Expedia's media model<< A blog by any other name | Main | Talkin' Turkey >> Diane Clarkson | November 20, 2007, 01:58 PM Expedia announced late last week that it has entered into a multi-year agreement with IHG (InterContinental Hotels Group), with 3,700 hotels across IHG brands being included in the Expedia, Hotwire and Expedia Corporate Travel portfolios. This is a described as a two-part economic model. The first part is transaction pricing. The second part is what is really interesting: media pricing based on clicks. According to news reports, Expedia and IHG collaboratively developed this model which they describe as "a first in online travel", with IHG receiving benefits from value-added media placement throughout the Expedia network in addition to the bookings they receive from Expedia. We know that online travel researchers are using online travel agencies as general search engines: 29 percent of travelers report they actively search flights in this way and that number grows higher within different segments, particularly the sophisticated online travel researchers. Given the high competition within the online travel industry between agencies and suppliers, Expedia’s model appears to leverage its strength as a search tool. |
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