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Since 2005, Expedia is the largest online travel agency of the expanding online market.⁴⁷ Expedia, Inc. is the parent company of some of the world’s leading travel companies that provide travel products and services for holiday and business travel in the United States and the rest of the world. Until 2005, Expedia is part of the investor group InterActive Corp. (IAC). During the second-half of the 1990s and the early 2000s, IAC launches a comprehensive acquisition process of companies in e-commerce, including online travel agencies such as Expedia.com and Hotels.com. A business unit of online travel agencies is concentrated under Expedia, Inc., including Expedia.com, Hotels.com, Hotwire.com, TripAdvisor, Expedia Corporate Travel and Classic Vacations, among many other US and international companies. Its main market is the United States. In 2005, Expedia had revenues of almost $3 billion. Like other leading online travel agencies, Expedia provides travel information for many airlines, hotels, cruise lines, car rental companies, etc. and for consumers everywhere. Towards consumers, Expedia uses the ‘merchant’ business model that allows people to book tickets, rooms, etc. directly on the web, while the ‘agency’ business model just takes care of transactions for other travel providers. Unlike the other online travel agencies, Expedia has no historic links to the leading airlines.

Expedia competes in a rapidly developing market of increasingly intense competition. Online travel services are a strongly growing market. From a small start in the early 2000s, it is expanding enormously to cover about one-third of the US market in 2005 but just one-tenth of the European market. By 2010 however, online travel booking and sales is projected to be the most common distribution form.

Expedia competes with online as well as offline travel companies and any other travel provider for that matter. The strength of Expedia is its ability to provide services to many suppliers. Expedia feels the increasing competition from the vertically expanding travel providers and distribution companies as well as new competitors such as search machine operators that collect prices and other information from many sites, especially Google and Yahoo.

The global online travel agency companies are concentrated in the US. The US online travel market is also the largest in the world, followed by Western Europe and Eastern Asia, mainly Japan (Table 6).

TABLE 6 The Global Online Travel Agencies Market in $bn and % Shares, 2001-2010

Source: Markussen, Carl H. (2003). Trends in the US Online Travel Market 2000-2002: www.crt.dk. Clikz. The US Online Travel Market, 10.11.2004: www.clickz.com. New Media Review (2006). The Online Travel Market: www.etcnewmedia.com. Markussen, Carl H. (2007). Trends in European Internet Distribution of Travel and Tourism Services: www.crt.dk ‘The Rest of the World’ is estimated.