Expedia: The Changing Business Model


Code : BSM0008

Year :

Industry : Transportation

Region : USA

Teaching Note:Not Available

Structured Assignment :Not Available

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THE EARLY DAYS Richard Barton (Barton), while working atMicrosoft, founded Expedia in 1994. Before the inception ofExpedia, Bartonwasworking forMicrosoft from1991 to 1994 in various product management capacities. In 1993, while traveling for a CD-ROMwork project to create travel guides (the travel guides were called Expedia), Barton came up with the idea of "e-travel" or using electronic resources to assist travelers. He informed BillGates, his boss atMicrosoft, that he thought the CD travel guide project would be a failure but his e-travel concept would be a success...

THE CHANGING BUSINES SMODEL Meanwhile, Barton felt that the company might face serious problems in continuing its business with the “commission model” (most of the airline companies had reduced the commission of online travel agents and some of themhad also stopped paying commissions for selling their tickets). Some analysts predicted that airplane ticket selling would shift to airline-controlled websites...

THE CHALLENGES In the early 2003, Barton resigned fromhis post and Erik Blachford, the president of Expedia North America succeeded Barton as president and CEO. By that time, Expedia had turned itself into a strong No.1. But analysts observed that there were a host of challenges facing the new CEO. The hoteliers and airline companies felt that Expedia was using its clout to demand discounts sapping their profits...

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