"We Don't Have To Make Acquisitions In India To Be Successful": Expedia

Expedia Inc., the world's largest online travel firm, is starting small in India, but hopes to scale up fast. Scott Durchslag, president of Expedia Worldwide, spoke in an interview to Tarun Shukla of Mint (Livemint.com) about breaking through the clutter, consolidation in the Indian market and Google Inc.'s entry into the online travel trade. Edited excerpts:

How do you see yourself growing in India?

Expedia invented online travel in Web 1.0, 15 years ago. Our challenge in India is that we are catching up with ourselves in some ways because you have some very very strong well-established players here. We are now making some major investments in terms of our brand and launching some of these Indian-specific products. We see India as one of the strategic markets for us in Asia because of its size and growth. According to PhoCusWright, in 2012 you are talking about an India market worth $22 billion (around Rs.99,450 crore today) and they are projecting that online will be $7 billion of that.

You have started Expedia.co.in in India in partnership with Cleartrip.com, and rebranding. Why did you not start from scratch or go in for an acquisition?

We use different partners for different things in the back-end or front-end depending on the need as long as it does not compromise the user experience. For India, we are trying to kind of ramp (up) very quickly—what's the most effective, most efficient path to being able to make these great choices available to Indian consumers? Over time, we are looking broadly at acquisitions, partnerships, broadly at building our own organic opportunities.

How long do you plan to use Cleartrip.com as your back-end? What about hiring and expansion?

I wouldn't comment specifically about any of our individual partners. It isn't just Cleartrip that we work with here, we work with redBus, and Nokia for maps. We will have a continually evolving set of those partnerships. And you will see investments not just in people, but in brand, you will see the "Big Daddy" (advertising campaign) on TV, billboards, taxis and trains. It's going to be visible to every Indian in segments that we are targeting—the experimental 20-45-year-old traveller.

You said you want to ramp up quickly and you also said you are open to acquisitions. Any likely Indian targets?

We look at it all the time. The challenge you face is: what are you buying? Are you buying some technology that you wouldn't otherwise have? Well, you've heard about our platform, which we think is pretty good and modular. Are you buying intellectual property? If you are just buying eyeballs, then I would rather compete to win your eyeballs. I don't think we have to do that (make acquisitions) to be successful. We can win at the level of user experience.

There are 20 travel sites in India. How do you see consolidation over the next three-five years? And how much time will it take you to reach the level of leaders such as Makemytrip.com in India?

What you will see starting to happen is you will see more and more clustering at the top, where the percentage of the Top 3 becomes bigger and bigger. So it can still be a decent business for the number three player, but after that it stops being as attractive a business. That doesn't mean others will go away; you will a lot of specialty sites, but you are going to see them face increasing challenges on how they monetize.

I would say I want to see us in the top five websites within a year and I would like to see us being the number one overseas hotel site even faster than that because frankly we are that in most places.

What are the implications of Google buying ITA Software Inc., on you and travel worldwide?

We believe that search should be fair. We are concerned about Google acquiring ITA and the reason is we are already seeing Google, in places, advantage themselves over their consumers.

And it isn't just us. There are a lot of people who have come together to say that's just too much power. Make search fair.

Will you participate on Google flight searches as an advertiser if the deal goes through?

I wouldn't rule anything in or out. We will have to see what the results are. But it's a concern. I don't think the nature of that (the deal) is such that you can turn your back on it. That's part of the problem. There is so much power there.