Expedia, Inc.EXPE

Morningstar Rating

Stock Research and Analysis

by Dan Su, CFA

Online travel giant Expedia EXPE is at the center of business and leisure travel activities, providing efficient distribution of travel inventory to vendors as well as one-stop shopping convenience to travelers. Gross travel bookings of $34 billion Read more

Bulls Say

With a well-established supplier network spanning hotels, air travel, tour packages, car rental, and other services, Expedia will continue to benefit from the shift to online travel bookings.

Expedia is aggressively targeting to expand travel inventory in Europe and Asia-Pacific markets where online travel is gaining popularity, but adoption rates are lower than in the U.S.

The Trivago acquisition in Europe should help Expedia gain better access to travel-related traffic on the Continent and participate more in the travel media advertising market.

In addition to opaque-pricing site Hotwire.com, Expedia is actively working with Groupon and low-cost airline AirAsia to serve the price-sensitive leisure travel segment around the world. Read more

Bears Say

The U.S. online travel market, which accounts for more than 60% of Expedia's gross bookings, looks saturated, and we expect growth in the near future to be fairly modest due to economic uncertainties and high unemployment.

Expedia is outpaced by key competitor Priceline in the fast-growing international markets in recent years. International bookings at Expedia grew by 30% annually since 2007, compared to 53% at Priceline.

Competition in online travel is intense due to low entry barriers and the lack of switching costs for travelers. Search engines, meta-search, social media, and daily deals sites can all pose threats to Expedia's competitive position. Read more

Management

We think Expedia's stewardship of shareholder capital is standard. CEO and board director Dara Khosrowshahi has been at the helm since Expedia was spun off from InterActiveCorp IACI in 2005, and has been instrumental in executing the platform upgrade Read more

Profile

As the world's largest online travel agent, Expedia provides booking services for hotel rooms, airline tickets, rental cars, cruises, package tours, and other travel products. Read more