Travel at full throttle at Expedia

The online travel-booking specialist is at an all-time high. Even so, the company is walking a on a ridge, as the online travel ecosystem could be completely reshaped by AI, fierce competition and changing user habits. Here is where things stand.

For several quarters, Expedia has shown signs of recovery thanks to a double effect. On one hand, B2C has returned to a more positive trajectory after an overly long period of stagnation. The company has managed to reduce its costs (notably marketing) to acceptable levels. This is noteworthy given that, historically, cost management is a delicate exercise for online travel agencies. The existing customer base is also being better leveraged. On the other side, the B2B segment continues to post growth far above the rest of the group. This business is less exposed to advertising cycles and traffic arbitrage.

In this context, the acquisition of Tiqets, a platform specializing in distributing tickets for museums, cultural attractions and tourist experiences, brings diversification to the activities and experiences segment, often considered the third pillar of travel after lodging and transport; this is still relatively underrepresented online. Competitors have also spotted the opportunity, as seen with Viator at Tripadvisor.

While momentum remains largely positive, the external environment nevertheless reveals a few weak points. The rapid rise of search tools powered by generative AI poses a structural risk to the business model. Like Booking, Expedia relies heavily on direct traffic to protect its margins. Transactions acquired via search engines capture a disproportionate share of value. The risk of disintermediation grows as search interfaces become more conversational, more integrated and more effective. At the same time, hotel groups continue to explore AI as a lever to reduce their dependence on platforms. To avoid being unduly alarmist, it is worth noting that current partnerships with major tech players may offer short-term respite.

The stock's recent re-rating reflects recognition of operational progress and the credibility of management's messaging. Indeed, its gap with sector leaders has partially closed. There are multiple growth levers: B2B, advertising, loyalty (via the OneKey program), experiences.

While the fundamentals remain very solid, the main risk is sector-wide: the competitive advantage is fragile and constantly called into question. What comes next will not necessarily depend on the numbers but on Expedia's ability to keep asserting itself in a digital travel landscape undergoing rapid transformation.