REPORT ON EXPEDIA AUSTRALIA

QUESTION

Questions to answer on ONE of the above sites :

1. Briefly explain (approx 100 – 200 words) what the site main business focus is.
2. Undertake the following search on the website chosen and report your findings in table format
   http://www.whoismydomain.com
3. Determine the Revenue Model used by the website.
4. What strategic Alliances does the website demonstrate? Give examples.
5. Use the Web Standards Checklist (http://www.maxdesign.com.au/articles/checklist/)
6. Marketing – When considering your chosen website answer the following (give examples):
   1. What is the basic marketing strategy?
   2. What is the Market segment the website is aimed at?
   3. What CRM does the website demonstrate?
   4. What advertising does the website undertake (look wider than just the site, consider HOW you would find the site)
7. How does the website handle logistics for their products? What evidence do you see on the site?
8. What payment systems are demonstrated on the website?
9. What security is implemented or displayed on the website? What examples or disclaimers are provided to customers regarding security?
10. What form of analytics do you see on the website? How is this displayed?

SOLUTION

Business Focus

Expedia, Australia is an online travel company which provides facilities to customers to book flights, hotels, and other travel related facilities in Australia. It aims to serve the customers by providing all sorts of options related to travel that a tourist requires while visiting Australia. The wide range of services that the website provides makes it very attractive and easier for any customer planning his/her travel in the country. The company has been successful in positioning itself as a diversified online travel company not only in the country but also across the world. It initially started as a travel agency; however, it was one of the first players in the industry to shift from a commission model to a hotel merchant model (Daniele & Frew) wherein Expedia enters into an agreement with different hotels in and around the country to sell the hotels’ inventory acting like an intermediary between the customers and the hotels.

The main business focus of the website is developing new services in new markets (i.e. different countries). This strategy has helped the organization in growing faster and aggressive marketing has helped it gain acceptance amongst the customers. The company can be placed in the fourth quadrant in the Ansoff Matrix (shown below) due its aggressive growth strategy.

Figure 1: Sample Diagram- An example of Ansoff Matrix (ansoffmatrix)

The table below shows the findings related to the domain name “expedia.com.au”:

Revenue Model:

As already explained above, the business model of Expedia is based on a merchant model with the hotels and hence, the revenue model is derived from the business model itself. Expedia’s revenues come from advertising, fees and commissions and a small part from media revenue (Travolon). The company earns most of its revenues from hotel bookings than any other service it provides. The table below is taken from the website www.travolon.com which shows a glimpse of Expedia’s revenue model:

The above table clearly shows that for every booking the Expedia gets some revenue which is a part of the price that the traveler pays. Thus, with more number of hotels using Expedia as their sales channel and with increase in bookings per day, Expedia’s revenues increase enormously. A survey conducted by Amadeus showed that the biggest challenge that these companies face is with respect to the loss in revenues from commission and the strategy that those companies plan to act on are related to revenue growth (Amadeus, 2006). Therefore, Expedia’s revenue model is exposed to a high risk of reduction in revenues as any other travel agency is in the internet domain mainly due to increase in websites which hotels own and other reasons.

Strategic Alliances:

The website displays mainly information about bookings for hotels, flights, and cars etc., however, it also displays the strategic alliances that it has with other organizations like Allianz global Assistance, which provides insurance for travelers across the world who book their travel through Expedia. In addition to this Expedia also provides:

• Expedia Access which is a travel agent affiliate program designed to allow the travel agents to tie up with Expedia and provide services to the customers.
• Expedia Affiliate Network which helps in setting up a website and allows affiliation to those who are interested in improving and customizing their website
• It provides specific business travel options for travelers through Egencia LLC
• Other than the above mentioned alliances, the website of Expediainc has published in its press releases information related to its Strategic Alliances, for example, Expedia has tied up with CruiseShipCenters International Inc. (ExpediaInc, 2007), in order to gain exposure to different channels in the cruise travel industry

Strategic Alliance is defined as the arrangement between two or more corporations to come together in achieving a set of mutual goals (Judge & Dooley, 2006). It has been found that most of the strategic alliances have failed mainly due to the focus of the alliance partners on the benefits of the alliance rather than the costs associated with it (Vaidya, S, 1999). Expedia, however, has been successfully used its alliances to increase its presence across different countries and almost in every field related to travel industry. We can say that Expedia has mastered the art of expansion through formation of strategic alliances with different organizations.

