Short Term Rentalz editor Paul Stevens comments on the potential impact of Uber’s rumoured acquisition of Expedia.
Multinational ride-hailing service firm Uber has been linked with a potential acquisition of US travel booking website Expedia by British newspaper the Financial Times. How likely is Uber’s interest set to materialise in a full-blown acquisition, and how could it shape the new era of travel and hospitality?
Inevitably, the rumours first emerged when I was attending last week’s VRMA International Conference in Phoenix as we were surrounded by exhibitor stands showcasing Airbnb, Booking and Expedia Group. Since then, we have had time to digest the reports and what it could mean for our sector.
Why Uber might pursue an acquisition of Expedia
On the face of it, we should perhaps not be surprised that Uber is exploring fresh monetisation opportunities, given the number of acquisitions it has made since going public via an IPO in 2019 and the verticals in which it has launched. Having launched 15 years ago as a pure ride-hailing service, Uber has transcended its roots to the extent that it now dominates the global taxi / mobility landscape [it is even its own verb – as Airbnb has made its mark in the short-term rental industry].
Through a series of mergers and acquisitions [M&A] and partnerships, the San Francisco-based firm now allows its app users to book anything from flights to trains, boats and food and drink/beverages, as well as broadening into corporate logistics and advertising. Its purchases include Postmates and Drizly in the food and beverage delivery space, managed transportation and logistics network, Transplace, and Chinese ride-hailing group DiDi. In the same period, it has partnered with Waymo, Google’s autonomous taxi service, General Motors’ self-driving unit Cruise, and more.
After reaching a valuation of $80 billion post-IPO, Uber is embarking on an aggressive M&A strategy led by CEO Dara Khosrowshahi, who himself served in the same role at Expedia for 12 years and is still a non-executive director on the travel website’s board.
Khosrowshahi’s history at Expedia, the company’s broad travel offering in terms of lodging, flights, cars and activities [plus owning Vrbo, Hotels.com and Orbitz], and Uber’s bounceback recovery from the Covid-19 pandemic provide a natural and curious connection for a possible Uber acquisition of Expedia. Without exaggerating, it could even be the most transformative purchase in the history of travel.
Possible synergies include extended travel packaging for Uber drivers and creating a more seamless travel experience in the corporate travel segment together, three years after Expedia Group sold Egencia to American Express Global Business Travel [Amex GBT]. Just two months ago in its Q2 earnings results, Expedia reported $28.8 billion in total gross bookings – giving Uber a strong potential future platform to leverage.
For now, however, this is all just speculation with no discussions currently ongoing.
Challenges for an acquisition
There are also some significant obstacles to any acquisition that must be considered.
Despite its diversification into transportation, Uber does not have a pre-existing footprint in travel. Integrating both services in its offering and merging two vastly different tech platforms would prove to be very complicated.
Uber has also made its name in the ride-hailing business – any major divergence from its core service could create confusion around a combined brand USP when it is already excelling in one field. It is also hard to imagine a travel offering being compatible with Uber’s existing core services like transportation when they serve contrasting use cases – after all, transportation requires instant value delivery and planning ahead is essential for seamless travel experiences.
Not to mention the probable regulatory hurdles as well. We are seeing a worldwide pushback against so-called, multi-vertical ‘super apps’ that are accused of holding a monopoly over the rest of the market. A strategic play like this between Uber and Expedia would surely catch the attention of antitrust regulators.
The ‘super app’ era
Uber is far from being the first company to hold ambitions to become a ‘super app’, though.
While Uber is targeting its first foray into the travel segment specifically, Airbnb is seeking to broaden its consumer base to new guest and host demographics, as well as looking to expand beyond travel in the future, possibly even into ride-hailing in a reverse of Uber’s growth trajectory. The home-sharing firm has just unveiled its Co-Host Network to help time-conscious hosts find the best local hosts to manage their property instead, plus its ‘Airbnb-friendly’ apartments programme enables renters to find a place to live and sublet it on Airbnb part time when they are staying away from home.
In Uber’s favour, the company has already enhanced its business model from launch by starting out as a booking service, before evolving into a retailer in partnership with eight autonomous vehicle platforms [including Waymo and Cruise] in select US states, and building an additional layer on top with food delivery services. At the rate in which the company has had to evolve to keep up with consumer trends, it could possibly partner with travel booking platforms to add a supplementary layer to its offering again.
Amazon’s entry into the travel segment
Away from Uber, there is a lot of anticipation for Amazon’s eventual entry into the travel and hospitality space, and perhaps Expedia could be its first entry point.
The e-commerce company already boasts a loyal customer base through its paid subscription service Amazon Prime, plus a robust technology infrastructure and high purchasing power. This could pave the way to developing personalised, curated and predictive travel solutions through a combined Expedia / Amazon offering that simplifies the booking experience through artificial intelligence [AI] and drives long-term consumer loyalty.
Furthermore, Amazon is already developing its own autonomous vehicle service in the shape of Zoox [all-electric robotaxis] and its Alexa for Hospitaliy voice AI is already in operation in vacation rentals, hotels, resorts, casinos and other lodging providers.
Conclusion
Whether Expedia is for sale or not, it may need to look at innovative solutions to keep up with the rest of the market from distribution and technology standpoints.
The channels through which consumers book their trips are changing now that more players are venturing into travel and social media platforms can control our travel choices. The traditional parameters of brands operating solely in travel are shifting towards more multi-vertical platforms, and we can expect more M&A activity in 2025 and beyond.
Any acquisition might seem a long way off now but out of Uber and Amazon, the latter appears better positioned to purchase Expedia and add another layer to its service offering. That said, it would be foolish to rule out Uber, given its own ambitions and evolution to date.
