Expedia Taps Fotopedia’s Growing User Base By Lending Its Hotel Booking Apps

EXPE: Expedia logo

Expedia (NASDAQ:EXPE), the world’s largest online travel service provider, announced its first collaboration with Fotopedia last week. The partnership integrates “Expedia Hotels” direct hotel booking services into two of Fotopedia’s top downloaded applications – Fotopedia Paris and Fotopedia Japan – for iOS devices.

Fotopedia is a publisher of iOS applications and uses innovative ways to discover, explore and share various travel destinations around the world. The applications enable users to build itinerary and offer new and exciting adventures to incorporate into their travel plans. By making Expedia hotel booking available to users at the click of a button, Fotopedia aims to target additional revenues via affiliate commissions on the bookings.

Expedia Increases its Presence in the Mobile Travel Space

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Targeting the mobile travel space, Expedia added yet another dimension to its growth strategy last year. It launched a number of applications for the iPhone and Android users, which optimizes it for the iPad display. In recent years, the emergence of alternate platforms – such as smartphones and tablets – have registered significant growth, which is expected to continue at a rapid pace in the years ahead.

If online travel agencies fail to keep up with innovation in this space, they face the risk of losing out a growing user base of online travel bookings via mobile devices. Expedia received ~4% traffic through mobile bookings in 2011, and we believe this fraction will only increase with growth in the smartphone using population.

Fotopedia is seeing 200 million image views per month and its applications have been downloaded over 12 million times. [1] We think that the partnership can help Expedia leverage on the immense user base captured by Fotopedia, further increasing its presence in the mobile travel space. Fotopedia claims that the partnership is only an initial step, and it will consider extending the same to nine other applications in the future.

We estimate Expedia to derive close to 65% of its total value from hotel bookings. Apart from a majority contribution to the company’s revenue, hotel bookings is also the most profitable business (>20% revenue margins) compared to air tickets, car rentals and cruises.

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We are in the process of updating our current price estimate of $33.19 for Expedia.

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  1. Fotopedia Is On A Roll: Now Gets 200M Image Views Per Month, Launches Morocco App, Tech Crunch, May 16, 2012 []