Expedia head admits reasons why its tours business is far behind TripAdvisor's

Travel booking giant, Expedia Group, has being selling tours and activities in popular travel destinations like Orlando and Hawaii for about 15 years. Numbers have shown that the company hasn't seemed to prioritize this sector and therefore is behind industry leader, TripAdvisor.

In a fairly candid assessment during Expedia’s recent second quarter earnings call, CEO Mark Okerstrom conceded that his company’s tours and activities business has been “under-funded” because of Expedia’s traditional focus on its lodging business.

“This is one of these products that just has a lot of potential, but in a big business like ours, where lodging ends up really in the roof, sometimes these things get underfunded,” Okerstrom said in response to an analyst’s question. “We are putting more capital into it right now and we’re optimistic that it can be a bigger driver going forward.”

HOW BIG IS EXPEDIA’S EXPERIENCE BUSINESS?

How big an experiences business is Expedia Group operating? The latest numbers the company disclosed are more than $500 million in gross bookings, which means the full value of the tours and activities sold, in 2017, and a few months later Expedia said the business was growing at a 20 percent clip.

If Expedia Group’s experience business were to grow at that pace through the end of 2019, then it would notch around $720 million in gross bookings; assuming it earns an average of around 20 percent commissions, then Expedia would generate around $144 million in revenue this year from its tours and activities business.

Industry leader TripAdvisor lumps its experiences and dining reservations businesses together when doing financial reporting, but we estimate that the revenue its experiences business would generate in 2019 would be roughly about twice the size of Expedia’s tours segment, or some $270 million.

Okerstrom said Expedia Group is “reimagining” its tours and activities strategy, and is investing in it to accelerate growth.

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