Re: Asia Pacific Branding for Online Hotels Reservations: Expedia Inc.

Q1. Critically evaluate the principal causal factors that encourage a tech company like Expedia

to undertake localization strategies of their products.

Organizations tend to take several strategic measures in order to be successful in a global market

as well as to adapt to the needs of global consumers. In this context, localization strategy is one

of the most preferred strategies being adopted by major business organizations especially in a

tech company like Expedia Inc. (to be commonly referred to as ‘Expedia’). According to

Professor Pankaj Ghemawat who is the author of Redefining Global Strategy discussed the

importance of “Adaption” as it relates to localization. He stated that companies with this strategy

often develop products which are customized to the specific country. In addition, the companies

may also have a decentralized management philosophy whereby location managers were given a

high degree of autonomy in decision making. In this way, the location managers are able to react

quickly to any change in local market trends or in any other business landscapes.

According to Nitish Singh who is the author of ‘Localization Strategies for Global e-Business’,

there are three key advantages of localization. Firstly, to improve customer satisfaction by

carefully refining and adapting content to resonate with a culture and to meet local peculiarities.

Companies spend millions on advertising and campaigns only to find that their new slogan

translates into something that wasn’t exactly intended in their target country, often with hilarious

or downright offensive results. For example, when Cadbury delivered an act of ignorance in

2002, when it launched an advertising campaign in India with the slogan, “"I'm too good to
share. What am I? Cadbury's Temptations or Kashmir?" The strapline over Kashmir could be

deemed as insensitive to Indian citizen (Rahul Bedi, 2002).

Secondly, localization allows more consumers to learn about your products and increases your

customer base. For instance, Expedia noticed an increase in mobile booking exceed 50% after

localizing their website by providing great content, translation, payment types and thorough

inventory including categories beyond accommodations and flights like car rentals and activities

(Mark Okerstrom, 2018).

Thirdly, localization allows you to enter new markets more rapidly. Companies that start

localizing tend to grow faster as in the case of Expedia when they bought over a leading Chinese

travel distributor called eLong that was believed to be a rapidly growth of US$47 billion

domestic travel market.

In the context of Expedia, the causal factor to adopt localization strategy is basically due to its

large customer base and strategic alliances as well as business-partners network around the

world. In this way, Expedia undertake to create local content website for countries with high

visitations in order to accommodate local preferences in making travel arrangements. As Expedia

website can be accessed worldwide, so Expedia has been very successful to achieve its global

reach, especially in strengthening its Asia-specific services through partnership. Furthermore,

Expedia attempted to target its audience in South East Asia by adding multiple Asian languages

option on to their website, and in doing so, Expedia is able to serve the market better and

eventually stand out as a business leader in the travel industry.

In terms of strategic alliances, Expedia focused on the importance of developing a strategic

alliance with a reputable and influential localized or regionalized company. For instance,

Expedia has established a strong partnership with the top Malaysian budget carrier AirAsia by

creating Air Asia Expedia Travel (AAE) in the year 2011. This partnership enables Expedia to

operate travel-booking website with Air Asia which is commonly referred to ‘Air Asia Go’. As

an official third-party online distributor, Expedia is allowed and able to bundle AirAsia flights

with hotel stays.

From a pricing standpoint, Expedia ensures it offers the best prices in Asia Pacific markets by

bundling travel products. For example, by booking both the flight and the hotel stay as a single

purchase can provide big saving to the consumer.

In addition, Expedia has worked closely with local tourism board by the provision of advisories

on matters pertaining to online travel industry. This is favorable for Expedia not only to

understand the local market but also to promote numerous activities in that market region. For

example, Myriam Younes who is a Director at Expedia Group said, “Expedia has been

successful in helping Singapore Tourism Board with digital marketing campaign to showcase

Singapore’s gastronomical and cultural scene” (Expedia Media Solutions, 2016).

