Introduction to the travel and tourism industry
Travel and tourism industry is growing now a days at fast pace. It may be within traveller’s own country or universally. Also, it serves as a major foundation of revenue for both the source as well as host countries. For the first time in 2012 the figures of international tourist have crossed the milestone of 1 billion worldwide (Cook, Hsu & Marqua, 2014).
This report is prepared in the context of the American travel and Tourism Company named Expedia, Inc. It operates internationally and takes into consideration numerous travel brands, websites and metasearch engines. Moreover, it also includes near about 200 booking websites in 75 countries as well as has listings roughly around 350,000 hotels and 500 airlines in number (Expedia, 2018). Expedia stands for exploration in addition to speed.
In the air of rising competition, the aim of Expedia is directed towards addressing the sustainability trend, be a socially responsible group, serving for changing customer likings and segregate itself in term of services offered. Apparently, Expedia should focus upon incorporation of sustainability hence placing itself as a leader. The offerings of tourism should be broadened and promoted through its website. Furthermore, there should be an increment in marketing efforts and maintenance of public relation. Expedia collects daily one petabyte of data and use that information to target the potential customers (Bushell & Healy, 2013). Purposes are inclined towards gaining an elusive form of personalization so that it can plea to millennial. The CEO (Mark okersterom) of the company has the vision of becoming the world’s leading $100 billion travel agency in upcoming years. Expedia strategy for growth is both procurement based and organic in nature. At present about one third of business operation are operated outside the U.S. and looking forward the Asia pacific region will be treated as priority which is expected to contribute near about two third in overall market expansion (Chicago tribune, 2018).
Undoubtedly, this industry had experienced recession for long period of time. In the mist of this lap, the GDP of this industry had decreased by 4.8% in the year 2009 (Hall & Page, 2014). Even after such back fall, there has been a tremendous increase showcased. According to United Nations world tourism organisation (UNWTO), it is one of the most rapidly growing industry in world economy as people travel for both pleasure and business with rising income level and evolving middle class globally. The recovery of economy will be a gradual one as GDP increased by 0.5% in 2010. UNWTO expects the arrival of 1.6 billion per year by the end of 2020. The expansion in this industry is likely to be generated by increasing focus on the availment of leisure in developed countries which is ahead boosted by innovation towards creation of sustainable services. The figures of the “fact sheet: global ecotourism” states that 25% of global tourism will be amounting to $473.6 billion revenue each year. Eco tourism is gaining momentum and showing growth rates of 20-34% contributing the worth of $77 billion in United States (World tourism organisation, 2018).
Expedia overview
In today’s world, people are cautious on their part to research for and get into vacations booking with high penetration of internet. In United States, almost 66% of travellers plan up their vacations with the use of internet (Costa, Panyik & Buhalis, 2013). This trend has benefitted Expedia in its success stories since 1996. In a survey by Expedia it was revealed that nearly 84% of customers have a desire to stay at justifiable hotels and they would not mind paying more for services of environment friendly surroundings (Velikova, Murova & Dodd, 2013). In addition, for sustainable tourism there has been always a viable marketing. Travellers believe that learning about new traditions and culture would enhance their travel experience. The people holidays decisions is highly influenced by the environmental consciousness of airlines, hotels as well as tour operators. Due to such mind set, Expedia efforts must address to the preferences of its customers. The hearsays of 2009 trip advisor survey shapes that while travelling 52% of travellers faced problems to make environment friendly choices and 44% sensed that green choices were not handy. In this regard, Expedia comes as a platform which connect with various options including car rentals, hotel bookings, flights, vacation packages, cruises and expeditions. Hence, it can influence the targeted customers by featuring eco- friendly and ecologically cognizant agency readily on its website (Goodall & Ashworth, 2013).
Due to the public image Expedia have in the mind set of customers, people will be more persuaded towards sustainable vacations bookings through its website. Also they have the privilege of accessing the information added by third party by generating reviews and ratings. The occasions for Expedia to capitalize keeps on emerging up as a result of changing preferences of customers and socially responsible events. The lasting success in the industry is dependent upon the viability and sustainability issue of destinations which will have impact in near future.
In the limelight of expansion plan, Expedia comes up with several ways of financing avenues so that it could capture the market worldwide and goals are met i.e. by sharing travel franchises for sale (Camilleri, 2018). The most commonly used boulevards for financing are mentioned below.
