Expedia's Widening Hammock

At Expedia (Nasdaq: EXPE  ) , there’s more to travel than just online bookings.

The company's popular TripAdvisor website is taking a majority stake in FlipKey, a website that features user reviews on 50,000 vacation rental properties. One could even say that FlipKey is the TripAdvisor of stand-alone vacation homes, although that may not be fair to TripAdvisor, since FlipKey was launched just five months ago. It may also be an unfair comparison to sites like VRBO and HomeAway.com, which have been covering vacation rentals for years.

However, the move is indicative of Expedia looking to snuff out -- and cash in on -- a potential threat, by getting to it while it's still in its infancy.

Expedia is no stranger to acquiring travel-community sites. It has now snapped up a dozen niche websites like air-carrier seating configuration specialist SeatGuru.com and cruise-ship review hub CruiseCritic.com. Add up Expedia's collection of mostly Web 2.0-prolific sites, and its TripAdvisor Media Network attracts 24 million monthly visitors.

Expedia is in a league of its own. Rival booking engines like Orbitz Worldwide (NYSE: OWW  ) may encourage customer reviews, but they're no match for the 15 million reviews and opinions that TripAdvisor-branded sites have amassed over the years. In theory, staying close to so many travel buffs -- 6 million registered users and counting -- should give Expedia an advantage over sites like deal-seeker Priceline.com (Nasdaq: PCLN  ) and travel publisher Travelzoo (Nasdaq: TZOO  ) . Expedia even owns a piece of China's eLong (Nasdaq: LONG  ) , which isn't as exciting as snagging a piece of market leader Ctrip.com (Nasdaq: CTRP  ) , but at least it's a great way to play a hot foreign market.

The rub, of course, is that communities are collectively smart. TripAdvisor doesn't hammer users over the head with Expedia propaganda, just as Amazon.com's (Nasdaq: AMZN  ) IMDB.com doesn't force film lovers to buy their DVDs through the leading movie site. However, it's always nice to know that the spigot is there if it ever comes to the hard sell.

So here's to Expedia and its globetrotting ways when it comes to snapping up travel websites big and small. If it's not the key to success, then it may as well be the FlipKey.  

Other ways to fly higher:

Ctrip.com is a Motley Fool Hidden Gems recommendation. Amazon.com and Priceline.com are Motley Fool Stock Advisor picks. Try any of our Foolish newsletters today, free for 30 days.

Longtime Fool contributor Rick Munarriz has been booking travel online since the 1990s, but he does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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  • Report this Comment On August 21, 2008, at 11:13 AM, rvonsosen wrote:

    This is an exciting week for the vacation home rental market. First there is the partnership Orbitz announced with Zonder, and then the TripAdvisor investment in FlipKey.

    This is a preview to what will be a very fast consolidation of a fragmented vacation home rental industry. Companies such as LiveRez (www.LiveRez.com), a provider of vacation home rental management software combined with a website, that give vacation property managers the ability to make online reservations stand to win from this trend. Travelers are the ultimate consumer here, and they expect an online vacation planning and booking experience when bookign a vacation home that is the same as booking a hotel.

    Companies like Expedia, Travelocity, Priceline, and Orbitz will need to provide an online booking (not just a referral to an email exchange or phone conversation) experience when really entering the vacation home rental market.

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