Technology advancement is another causal factor for Expedia to adopt localization as part of its

strategy. As reported by Groupe Speciale Mobile Association (GSM) of the European Union, the

number of mobile subscribers in the Asia-Pacific region has reached 2.7 billion in 2017 which is

half the global figure. So according to CEO of Expedia, Khosrowshashi, 40% of worldwide
traffic for Expedia comes from mobile devices and more than one in four room nights booked

globally was made via mobile in 2016.

As such, Expedia currently continue to make major investment in technology. Expedia invested

heavily on technology development for market expansion and gained business competitive

advantage from the benefit of technological innovation. For example, Expedia could add

functions that provide real-time travel information on mobile devices in their own languages.

This includes Expedia rolling out services via Amazon's Alexa intelligent personal assistant

feature in the U.S., and also to be tested in Asia (Nikkei Asian Review, 2017).

In conclusion, Expedia has been successful in its quest for global recognition by adopting

localization strategy at the respective region or country. It has effectively adopted the website

approach with strong regional based partner like Air Asia. In addition, the pricing for flight and

hotel reservation become a cost saving factor as compared to other competitors. Similarly,

Expedia also give serious attention to technological innovation and advancement, such as mobile

apps in local languages.

Q2. Using appropriate globalization models, evaluate the success of Expedia since

its conception in terms of its marketing development.

Success of Expedia started in America when Expedia.com launched on October 22, 1996 as a

division of Microsoft and in 2003, it was purchased by InterActiveCorp (IAC). In 2005, IAC

spun off Expedia Inc., which owned its travel group of businesses, including Expedia, Expedia

Corporate Travel (ECT), Trip Advisor, Classic Vacation, eLong, Hotels.com and Hotwire.com.

These acquisitions enable Expedia Inc. to target different segment in different market, for

instance, the creation of Expedia Corporate Travel specifically to target business travelers by

serving more than 2,000 companies in the United States (Expedia Group, 2019).

In this way, it allows companies and corporate travel planners to make travel arrangement with

better savings through Expedia Corporate Travel website. As such, Expedia Travel Corporate is

able to adhere to each company’s travel policies in favor of the corporate customers due to

greater flexibility of bookings.

In addition, a survey was conducted with Northstar Research Partners, an American based

marketing research firm, focusing on shopping habits, influences and motivations of travelers

across four generations reveals that Millennial travel more than any other generation (35 days per

year) and are more likely to be influenced by advertising during the decision-making process.

This survey concluded that, across all generations, Americans are open-minded travelers

especially the millennial, who are deciding between two or more destinations and seeking help
and inspiration during the travel planning process which is why Expedia travel websites are

widely used by the millennial generation from America.

It is also important to note that travelling mobility has become much easier and cheaper with an

increase booking through mobile applications which are widely used by the younger generations

thus Expedia has made its application and online booking to be more user-friendly and efficient

as to increase booking confidence and delight for this age group.

Another success factor for Expedia, it has the economy of scales through thousands of its

suppliers in the area of services like hotels, car rentals, flights and travel products based in

America. For example, Hotels.com provides over 15,000 hotels in more than 400 destinations

mostly in North America. Because of its large nature, Hotels.com has succeeded in capturing

traveler’s attention when it comes to holiday booking by creating innovative website and a

catchy tagline phrase “We know hotels inside and out” which were used in their marketing

materials and advertisements.

Furthermore, Expedia has extended a wider network through the ‘Interactive Affiliate Network’

(IAN) which was a division of Hotel.com, whereby organizations or individuals independent of

Expedia could leverage Expedia’s content by setting up a domain name and that domain

connects directly to an Expedia website. This effort would encourage more visitors to search and

book Expedia’s inventory through a different interface. The success of this IAN platform has

seen more than 66,000 affiliated companies and organizations participated in this program.
In pursuant to the above, Expedia is adopting the same methods in targeting Asia Pacific market

as Expedia knows that people in Asia are getting more demanding in their travel needs.

