With travelers increasingly using mobile devices to book travel, Expedia (NASDAQ:EXPE) has rolled out a new iPad app for Hotwire that makes reservations easier and quicker than making reservations on desktops. It has also targeted the corporate travel segment for growth to give employers more tools for approving and booking travel. We believe that these new initiatives will help Expedia improve its growth prospects despite a slow economic recovery.
Launch Of New Hotwire iPad App To Help Tap Growing Mobile Space
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Expedia’s Hotwire brand, a leading discount travel site that operates in over 11 countries, launched its first iPad app last month. Hotwire has already seen success in tapping smartphone users with nearly 25% of hotel transactions coming from mobile devices since the launch of its iPhone app last year. Now, the brand has tablet users on its radar as tablet usage for mobile bookings overtakes smartphones.
In a combined study by Expedia and comScore in November 2012, of travelers who owned a mobile device, around 60% made a purchase on a tablet in the preceding six months while around 50% made a purchase on a smartphone. In the future, tablets are forecast to remain ahead of smartphones for online travel bookings. The study also revealed that of the 44% travelers who plan travel on mobile devices about almost 50% of these travelers used an app to book their trip.
Hotwire’s iPad app’s interface reduces booking by half compared to desktops allowing for quick reservations. The company expects the new iPad app to not only help better serve its rapidly increasing customer base but also help expand the user base as best deals are offered last minute while travelers are on-the-go. 
We believe the launch of the app will help Hotwire in overcoming challenges such as increased competition in the express deals space, the decline in opaque bookings and weakness in the domestic car business. (Read Our Article: Hotwire’s Challenges Are Limiting Expedia’s Growth)
Introduction Of Autobook To Complement Productivity Enhancement Initiatives By Corporations
Egencia, the business travel division of Expedia, launched an online booking tool, Egenica Autobook, in the U.S. and Canada last month. In the face of the slow economic environment, corporations have introduced cost cutting initiatives. The Autobook solution complements these initiatives by enhancing productivity and adding ease in planning and managing business travel. It also reduces the risk of price increases and the loss of available flight seats, hotel rooms or cars by streamlining the trip ‘approval to purchasing’ process for travelers. Using the tool, ticketing and reservations occur automatically for a traveler following approval from his or her employer. 
Egencia also extended its Online Flight Exchange feature to mobile devices. The Mobile Flight Exchange program allows business travelers to quickly exchange flights prior to check-in, eliminating travel related stress for employees and enhancing their productivity. With mobile device usage for travel bookings on the rise, Egencia is gearing up to benefit from the trend.
We expect the launch of Autobook and extension of Online Flight Exchange feature to mobile devices to help Egencia drive growth going forward. Egenecia accounts for around 5% of our price estimate.
Our price estimate of $69 for Expedia is at a premium of over 10% to the current market price.