Brief Time period Rentalz editor Paul Stevens feedback on the potential impression of Uber’s rumoured acquisition of Expedia.
Multinational ride-hailing service agency Uber has been linked with a potential acquisition of US journey reserving web site Expedia by British newspaper the Monetary Occasions. How possible is Uber’s curiosity set to materialise in a full-blown acquisition, and the way may it form the brand new period of journey and hospitality?
Inevitably, the rumours first emerged once I was attending final week’s VRMA Worldwide Conferencein Phoenix as we have been surrounded by exhibitor stands showcasing Airbnb, Reserving and Expedia Group. Since then, we have now had time to digest the experiences and what it may imply for our sector.
Why Uber would possibly pursue an acquisition of Expedia
On the face of it, we must always maybe not be stunned that Uber is exploring recent monetisation alternatives, given the variety of acquisitions it has made since going public through an IPO in 2019 and the verticals during which it has launched. Having launched 15 years in the past as a pure ride-hailing service, Uber has transcended its roots to the extent that it now dominates the worldwide taxi / mobility panorama [it is even its own verb – as Airbnb has made its mark in the short-term rental industry].
By way of a sequence of mergers and acquisitions [M&A] and partnerships, the San Francisco-based agency now permits its app customers to ebook something from flights to trains, boats and food and drinks/drinks, in addition to broadening into company logistics and promoting. Its purchases embrace Postmates and Drizly within the meals and beverage supply house, managed transportation and logistics community, Transplace, and Chinese language ride-hailing group DiDi. In the identical interval, it has partnered with Waymo, Google’s autonomous taxi service, Common Motors’ self-driving unit Cruise, and extra.
After reaching a valuation of $80 billion post-IPO, Uber is embarking on an aggressive M&A method led by CEO Dara Khosrowshahi, who himself served in the identical function at Expedia for 12 years and remains to be a non-executive director on the journey web site’s board.
Khosrowshahi’s historical past at Expedia, the corporate’s broad journey providing when it comes to lodging, flights, vehicles and actions [plus owning Vrbo, Hotels.com and Orbitz], and Uber’s bounceback restoration from the Covid-19 pandemic present a pure and curious connection for a potential Uber acquisition of Expedia. With out exaggerating, it may even be probably the most transformative buy within the historical past of journey.
Doable synergies embrace prolonged journey packaging for Uber drivers and making a extra seamless journey expertise within the company journey phase collectively, three years after Expedia Group offered Egencia to American Categorical World Enterprise Journey [Amex GBT]. Simply two months in the past in its Q2 earnings outcomes, Expedia reported $28.8 billion in whole gross bookings – giving Uber a robust potential future platform to leverage.
For now, nonetheless, that is all simply hypothesis with no discussions at present ongoing.
Challenges for an acquisition
There are additionally some important obstacles to any acquisition that have to be thought-about.
Regardless of its diversification into transportation, Uber doesn’t have a pre-existing footprint in journey. Integrating each companies in its providing and merging two vastly completely different tech platforms would show to be very sophisticated.
Uber has additionally made its identify within the ride-hailing enterprise – any main divergence from its core service may create confusion round a mixed model USP when it’s already excelling in a single discipline. Additionally it is laborious to think about a journey providing being appropriate with Uber’s present core companies like transportation once they serve contrasting use instances – in any case, transportation requires on the spot worth supply and planning forward is crucial for seamless journey experiences.
To not point out the possible regulatory hurdles as nicely. We’re seeing a worldwide pushback towards so-called, multi-vertical ‘tremendous apps’ which are accused of holding a monopoly over the remainder of the market. A strategic play like this between Uber and Expedia would absolutely be a focus for antitrust regulators.
The ‘tremendous app’ period
Uber is much from being the primary firm to carry ambitions to turn into a ‘tremendous app’, although.
Whereas Uber is concentrating on its first foray into the journey phase particularly, Airbnb is looking for to broaden its client base to new visitor and host demographics, in addition to trying to develop past journey sooner or later, presumably even into ride-hailing in a reverse of Uber’s development trajectory. The house-sharing agency has simply unveiled its Co-Host Community to assist time-conscious hosts discover the perfect native hosts to handle their property as a substitute, plus its ‘Airbnb-friendly’ flats programme permits renters to discover a place to reside and sublet it on Airbnb half time when they’re staying away from house.
In Uber’s favour, the corporate has already enhanced its enterprise mannequin from launch by beginning out as a reserving service, earlier than evolving right into a retailer in partnership with eight autonomous car platforms [including Waymo and Cruise] in choose US states, and constructing a further layer on high with meals supply companies. On the fee during which the corporate has needed to evolve to maintain up with client traits, it may presumably accomplice with journey reserving platforms so as to add a supplementary layer to its providing once more.
Amazon’s entry into the journey phase
Away from Uber, there’s quite a lot of anticipation for Amazon’s eventual entry into the journey and hospitality house, and maybe Expedia might be its first entry level.
The e-commerce firm already boasts a loyal buyer base by means of its paid subscription service Amazon Prime, plus a sturdy expertise infrastructure and excessive buying energy. This might pave the way in which to growing personalised, curated and predictive journey options by means of a mixed Expedia / Amazon providing that simplifies the reserving expertise by means of synthetic intelligence [AI] and drives long-term client loyalty.
Moreover, Amazon is already growing its personal autonomous car service within the form of Zoox [all-electric robotaxis] and its Alexa for Hospitaliy voice AI is already in operation in trip leases, resorts, resorts, casinos and different lodging suppliers.
Conclusion
Whether or not Expedia is on the market or not, it could want to have a look at progressive options to maintain up with the remainder of the market from distribution and expertise standpoints.
The channels by means of which shoppers ebook their journeys are altering now that extra gamers are venturing into journey and social media platforms can management our journey selections. The normal parameters of manufacturers working solely in journey are shifting in direction of extra multi-vertical platforms, and we will anticipate extra M&A exercise in 2025 and past.
Any acquisition may appear a great distance off now however out of Uber and Amazon, the latter seems higher positioned to buy Expedia and add one other layer to its service providing. That stated, it will be silly to rule out Uber, given its personal ambitions and evolution thus far.
