Published on April 22, 2020
Former President at Hotels.com
Scott joined Hotels.com in 2003 when the company was a Dallas-based startup. He spent 5 years in product and customer marketing before moving to SVP where he was responsible for the global website and product development. In 2012, Scott was then promoted to President of Hotels.com with full P&L responsibility. Scott previously spent 3 years at Blockbuster as Senior Director of Strategic Marketing for Blockbuster Online, the incumbent competitor to Netflix, where he was competing directly with the now video streaming giant. Read moreView Profile Page
I just want to compare Expedia and Booking, for a moment. Clearly, two great companies that define that whole space. Why do you think Booking is so much leaner, specifically, than Expedia? Expedia has, roughly, two billion, opex or fixed costs, versus Booking, which is under half of that. What is the major difference here, in the way that they operate?In order to answer this question, I have to give you a little bit of context, to how the companies came about. It really will explain the differences and how they’ve evolved, over time. In the US, Hotels.com was one of the first, Expedia maybe second, in terms of developing an OTA strategy, going to market. There was a company called IAC, InterActiveCorp, that very early on, recognized that these businesses and the internet could disrupt big industries. Barry Diller was the chairman of this company and, basically, decided to start buying companies up and rolling them up, if you will, and creating more of a conglomerate.He stared IAC and they bought up a bunch of companies. Mash.com was one of their first. They bought Hotels.com, on the travel side, actually, before Expedia and then Expedia, Hotwire, TripAdvisor and so on and so forth. I came along, in 2004, on the Hotels.com side and IAC had just bought all these companies up and Barry had realized that the majority of his portfolio, within IAC, were travel companies and, therefore, why don’t I just separate them out and create an umbrella company, Expedia Group.So that’s what we did. Underneath the Expedia umbrella, these businesses that I talked about, Expedia, Hotels.com, Hotwire, TripAdvisor, they were all allowed to operate independently, even competing, in some cases. Dara Khosrowshahi was the CEO at the time and he really felt as if it would create agility and competition amongst the group, if we allowed them to operate independently. There were conversations, early in that stage, where we said, why don’t we roll some of these things up, so that we don’t duplicate marketing and technology and HR, finance and all that stuff. What we learned through research and understanding customer behavior, at the time, was that, really, all of these businesses were tailoring themselves to different customer sets.If you think about Expedia, it’s full service – hotel, car, air, even in market services, tours and so forth. More of a complete vacation trip. Whereas Hotels.com, its primary focus was on a one or two night stay, on a Friday, Saturday night, within a four-hour driving distance of your home city. Hotwire was the discounted, opaque provider. They all operated against different customer sets. I will say, the competition that happened, within those businesses, was really good. It helped us move faster and we grew like crazy, during that time period. But it came at the cost of having duplicate technology, marketing, spend, competing against each other in the auction of Google.So that’s how Expedia grew up. On the other hand, Booking started a little bit later than we did. Growing up in Europe, based in Amsterdam, they really quickly understood multicultural, multicurrency, multilanguage aspects of building websites in Europe. We didn’t, because we were US based. They focused on one product, and that was hotels. They didn’t do any TV, in the beginning. It was all Google and they just got really good at it. They were able to move quickly. They had a different model, as well, an agency model, where the consumer pays after the stay, versus Expedia, in the US, where the customer paid at the time of booking. That was good for the US, but not good for the rest of the world. When we tried to compete in Europe, against that model with Booking, we had a mismatch. It was a gap in the marketplace, just like we talked about earlier.Those were some of the key differences there. Over time, the way of carrying the duplicate of technology and the duplicate of marketing and all that stuff, has added up. That’s why you see the different cost structures that you do, between the businesses.I’ve never understood why Expedia has kept it like that. I know things are changing now and Barry Diller has taken the helm and he’s forcing some change, in his style. I agree, at the beginning, that’s how it evolved; it seems like it’s a bit outdated. How do you feel about how that evolved and what prevented the change, during that time?
Hotels.com & COVID Travel Disruption