Checklist:

This section deals with a certain checklist that indicates whether expedia.com.au has the required standards for a website:

Quality of code

1. Does the site use a correct Doctype?

Ans:    Yes, the site has a correct Doctype in the form of HTML5 Declaration: <!DOCTYPE html>

2. Does the site use a Character set?

Ans:    Yes, the site uses a Character set in the code as: charset=ISO-8859-1

3. Does the site use Valid (X)HTML?

Ans:    No, the site doesn’t use a Valid (X)HTML as errors were found while performing Markup Validation using W3C Markup Validation service

4. Does the site use Valid CSS?

Ans:    No, the site doesn’t use a Valid CSS as we found errors while validating it through W3C CSS Validation Service

5. Does the site use any CSS hacks?

Ans:    Yes, it uses CSS hacks like “!important”

6. Does the site use unnecessary classes or ids?

Ans:    Yes, it has few unnecessary classes in the code where it has been written class=””

7. Is the code well structured?

Ans:    No, the code is not well structured as the semantic data extractor tool of W3C could not extract data due to lack of structure in the code. Below shown is the output from the semantic data extractor:

" Using org.apache.xerces.parsers.SAXParser

Exception net.sf.saxon.trans.XPathException: org.xml.sax.SAXParseException: The content of elements must consist of well-formed character data or markup.

org.xml.sax.SAXParseException: The content of elements must consist of well-formed character data or markup.”

8. Does the site have any broken links?

Ans:    In order to check for broken links, the W3C line checker was used whose output is shown below:

9. How does the site perform in terms of speed/page size?

Ans:    This test was performed using a tool (iwebtool) whose results are shown below:

10. Does the site have JavaScript errors?

Ans:    Yes the site has JavaScript errors which were found out from the JavaScript Console of Google Chrome. The image below is the list of errors in the website www.expedia.com.au:

Degree of separation between content and presentation

11. Does the site use CSS for all presentation aspects (fonts, colour, padding, borders etc)?

Ans:    Yes it uses CSS for most of the presentation aspects, however, javascript is sometimes used for aspects like frameborder etc.

12. Are all decorative images in the CSS, or do they appear in the (X)HTML?

Ans:    The site has used both CSS and (X)HTML (as “img src” has been used for few instances in the code) for decorative images

Accessibility for users

13. Are “alt” attributes used for all descriptive images?

Ans:    Yes alt attributes have been used several times in the code for descriptive images.

14. Does the site use relative units rather than absolute units for text size?

Ans:    No, the site uses only absolute units for size, e.g. font-size:11px;

15. Do any aspects of the layout break if font size is increased?

Ans:    No, the layout does not break when font size is increased or decreased

16. Does the site use visible skip menus?

Ans:    Yes, it provides skip menus for navigation.

17. Does the site use accessible forms?

Ans:    Yes, the site uses accessible forms.

18. Does the site use accessible tables?

Ans:    Yes, the site uses accessible tables only in one case

19. Is there sufficient colour brightness/contrasts?

Ans:      Yes.

20. Is colour alone used for critical information?

Ans:    No, all critical information is visible without color too.

21. Is there delayed responsiveness for dropdown menus (for users with reduced motor skills)?

Ans:    The dropdown menus are neither too fast nor too slow to cause difficulty for any kind of user.

22. Are all links descriptive (for blind users)?

Ans:    Yes

Accessibility for devices

23. Does the site work acceptably across modern and older browsers?

Ans:   Yes it does.

24. Is the content accessible with CSS switched off or not supported?

Ans:    Yes, the content is accessible even when CSS is off or not supported.

25. Is the content accessible with images switched off or not supported?

Ans:    Yes, the content is accessible even when the images are switched off.

26. Does the site work in text browsers such as Lynx?

Ans:    Yes, it works in text browsers such as Lynx.

27. Does the site work well when printed?

Ans:    Yes, it works fine when printed.

28. Does the site work well in Hand Held devices?

Ans:    Yes

29. Does the site include detailed metadata?

Ans:    Yes, the site includes metadata.

30. Does the site work well in a range of browser window sizes?

Ans: Yes it works fine in all browsers window sizes.

Basic Usability

31. Is there a clear visual hierarchy?

Ans:    Yes, the website’s hierarchy is clearly visible.

32. Are heading levels easy to distinguish?

Ans:    Yes, heading levels are bold and larger in size which makes them distinguishable from other text in the webpage.

33. Is the site’s navigation easy to understand?

Ans:    Yes

34. Is the site’s navigation consistent?

Ans:    Yes

35. Does the site use consistent and appropriate language?

Ans:    Yes

36. Does the site have a sitemap page and contact page? Are they easy to find?

Ans:    Yes, the site clearly has a sitemap link at the bottom of the page with a readable font size. However, there is a specific contact page found when the customer support link is clicked in the homepage. Sitemap page is relatively easier to find than the contact page.