The home equity line of credit or home equity instalment loan is granted on the possession of ownership of home.
Low rate of interest and highly flexible. The documentation work is least and no detailed
Expedia’s sustainability focus
Repayment schedule is drawn.
The repayment of loan demand higher income. The home value will be calculated by real state assessment.
The availability of retirement funds in an individual account can be used for funding the franchise business without occurrence of an early extraction penalties.
The payment of interest is nil. It doesn’t have long procedure for approval.
It is a risky deal as the retirement plan is kept on edge. The building of business is must in this case.
They are referred as government backed loans which is available at low market rates. SBA ready franchise helps to expedite the process of lending and is classified by Expedia cruise ship centres.
A particular percentage of the total cost to be incurred in business can be financed which helps in conservation of cash. Yet, the interest rate are kept fairly low and prepayment penalty is nil.
It could take around three months or more for gaining of SBA loan. In addition to that, the documentation process is also extensive.100 percent of collateral security is needed.
This is most common source of finance, as willing relatives can contribute in the success.
The terms of repayment are highly flexible. Collateral security is usually not demanded
In the event of failure, it may strain the connection. In exchange for the investment desired, the chances for seeking equity is high.
Two or more people come together for the common cause. The partner must compliment the skill set and value addition to the business.
The distribution of roles and responsibilities gives greater flexibility. The chances to grow is faster.
In event of disputes and mis communication, it can result in most expensive formula of financing. The multiplication of frustration and splitting potential returns is common.
For emphasising on sustainable tourism, it would not require any kind of additional cost. The top level of management need to spend the precious time in revising and implementing the strategy towards sustainable tourism. In matters related to sales and marketing Expedia should assign at least three to five employees on projects of sustainable tourism and then later allot few new hires for upkeep. The two new entrant will be hired at cost of $ 50,000 per year as salary granted and nearly $15,000 would amount for hiring cost of a marketing specialist (Carter, Wright, Thatcher & Klein, 2014).The roles and responsibility for conducting market research and finding of businesses to list in the area of green travel segment of the website will be under the marketing head. Any further occurrence of changes in future will incur nominal cost to Expedia.
The growth of eco-tourism
The predictable figures of about $100,000 should be due for Facebook advertising which contributes over $1.50 per click (Haucap & Heimeshoff, 2014). Henceforth, the financial situation of Expedia discloses that it have the potential of capping the daily and lifespan amount to be consumed on Facebook for customizing advertisement. In order to avail the Facebook contest wherein a fan is expected to win green vacation would cost $8000 dollars. In the starting, the cost of this strategy is estimated to be $223,000. Expedia anticipates many huge benefits by additional customers and innumerable bookings. Certainly, it would compensate the goodwill in support of sustainable tourism. It is expected to increase up to 25% of the universal travel along with the market value of $473.6 billion per year over the upcoming six years. If the aforesaid work in the said manner, than Expedia will continue to grow in long run leaving no boundaries for expansion and revenue.
Cost volume profit analysis is the specific way of displaying and studying the interrelationship between cost, volume and profit. Management uses the relevant information in precise manner so that it could yield meaningful results. It show case the level of sales required at which cost and revenue would be in equilibrium position (DRURY, 2013) .Generally termed as breakeven point or point of zero profit. It helps in taking decision regarding price of product, expansion, contraction, shut down and various changing level of activity. In order to overcome the former, CVP analysis helps in taking decision after the cautious understanding of features of cost and its behaviour at diverse operational stages.
With the assortment of product and services offered, there exist huge competition in travel and tourism industry. The competitors in the pathway of Expedia includes Travelocity, Priceline and Orbitz. Though Expedia remains the pioneer with the largest volume of transactions but there is always the chances of threat as they also offer the services in parallel manner. Recently, Expedia has stepped ahead beating its competitors by generating the annual revenue of $3,348.11 million in 2010 whereas Priceline amounted $2,338.21 million and Orbitz with $738 million (Lee, Guillet & Law, 2013).