According to Simon Fiquet who is Expedia Southeast Asia and India General Manager,

“travelers from different parts of Asia have different preferences when it comes to holiday

bookings, for example, Japanese travelers are particular about room cleanliness, the Koreans

prefer rooms with a bathtub, Chinese and Indian travelers want good food and vegetarian

choices, while the Muslims look for places with halal options. Therefore, for every country,

Expedia tweaked its sites and apps to best suit preferences so that travel bookings can be a

breezy experience”.

Asians are the biggest users of mobile Internet and most of their travel bookings are done via

smartphones. Expedia saw 180 million downloads of its mobile app last year with nearly one

third of all transactions and more than 65 percent of hotel room night bookings coming through

mobile platforms are mainly from the Asian market (Expedia Inc. Annual Report 2017).

Therefore, strong emphasis on localization strategies has been implemented to serve this market

better. To form the right strategy, Expedia has conducted a survey based on the data obtained

from international tourism focusing on visitor arrival and departure as well as spending for

personal or business travel in recognizing the most important travel needs for market in Asia.

The buying of eLong, a Chinese travel distributor, can be seen as a positive distribution strategy

as eLong distributed 2,600 hotels in China and it is believed to be worth US47 billions of

domestic travel market for China. Similar efforts are being pushed through joint ventures and

investment in existing businesses with other Asian countries.

It can be concluded that merger and acquisition by Expedia has brought about corporate

strategic advantages. Accordingly, Expedia emphasis on the importance of localization and its

competitive advantage, which made it very successful in their global expansion.

Q3. Using International firm competitiveness evaluates the critical success factors of

Expedia’s global penetration.

Expedia successfully build a sustainable competitive advantage in the travel industry by firstly,

innovating new products and services. For instance, in an article published in the Economic

Development Board Singapore (2017), recognized Expedia innovation lab, which has deployed

electromyography, real-time eye tracking and a powerful slew of software that can be combined

with real-time questions to the user, uncovers emotional responses such as delight or frustration,

that are used to develop products and the way users interact with Expedia’s website. By having

all these features help Expedia to understand the consumer behavior in the online environment

and thereby offer a unique comparative advantage against its competitors.

Secondly, Expedia has thousands of suppliers from travel sectors when they acquired some

brands and businesses such as Hotels.com, HomeAway, Trivago and more, which give them the

economy of scale. The Expedia Group Annual Report for 2017 reported Expedia scale of
operations enhances the value of technology innovations they introduce on behalf of their

travelers and suppliers. Hence the size and scale enable Expedia to negotiate competitive rates

with its supply partners, provide extensiveness of choice and travel deals to their customers

through an expanding supply of portfolios. Similarly, the size of Expedia’s worldwide traveler

base makes their websites an increasingly appealing channel for travel suppliers to reach

customers. For example, Expedia launched its private label program called the ‘Interactive

Affiliate Network’ (IAN), which gave suppliers and other companies access to Expedia's

booking engine to set up co-branded web sites so they could enhance their site content by

offering full service travel booking functionality. Companies such as American Express

Vacations, National Car Rental, National Leisure Group, and the Hotel Reservations Network

have joined the program as to leverage the Expedia brand.

Thirdly, Expedia has spent massively on research and development and tech innovation

estimated to be US1.2 billion since 2016, by developing its own Innovation Lab based in

Singapore, headquarters in the USA and recently in London. By this move, Expedia is able to

challenge the threats of new competitors in the travel industry whilst reducing the chance for

competitors to replicate.

Fourthly, Expedia have understood well the travelers’ behavior and preference when it comes to

booking travel in order to overcome the threat of substitute products and services. For example,

Expedia has started to include halal hotels and restaurants in Expedia’s inventory for Muslim

travelers due to the rising numbers of the global Muslim population and businesses around the

world.
Fifthly, Expedia aim to be service oriented rather than product oriented when they operated toll-

free customer support lines in the United States and around the world. Similarly, some of its

operating units operated a toll-free booking line and even a live chat for a faster response time.