37. For large sites, is there a search tool?

Ans:    No such tools are there for bookings but for pages like press releases etc, search tool is provided

38. Is there a link to the home page on every page in the site?

Ans:    Yes, the Home tab is visible in every page in the site.

39. Are links underlined?

Ans: Yes

40. Are visited links clearly defined?

Ans:    Yes

Site management

41. Does the site have a meaningful and helpful 404 error page that works from any depth in the site?

Ans:    Yes, it has a 404 error page which provides a search box so as to help avigate to any part of the site.

42. Does the site use friendly URLs?

Ans:    Yes.

43. Do your URLs work without “www”?

Ans:    Yes it works.

44. Does the site have a favicon?

Ans:    Yes it has a little airplane favicon.

Marketing Strategy

Expedia has been one of the front runners when it comes to developing a marketing strategy. There have been many instances where the marketing strategy of the company has been a big success amid difficult situations in the market/economy. The marketing strategy of the company is aimed to reflect a trustworthy image of the brand (Johnson, 2011) which would in turn help them to distinguish themselves from other players in the industry. Expedia, even though it is an internet based company, has used the traditional methods of advertising like TV ads, print ads etc (Duermyer). The company also uses email marketing techniques by sending emails to the customers encouraging them to share their experience with the company’s services (lyris), which would eventually help promoting the brand of Expedia.

Marketing strategy has been explained by many theories like Game theory, Signalling, innovation, product quality, market pioneering etc. (George Mason Unievrsity). The marketing strategy of Expedia can be related to the theories of innovation and market orientation as they aim to attract customers with unique campaigns highlighting the services they provide (which match the needs of the customers), which helps them in developing a very unique brand image in the online travel industry.

Market Segment

As an online travel agency, the company aims to capture the segment of the market that has access to the internet and as already explained, the company due its diversified nature has an huge advantage over its competitors as it caters to all the customers in the market like families, luxury passengers etc (wikinvest). The company provides separate service to business travelers through Egencia Business travel, this shows that the company is trying to cater to all kind of travelers so as to increase its market exposure. Further, its presence in different countries also indicates that it has been continuously expanding its reach to customers across the world. The theories of market segmentation

Shapiro & Shi (2008) have published a research paper on the market segmentation related to online travel market. They mention the three leading online travel agencies (Expedia being one of them) and the way they have captured the market of travel agencies even though there are services provided by hotels and cruises etc. Their main research is related to the reason of growth of the online travel agencies and the role they play in the market segmentation of the overall travel and hospitality industry.

Customer Relationship Management

Expedia is very well known for its CRM practices and it is very important that right steps are taken in building a robust CRM mechanism. On the other hand it is also important for the company that it the CRM mechanism is adding value to the organization as well. Being an online travel company, it is evident that there are frequent interactions with the customers and, thus, CRM becomes an integral part of the business. CRM mechanism helps the organization understand the customers better and as a result enables them to serve the customers better (Prasongsukarn).

Expedia has a separate page for Customer support which indicates the importance that the customer is considered by the company. The page lists out the ways that the customer can contact with the company i.e. either by calling or by e-mail. Further, it also provides tools like online flight check in and currency converter which would help for the customer who is travelling. The website has been designed so as to assist the customers’ queries which are reflected by the “most popular answers” list shown in the page which indicates the frequently asked questions by the travelers. Other than these, the page also provides links related to travel advices related to the essential documents and other information related to a trip to certain place. The whole page has been structured in such a manner that the customer finds no difficulty in navigating through it. Thus, we can say that Expedia has provided a very sound process of CRM so as to interact with the customer on a regular basis as well as provide services (like Travel tools) which provide additional services to the customers.

Advertising

As already discussed in the marketing strategy section, Expedia is an organization which is known for its aggressive marketing campaign. The organization has its presence in around 30 countries, and in order to gain the market in each of these countries and position itself in a unique way from the competitors, it had to develop a strong advertising campaign. For example, Expedia’s campaigns named “Las Vegas on $273”, “Thailand on $222” and “New York on $50” are aimed at attracting the customers by highlighting the amount they would save by using Expedia (BMF). It is also very efficient in using all forms of media i.e. TV, Print, Online etc, which is evident from its new campaign- “one word for travel” in India where it has recently entered. The company has invested close to `60 crore for the marketing campaign which is mainly focused on the brand name ‘Expedia’ (brandkathas). Moreover, most of the travel websites as well as news websites talk about Expedia’s strategy, performance, and advertising campaigns.

