Expedia (NASDAQ:EXPE), the largest online travel services provider in terms of booking volumes, posted a strong Q2 2012 with a 13% increase in gross bookings and a 14% increase in revenues despite macro-economic headwinds. (Read: Expedia’s Results Impress And Show Focus On European & Asian Growth) The company has been increasingly focused on expanding its presence in international markets, where it has seen a substantial increase in revenues in the last five years. The acquisition of VIA Travel, the joint venture with AirAsia, and the partnership with Thomas Cook India are some of the recent deals that reiterate the company’s commitment to growth in Europe and the Asia-Pacific region.
By announcing a strategic partnership with RedBus, India’s largest ticket booking company, earlier this month, Expedia has expanded its offerings by adding bus ticket bookings to its portfolio of services. The alliance with RedBus gives Expedia access to bus seat inventory across 180,000+ bus services and 900 operators across India. Redbus.in will power bus ticket booking functionality on Expedia’s Indian portal, which in turn will enable users of the leading online travel agency to book bus tickets on its website.
Over the years, bus travel has become a preferred mode of transport for many in India and is estimated to be growing at around 25% annually.  With the increasing use of luxury buses such as Volvo and Mercedes, a growing number of travelers are opting for bus travel which serves as a viable option for shorter routes.
Redbus was one of the pioneers in online bus ticket booking in India and recently reached the 1 crore bus ticket bookings mark. (Redbus.in powers Expedia’s bus ticket booking service, Trak.in, August 2)) Though some existing players in India such as MakeMyTrip offer the bus booking feature on their websites, we think that tapping the wide inventory of RedBus will help the company perform well in this market.
As per Expedia’s most recent investor presentation, the Asian travel market is estimated to reach around $290 billion in 2012, out of which the online travel segment will constitute close to 24%. Expedia currently accounts for 4% of the Asia-Pacific online travel market. We believe that by increasing the number of alliances with leading domestic travel companies and expanding its product offering, the company is well-equipped to increase its market share in this region.
Our price estimate of $61.62 for Expedia is at a premium of over 10% to the current market price.Notes:
- redBus powers bus ticket booking facility on expedia.co.in, Know Ahead, August 2 [↩]