In order to differentiate itself, Expedia have implemented generic business strategy wherein they complement the customers with reward card and mobile app, also the product features i.e. bundling deals (Chakraborty, Huang & Khanna, 2013). Price bundling may happen in one of the three mentioned strategic forms: pure components, pure bundling and mixed bundling strategy. Pure components tactic also known as unbundling or separate pricing refers to selling of products only independently. Pure bundling which may be called as tie- in- sales, displays the marketing of product only in packed form. Bundles are available and no single purchase is allowed. Heading ahead, mixed bundling is a strategy wherein both single and bundle facility is available. The further division includes two forms within- mixed leader bundling and mixed joint bundling. In the former, the price of one product is minimised only when the leading product is purchased at its stated price. Latter, includes discounted price for whole bundle and not for a single product in the bulk. Expedia is accustomed to use the mixed joint bundling pricing strategy. On the website, a wide array of choices are available to customers to choose products say for e.g.: car rentals, flights, hotels, activities etc. either as a bundle or independently. However, when choices are made for bundle, than new discounted prices is displayed so that it justifies the impact (Dong, Ling & Guo, 2014). This kind of pricing strategy leads to growth and profitability in the long term, meanwhile fulfilling the objectives in short run
The role of internet and technology in travel
Conclusion
Expedia should focus more on advertising of sustainable tourism offerings on its site. The promotional efforts should address the logo “green travel” and it should be easily accessible. In general terms, an average customer will not download a dozen app on their mobile so if Expedia could win the race of mobile war, ultimately it becomes the highly preferred distribution point which every airlines, hotel and supplier would be willing to work with. In future, maximum efforts should be focused upon on customer preference and satisfaction, on the same end safeguarding and exploring world’s many unrevealed and untouched places.
The lucrative packages serving the interest and needs of every income group will increase the demand, hence profits. In order to beat the competition, timely changes must be undertaken by Expedia so that it could distinguish the services offered and at reasonable price. Expedia should endure adapting in order to remain pioneer in the vanguard of the online travel service entity.
References
Bushell, G. and Healy, M., 2013. Expedia: The de minimis Notice and ‘by object’Restrictions. Journal of European Competition Law & Practice, 4(3), pp.224-226.
Camilleri, M.A., 2018. Nurturing travel and tourism enterprises for economic growth and competitiveness. Tourism and Hospitality Research, 18(1), pp.123-127.
Carter, M., Wright, R., Thatcher, J.B. and Klein, R., 2014. Understanding online customers’ ties to merchants: the moderating influence of trust on the relationship between switching costs and e-loyalty. European Journal of Information Systems, 23(2), pp.185-204.
Chakraborty, T., Huang, Z. and Khanna, S., 2013. Dynamic and nonuniform pricing strategies for revenue maximization. SIAM Journal on Computing, 42(6), pp.2424-2451.
Chicago tribune, 2018. New Expedia CEO has a hard act to follow [Online]. Available at https://www.chicagotribune.com/business/ct-biz-expedia-ceo-mark-okerstrom-20170927-story.html [Accessed on 13th march 2018].
Cook, R.A., Hsu, C.H. and Marqua, J.J., 2014. Tourism: the business of hospitality and travel. Boston, MA: Pearson.
Costa, C., Panyik, E. and Buhalis, D. eds., 2013. Trends in European tourism planning and organisation (Vol.60).Channelview Publications.
Dong, Y., Ling, L. and Guo, X., 2014. Travel package modeling: optimal bidding strategy of tour operator to cooperative hotels. Asia pacific journal of tourism research, 19(12), pp.1417-1440.
DRURY, C.M., 2013. Management and cost accounting. Springer.
Expedia Inc. 2018. About us [Online]. Available at https://www.expediainc.com/ [Accessed on 13th march 2018].
Goodall, B. and Ashworth, G. eds., 2013. Marketing in the Tourism Industry (RLE Tourism): The promotion of destination regions. Routledge.
Haucap, J. and Heimeshoff, U., 2014. Google, Facebook, and Amazon, eBay: Is the Internet driving competition or market monopolization? International Economics and Economic Policy, 11(1-2), pp.49-61.
Lee, H.A., Guillet, B.D. and Law, R., 2013. An examination of the relationship between online travel agents and hotels: A case study of Choice Hotels International and Expedia. Com. Cornell Hospitality Quarterly, 54(1), pp.95-107.
Velikova, N., Murova, O. and Dodd, T.H., 2013. Emerging wine market in the Dominican Republic: Consumer market analysis. Wine Economics and Policy, 2(2), pp.76-84.
World tourism organisation UNWTO, 2018. UNWTO Annual report [Online] Available at https://www2.unwto.org/annual-reports [Accessed on 13th march 2018].
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