The Internet revolution did more than create amazing new business models it
killed several old ones. In the old days, you had to call a travel agent, hotel,
rental car company or airline directly to book a reservation. Then the Internet
came along, and with it came aggregation of travel bookings via websites like
Expedia (NASDAQ: EXPE ). Travel agents at all budget levels saw their business
vanish. Airlines closed down ticketing offices. Customer service phone centers
were sent abroad. Companies like Expedia made a lot of money. The questions are:
Do they still? And will they continue to do so? The Expedia brand has since
expanded to include Hotels.com, Hotwire.com, the TripAdvisor Media Network,
Expedia Affiliate Network, Classic Vacations, Expedia Local Expert, Expedia
CruiseShipCenters, Egenciatm, eLong, Inc., and Venere Net SpA. The key word here
is brand. Expedia, like Priceline.com (NASDAQ: PCLN ), has become a household
name. It is the go-to website to purchase travel. That brand name has a lot of
power behind it. But dont mistake that for invincibility. All thats required to
knock Expedia off its perch is a better user experience. How long before Google
Travel becomes a reality? Maybe never. But maybe is a tough word to hang a
business model on. Expedia poses another huge potential risk. The 2008 financial
crisis devastated the travel and leisure industry. The decline in revenues went
across the board. The cuts went deep, even deeper than post-9/11. Thats why
Expedia lost a whopping $2.5 billion in 2008. If we are headed for a double-dip
recession, Expedia will get slammed again, and slammed hard.
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