Expedia Recruits Asian Travel Agents to Expand Reach
While major online travel agencies are counting on increasing Internet penetration and rising income levels in Asian emerging economies for future growth in travel bookings, Expedia (NASDAQ:EXPE) has a more elaborate plan to capture market share in the travel market. Expedia via its Travel Agent Affiliate Program (TAAP) is partnering with travel agents by providing them access to its database of hundreds of thousands of hotel properties and air tickets, and not only helping them earn a commission on the bookings, but also liquidating more of its own inventory of travel products in the process. [1] On the online travel bookings front, Expedia competes with other leading players such as Priceline.com (NASDAQ:PCLN), Travelocity and Orbitz (NASDAQ:OWW).
We value Expedia with a $30.60 Trefis price estimate of its stock at roughly 15% premium to its current market price.
In an earlier article, we explored how Expedia’s TAAP helps it evolve from being another ‘competitor’ to a ‘supplier’ to travel agents and is in fact a noteworthy growth opportunity in markets with an already high Internet penetration. See Expedia’s Partnership with Travel Agents Adds New Leg of Growth.
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Why does partnering with travel agents make sense in emerging markets with so much scope for growth in online bookings?
More than a third of travel bookings continue to happen at the traditional brick-and-mortar travel agent even in the highly evolved travel markets such as U.S. and Western Europe. Hence a similar split can be reasonably expected to eventually exist in the markets, which currently have very low but rapidly increasing Internet penetration.
While most online travel agencies might be compelled to look into this segment when the online growth tapers down, Expedia clearly stands to benefit in the long run by being an early mover into this segment.
TAAP is entering Southeast Asia via Singapore with subsequent launches planned in Japan, Malaysia, Indonesia and Thailand.
View our detailed analysis for Expedia here.
Notes:- Expedia’s Travel Agent Affiliate Program Gains Momentum in Singapore, e Travel Blackboard Asia Edition, August 17’ 2011 [↩]