This paper’s main objective is to analyze the on line travel company Expedia taking into consideration factors such as its financial standings, present and future strategies, industry standards and competitor and finally, an intricate economic examination. With the tools we learned in our MAcc Financial Statement Analysis, we were able to break down the company’s available financial and contextual information, such as it’s history, Porter Five, current and future strategy and financial statement numbers, in order to build a more clear and concise picture of Expedia’s current business position.
Introduction and Brief History
Expedia, owned by Expedia INC, is one of the world’s leading online travel companies. Starting in Redmond, Washington, the company headquarters are now in Bellevue. In 2012, Rich Barton, the founder and CEO, stated on the company website that, “in 15 years one company literally has changed the travel industry forever and has become the most important player in it”. In its 18 years of existence, Expedia, INC has changed its structure by being acquired and subsequently acquiring other companies, and has become the largest travel agency in the world. Beginning a brief history, Expedia was first launched in October of 1996, debuting on the web as “Microsoft Expedia Travel Services”. In November 1999, Expedia announced their IPO and by January 2001 saw their first profitable quarter. A huge milestone for Expedia in Q4 of 2001 was when the company surpassed Travelocity as the #1 Online Travel Company. IAC (an ecommerce giant) acquired Hotels.com in June 2003, Expedia in August 2003, Hotwire in November 2003, and in March 2004 IAC acquired Egencia and rebranded it as Expedia Corporate Travel. In January 2005, Expedia took a controlling stake in eLong, a China-focused travel agency. And in August 2005, IAC merged its online travel businesses into Expedia, INC. Expedia, INC reached yet another milestone in 2007, when it was added to the S&P 500. Today, the Expedia, INC website offers information on the 12 different companies that they own. These companies are: Expedia, Expedia Affiliate Network, Hotels.com, Egencia, Hotwire, eLong, trivago, Venere, CarRentals.com, Classic Vacations, Expedia CruiseShip Centers, and Expedia Local Experts. With a mission of, “Revolutionizing Travel through the Power of Technology” the Expedia website blatantly declares statements such as “We Love Travel” and “We’re Everywhere”. Expedia hopes to help provide travelers with an easy travel planning experience. The company hopes to, “provide personalized service, the latest technology and the widest selection of vacation packages, flights, hotels, and rental cars”. Expedia also states that they “help everyone, everywhere, plan and purchase everything in travel”
Industry Economic Characteristics and Competitive Dynamics
Expedia is part of the very competitive online travel industry within the more broad lodging industry. The industry seems to grow as fast as the internet itself does. Back in 1999, the Travel Industry Association of America reported that 15.1 million consumers booked their travel online.2 10 years later that number had jumped to 70 million. Consumers are transitioning from using the traditional travel agent to booking online. The online travel industry is causing traditional travel agencies to modify and update their business models to compete and stay relevant. According to a Forbes article, Competitive Landscape Of The U.S. Online Travel Market Is Transforming, Expedia, Priceline, Orbitz Worldwide and Travelocity own 95% of the U.S. online travel market (as of April 2014). While Expedia dominates the U.S. with about 40% of the market share, Priceline has 35% in Europe. A benefit to the internet is being able to easily penetrate worldwide markets.3 While domestic U.S. travel bookings could satisfy the market, if another company is able to meet more demand for global travel and create more...
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