventory in Canadian dollars, work better and have brand meaning that brings a lot of business direct.

Technorati tags: google, yahoo, travel, expedia, travelocity, orbitz, aircanada, westjet

News today on the Yahoo! blog of the new-and-improved Yahoo! FareChase. I just checked it out and have one word: Wow.

The hotel integration is tremendous. They are pulling from snazzy tools like Flickr and various user generated reviews, are shoveling reach to multiple possible sellers, snapping in some very cool satellite imagery, and are even managing to maintain good integration with their legacy "partner," Travelocity. Lots more revenue potential for Yahoo!, more selling opportunities for others including the supplier, and a richer customer experience. A win all around.

So, where oh where is Troogle? Calling Mountainview! Jane? Hello?

More discussion here and here.

Tags: yahoo, yahoo farechase, travelocity, google

I took the car today for the first time in a long time, and ended up driving westbound on the Gardiner. Big news! Looks like Travelocity.ca has changed their mega-billboard down there. And now? It's almost legible! You can almost make out the name, barely read the scrolling text, and marvel at that stupid frickin' gnome  there, bigger than life. Stupid, stupid, awful, supremely-poorly-testing, ugly, obnoxious gnome.

At the exact same time I am passed by one of the gorgeous Expedia.ca buses, in all it's completely perfect, screaming yellow, crisp, clear, made-in-Canada, right-in-context, plane-and-globe branding glory.

It was one of those moments when you just sorta "get" why, in Canada, Expedia won and Travelocity lost. And soooo badly, to boot. With due respect to Sam, Michelle, and the rest of the Sabre crew in Dallas, they just pooched it royally  up here. It was theirs to lose, and they did.

And yeah, I'm biased. Proud of it. But that doesn't mean I'm wrong.

Technorati tags: travelocity, expedia, online travel, travel, gnome

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Somebody check the weather, because it could be that Hell has frozen over. Why? Well, I just made my first purchase on Priceline.com - and I am feeling pretty good about it. Now, as the guy who wrote the business plan for Expedia.ca and then was Chief Marketing Officer for Expedia.com, that's pretty scary stuff.

Here's the deal. We are heading to Halifax for Easter with the Grandparents, and as such need flights and a car. Well, for flights we had pretty specific requirements, so we went the traditional route (which in this case meant booking directly at AirCanada.com because it was $600 cheaper than on Expedia or anywhere else, but in fairness that's not always the case. Frequently, the online agencies have better deals, depending in when and where you travel - just not this time). We don't need a hotel, but do need a car. I went to Expedia.ca, Travelocity.ca, Hotwire.com (an "opaque" or you-don't-know-what-you've-bought-until-you-buy-it part of the Expedia family) and finally, to Priceline.com.

With due respect to my friends in the business, when you are picking a rental car up at an airport for a leisure trip, a rental is a rental. Though I do value the service bells and whistles when I am on business, when I travel on my own dime I will gladly trade a little convenience for savings. And for an airport pickup, you know who the choices might be, so what's the big fear?

So, in a nutshell? Priceline beat the pants off of everybody else. By a mile. And they have a neat little tool that guides your bid into likely-to-be-accepted territory. And I ended up getting the car from Hertz.

So, what will happen when I get there? Will it all be awful? Will I regret having done this? Will I hate William Shatner more than I do now?

We shall see. I will provide a full report when I get back.

Technorati tags: priceline, expedia, travelocity, online travel, william shatner