Studies show that advertising campaigns for most of the online travel agencies highlight the low cost features that they provide (Bilotkach & Rupp, 2009) , but ultimately fail to provide those services (that they promised) to the customers. Although Expedia also has a similar type of campaign, it has been successful in providing low cost packages for its customers, thus, gaining the customer’s confidence which boosted its market share across the world.

Logistics

Being an online travel company, Expedia only provides services like platform to book tickets in different hotels and airlines etc., therefore, there is no inventory in terms of products for Expedia. However, it doesn’t mean that the company doesn’t have to deal with supply chain management issues. A supply chain consists of all the process involved from procurement to delivery of the product. Similarly, for companies providing services supply chain management involves managing different process they undergo in delivering the service. Different industries have different needs of supply chain, like health care industry although it is a service industry requires proper management of the medical instruments and medicines that are used (Britannica) on a daily purpose in the organization to ensure efficiency as well as safety. In the case of Expedia, the supply chain and logistics considerations involve the relationships with their suppliers like hotels, airlines etc. and managing the call centres which are customer support services. Managing call centres also include managing people and technology, which can be termed as a logistics requirement. Moreover, the payment systems provided by the site imply a tie up with external agencies which act as payment gateways (banks), which require robust technology and processes to ensure privacy as well as secured transaction. Supply chain management is an essential management concept and it is necessary for an organization to implement a sustainable supply chain which would not only ensure reduce costs on different fronts but also helps in bringing more business with higher customer satisfaction and shareholder value creation (Conservation, 2003)

Payment Systems

A study was conducted in order to understand the effect of E-commerce and internet on the travel agencies in 2001 (Hill & Hill). They summarize that with evolving technology, the airlines are trying to install the latest technology (online booking facilities) to attract customers whereas the offline travel agencies are shifting to other fields. A recent report (ystats) on online travel in Europe indicates a significant rise in online bookings by customers through online travel agencies even though it seemed to be costlier than alternative platforms. Expedia’s growth story is s

The payment details are only visible in the website on booking a ticket, whether it is for flight, car, or hotel accommodation. Only credit cards are accepted as the payment mode, however, different credit cards like American Express, Visa, Delta and Master Cards (Expedia). In order to support its customers with issues related to payment systems, Expedia provides detailed information related to the types of cards accepted as well as the reasons for specific issues related to failure payments etc. Payment systems become an important part of Expedia’s business as most of its revenues come from bookings (hotels, flights etc.), therefore, it is not only important to have a robust payment systems but it is also essential to maintain good relationship with the payment gateways.

Security

The home page of the website only mentions that it is one of the most used and trusted by the travelers who can access internet. However, the customer support page (as already explained) contains all the information related to security and privacy policy of the company. The privacy policy (which can be accessed by any one) lists out the details related to the collection of information as well as the way the company uses it. Expedia clearly states the situations and the types of organization with which it shares the customer information the customer should read the privacy policy before making a booking in the site so as to be aware of the security related issues. Other than the customer’s personal information, the company also takes necessary steps to ensure proper security while the customers are making payments. Studies have shown that credit cards have been predominantly used in online payment systems (jing, 2009) and several security systems have been developed to prevent any sort of mishap in the transactions which might lead to loss for the customer.

Analytics

The site shows only information related to the number of hotels and airlines that it has partnered with and also indicates the attractive offers and prices at some hotels and flights. Expedia does so in order to highlight the cheapest offers which would attract visitors of the website to turn into their customers. Other than these data, the website does not provide any specific analytics which could be used to analyze the company’s performance.

Analytics in general are very useful for different kinds of analysis both for the company as well as an investor. Expedia has recently taken help of SAS analytics in order to process and understand huge data of customers’ booking and travelling preferences (SAS). This would also help the company in understanding the famous destinations of the customers and in order to retain these customers, the company can provide attractive offers such as discounts or low prices etc.

Recommendation & Conclusion

Through this report we have found that Expedia has been very successful in expanding into different markets by getting into agreements with different hotels and airlines. The strength of the company is in building strong relationships with different parties involved in the business. Few recommendations for the improvement of the website:

• Some of the web standards have not been met by the website, which needs to be improved by proper use of CSS and HML coding
• Expedia as a company needs to incorporate different modes of payments, other than only credit cards, so as to expand its reach to customers who do not possess credit cards
• CRM activities should be highlighted in the home page so that the customers feel attracted to the services the company offers

Having studied different aspects of the business of Expedia, we have come to a conclusion that even though the industry faces an imminent risk with the hotels, airlines etc building their own website to provide booking options for the customers, Expedia has been able to successfully attract more and more customers across the world. The strong relationship that it maintains with its travel affiliates and its strong strategic alliances with different organizations have helped the company grow so far and would play an important role in its future growth too.

