Expedia banks on technology edge(1)

Expedia is banking on its technology strengths to make a difference in Asia, said James Vaile, vice president for Expedia Asia/Pacific.

Expedia started out as a Microsoft company and although no longer owned by the technology giant, still carries a strong technology legacy, said Vaile.

"We build our technology from a technology perspective. That is what's lacking in Asia/Pacific," said Vaile, in an interview with TravelWeekly.

"We have a cultural discipline on technology development that we gained from Microsoft that is paramount for us now."

The first Expedia product Asia will see is its wholesale private label booking engine - Worldwide Travel Exchange (WWTE), which will give customers both Expedia's technology as well as global content.

"This enables us to give with our partners US$250 million worth of technology investment on a revenue share basis. It is an incredibly exciting and scalable part of our business," said Vaile.

There is no licensing fee or set-up fee involved; users only give a portion of revenues made on WWTE to Expedia. WWTE's client list includes American Airlines, Virgin Atlantic, British Airways, United Airlines, Hyatt, and Wyndam Hotels.

Even with the impressive list of mostly North American clients, Expedia is aware of the differences between the fragmented Asian markets and the more homogeneous North American one.

"We are rewriting the codes for Asia/Pacific," said Vaile.

By the end of the first quarter of 2003, Expedia's WWTE will include the air component, something that is trickier to retail in Asia due to the nature of travel, which usually involves multiple points, multiple carriers, and mostly traded on private fares.

But Vaile contends that multiple-stop products are not usually sold online in any case. "We thought we might encounter similar problems when we started in the UK, but what we normally sell there are point-to-point packages."

Vaile was instrumental in getting Expedia's UK operations off the ground as its managing director from 1998. After four years, its operation there is in the black.

WWTE's content, which it contracts globally, includes lodging, car and vacation packages. And with a new dynamic packaging technology that it introduced in the US 18 months ago and in Europe in May, travellers can pick and choose different travel components and put together their own vacation package.

The other business prong that Expedia is focusing on in Asia is its lodging business. The Expedia team will contract for and manage hotel inventory, making it available to its existing international retail sites.

Expedia's lodging business was built on a purchase in 2000 of Travelscape, a Las Vegas company. Travelscape is now considered the wholesale arm of Expedia.

For its 7,200 merchant hotels, Expedia has an Extranet tool that allows them to view and modify rates and inventory online. According to Vaile, this is a unique selling point for Expedia. "We have taken the lead from successes in other companies and built the merchant business from the back end," said Vaile.

While contracting used to be done only out of its office in Washington state, Vaile said his team will now do contracting with Asia/Pacific properties out of its Sydney office.

Expedia's third business prong that will eventually take root in Asia is its own branded retail sites. But Vaile is not putting a time line on it.

"Our international success stories have been based on the creation and distribution of local content, product and technology," he said.

Until it can roll out a version specifically for Asia, Expedia will not retail here under its own brand, said Vaile.

On whether Expedia has chosen the worst of times to start operations in Asia, Vaile said, "We know that irrespective of terrorist threats, as horrific as those are, consumers will still travel; they will just change their travel behaviour."

He admitted the current economic conditions have caused a "drop off" in travel, but he is confident with its distribution network that is "streamlined and easy", Expedia will get its message out.

"We are not competing in a finite market here in Asia. Every time a new player enters, the market grows," added Vaile.