Lastly, Expedia operates in a very competitive travel industry by negotiating directly with the

hotels and using Global Distribution Systems (GDS) to book hotel reservations, cruises, air

tickets, car rentals, different attractions and services. GDS systems are expensive to access, and

so many suppliers are convinced that Expedia could reach more customers than its competitors.

Globally, Expedia, Cendant TDS and Travelocity were locked in a battle for the top ranking

among online travel services. However Expedia experienced more customers than Cendant TDS

and Travelocity according to Hotel Marketing, 2005. Cendant TDS strength in its large and full

range of travel products specifically Orbitz.com whilst Travelocity's differentiate itself on the

basis of outstanding customer service and guarantees.

In addition, Expedia also consider the importance of building relationship with the local tourism

promotion board and government agencies. As such, Expedia has signed partnership with several

tourism boards, such as Tourism British Columbia, South Africa Tourism, Singapore Tourism

and Netherland Board of Tourism on the basis of creating effective campaigns to increase

tourism and hotel bookings for their partners’ destinations. As quoted by Andrew Van Der Feltz,

Director of Netherland Board of Tourism, “The Expedia team uses their expertise and in-depth

knowledge of online consumer travel behavior to create integrated, strategic campaigns to meet

our key marketing objectives. We leverage Expedia’s brand and marketing reach to further drive

interaction using relevant and insightful content about Holland’s cities, events and attractions.”
Q4. Recommend the various market strategies that Expedia could utilize to ensure its success in

the South East Asian market.

Organizations tend to take several marketing strategies in order to be competitive as well as to

maintain a position in the market. In this context, SWOT analysis is one of the most preferred

strategies being adopted by major business organizations. The SWOT analysis is; in essence,

refer to the internal strategic factors such as strength and weaknesses, and external strategic

factors such as opportunities and threats (Michael, Watkins, 2015).

According to Watkins, SWOT analysis method produces more effective results when done

backwards; TOWS rather than SWOT. He suggested to focus on identifying emerging threats

and opportunities, by doing so, can provide a solid foundation for talking about weaknesses and

strengths. In the case of Expedia, it has successfully adopted the TOWS strategies to help align

the company’s efforts and focus its strengths on achieving big goals.

In term of threats faced by Expedia, there is an ongoing threat of the online travel booking

market, which large companies with sizable user traffic could enter the industry, such as Google,

Amazon, and Facebook could have a major impact on Expedia’s growth, especially in the

emerging markets like South East Asia. For instance Google has gradually been expanding into

the travel market when it launched Google Flights. To overcome this threat, Expedia has

developed new products, namely the Expedia Innovation Lab to enhance consumer experience

through online travel booking. Alternatively, it has also improved ways to serve its consumers by

becoming service oriented and focusing more on travelers’ behavior and preference.
Another major threat to Expedia is when the travel industry is affected by changes in economic

growth. In a downturn, consumers have less income and therefore could cut back on

discretionary expenses like leisure travel. Dan Wasiolek quoted “Expedia is not immune here, as

revenue growth was essentially flat in 2009 excluding Trip Advisor. At that time, the still-low

penetration of online travel bookings in developed markets helped prevent a more severe

decline. If an economic downturn were to occur now, developed markets would not offer the

same cushion as they did in 2009 because of more mature penetration and increased

competition”. So it is important for Expedia to identify which Asia Pacific market they should

enter and priorities to accelerate growth. Hence, Expedia recognized the importance of market

penetration through the data obtained from the World Travel and Tourism Council (WTTC),

which enable them to make the right decision about the Asia Pacific strategy.

The opportunities for Expedia remains strong if the company invests back into the business

either progressively or through additional acquisitions as in the case of eLong, HomeAway and

Trivago. The same can be replicated in new emerging markets which represent large growth

opportunities.