References

 Daniele, R & Frew, A. From Intermediaries to Market-makers – An Analysis of the Evolution of E-mediaries. Retrieved from http://www.ifitt.org/admin/public/uploads/danielefinal.pdf

Ansoffmatrix. Sample Diagram- An example of Ansoff Matrix. Retrieved from http://www.ansoffmatrix.com/

Travolon. Expedia: their hotel business model in 5 bullet points. Retrieved from http://www.travolon.com/component/content/article/116-english/384-expedia-their-hotel-business-model-in-5-bullet-points-.html

Amadeus, 2006. Service Fees and Commission Cuts. Opportunities and Best Practices for Travel Agencies. Retrieved from http://www.amadeus.com/travelagencies/documents/travelagencies/White%20Paper_ForWebUse.pdf

ExpediaInc, 2007. Press Releases. Expedia, Inc. Enters Long-Term Strategic Alliance With CruiseShipCenters. Retrieved from http://press.expediainc.com/index.php?s=43&item=146

Judge, W.Q., & Dooley, R (2006). Strategic Alliance Outcomes: a Transaction-Cost Economics Perspective. British Journal of Management, Vol. 17, 23–37 (2006). DOI: 10.1111/j.1467-8551.2005.00441.x

Vaidya, S. (1999). Strategic Alliances: A Unification of The Current Literature. Retrieved from http://www.sbaer.uca.edu/research/sribr/1999/19.pdf

Duermyer, Strategic Internet Marketing. Developing Effective Internet Marketing Strategies for Your Business. Retrieved from http://homebusiness.about.com/od/marketingadvertising/a/IMarketing101_2.htm

Johnson, B. (2011). Expedia takes brand position of trust and personalization. Retrieved from http://www.marketingweek.co.uk/expedia-takes-brand-position-of-trust-and-personalisation/3027648.article

Lyris, An Online Marketing Success Story. Retrieved from http://www.lyris.com/blog/721-An-Online-Marketing-Success-Story

George Mason Unievrsity. Theories in Marketing Strategy. Retrieved from http://mason.gmu.edu/~ajaju/mktg471/THEORIES%20IN%20MARKETING%20STRATEGY.doc

Wikinvest. Expedia Wiki Analysis. Retrieved from http://www.wikinvest.com/stock/Expedia_(EXPE)

Shapiro, D. & Shi, X. (2008). Market Segmentation: The Role of Opaque Travel Agencies. Retrieved from http://homes.chass.utoronto.ca/~xshi/ota.pdf

Prasongsukarn, K. Customer Relationship Management from Theory to Practice: Implementation Steps. Retrieved from http://gsbejournal.au.edu/2V/Journal/CUSTOMER%20RELATIONSHIP%20MANAGEMENT%20FROM%20THEORY%20TO%20PRACTICE%20IMPLEMENTATION%20STEPS.pdf

BMF. LAS VEGAS ON $273. Retrieved from http://www.bmf.com.au/Our-Clients/Expedia/Las-Vegas-on-$273

Brandkathas, May 2012. Every brand has a story. Retrieved from http://brandkathas.blogspot.in/2012/05/tang-kraft-foods.html

Bilotkach, V. & Rupp, N.G. (2009). Do consumers benefit from low-price guarantees?  Evidence from online travel agents. Retrieved from http://www.socsci.uci.edu/~vbilotka/Bilotkach_Rupp_LowPriceGuarantees.pdf

Conservation. (2003). Supply Chain Management for Tour Operators. Retrieved from http://www.conservation.org/Documents/CI_ecotourism_supply_chain_mgt_handbook_nov2003.pdf

Britannica. Logistics. Retrieved from http://www.britannica.com/EBchecked/topic/346422/logistics/64310/Warehouse-and-distribution-centre-management#toc64313

Expedia. Customer Support. Retrieved from http://support.expedia.com.au/app/answers/detail/a_id/4693/kw/payment

Ystats. Europe Online Travel Report 2012. Retrieved from http://www.ystats.com/uploads/report_abstracts/928.pdf?PHPSESSID=4f588ea02500518b57215668f5883f87

Hill, S.K. & Hill, D. (2001). E-Commerce’s Impact on the Travel Agency Industry. Retrieved from http://archive.sba.gov/advo/research/rs210.pdf

Jing, Y. (2009). On-line Payment and Security of E-commerce. Retrieved from http://www.academypublisher.com/proc/wisa09/papers/wisa09p46.pdf

SAS. SAS® Analytics helping Expedia reap big insights from big data. Retrieved from http://www.sas.com/news/preleases/expedia-predictive.html

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