Opportunity in technology cannot be disregarded as Expedia decision to accelerate technology

spend is believed to be positive as it would support the company's network advantage. A survey

conducted by digital research company Criteo shown that 39% of 1,100 respondents in India,

Singapore, Australia, Taiwan, Vietnam and Indonesia primarily use smartphones for booking

travel, and 38% book while on the go.

So the emphasis on technology should be invested strongly on mobile, messaging and machine

learning for Asian consumers in order for Expedia to grow in the South East Asian market. The

CEO of Expedia, Dara Khosrowshahi in his statement released in 2017, said there are two keys

to winning in Asia, which is knowing the Asian consumers and adopting a mobile-first attitude.

Expedia is dedicated to driving customer satisfaction and perceived to be one of the best brand

equity among the potential new customers. As recorded in the Expedia Annual Report 2008,

Expedia has won numerous awards for Highest Customer Satisfaction for the third year in a row

and a Consumer award in 2015. So the strength of Expedia comes from its reliable after sales

support which has been resulted with high level of customer satisfaction and accordingly, the

Expedia brand has proven to be very well accepted among Asian consumers were positive when

it comes to online travel booking. So in order to ensure the continuity success of Expedia in

Asia, more effort must be put in making sure that global Expedia brand provide “local relevance”

in consumer experience.

According to a study of 45 most trafficked travel brands in the region by Google and Accenture

Interactive, Expedia Singapore offers the best mobile experience in Southeast Asia.

In addition, Expedia has built a leading network of online travel services, which has driven a

strong user base. Hence, Expedia need to accelerate their marketing spending to expand their

international presence in order to support their network advantage over time especially in Asia.

In this context, Expedia has improved their position in South East Asia through strategic

partnerships, for example eLong in Beijing and Shanghai. This move is considered to be crucial
as China will contribute nearly 20% of industry online booking growth over the next five years

as reported in the Chinese Outbound Tourism Research Institute (COTRI).

Finally, the acquisition of HomeAway also gives Expedia a leading share in the fast-growing

online vacation-rental market competing against Airbnb. The partnership allows Expedia to list

40,000 vacation rental properties on its website as reported by Travel Wire Asia and thus,

offered an alternative accommodation besides a hotel for Asian consumers. As such, the

acquisition has helped put HomeAway on the map whilst driving revenues for the group brand.

A report published by ForwardKeys, an IT and Business Intelligent Company with Headquarter

in Spain, the family travel is still a key driver in the Asia market, especially during the Chinese

New Year season where families tend to travel in groups. Particularly in China and India, where

tourists often travel in larger parties or with extended families, HomeAway presents itself as an

ideal vacation rental model. HomeAway Asia vice-president Prashant Kirtane quoted, “With

many families living geographically farther apart, a multi-generational trip is often the only

option for today’s modern and mobile family.”

Despite Expedia strong network advantage, there are competitors that already have the customer

traffic and network infrastructure scale that could be a weakness of Expedia. Focus entry from

Cendant TDS, Booking.com and Octopus Travelc.com would lead to slow market share growth

and limited margins. However, according to Dan Wasiolek who is a Senior Equity Analyst at

Morningstar Inc. said “the online travel market will have some level of increased competition

over the next several years, as the travel booking market remains large, at $1.5 trillion, and

online penetration of the travel market remains low, at 44%”. Hence, the importance of
competitive advantages by Expedia can be analyzed in its attempt to attain competitive results

and fastest growth.

It can be concluded that the consolidation of the North American online travel market with the

help of acquisitions such as Hotel.com, Trivago and HomeAway has strengthened

Expedia's position in the U.S. However, the company may have realized that the key to growing

further lies in emerging markets, especially in Asia-Pacific. So Expedia must take steps to grow

its presence in Asia through increased investment in technology and strategic acquisitions in

hope to capture this market, thus have more advantages to grow substantially in the Asian

market.
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