Expedia’s Triumph and the Coming Shift in Self-Driving Cars
The success of convenience in travel booking has changed how people plan their trips.
In 1994, 27-year-old Microsoft Corp. (MSFT) product manager Rich Barton pitched a groundbreaking idea to Bill Gates and other executives:
What if you could take travel booking and move it online?
This idea led to Expedia Group Inc. (EXPE), which launched in 1996 and became a standalone company in 1999. As a one-stop shop for travelers, Expedia’s website quickly attracted more visitors than the airline and hotel websites it aggregated.
Today, four of the five most visited travel sites in the United States are aggregators like Expedia, with a combined market value of over $235 billion—surpassing the value of the 10 most valuable hotel and airline companies together. Notably, major U.S. airlines still trade below their January 2020 levels, while Expedia has made significant gains.
People appreciate convenience.
Why spend time checking multiple airline websites for a Christmas flight when Expedia can present the best options in one visit? Despite airlines countering with rewards programs and exclusive online offers, Expedia and similar aggregators remain more valuable for their extensive search capabilities.
A similar trend is likely to develop in the self-driving vehicle market.
The Evolution of Autonomous Vehicles
On October 10, Tesla Inc. (TSLA) is anticipated to announce plans to provide its own robotaxi services. This would position the company alongside Alphabet Inc. (GOOGL)-owned Waymo and General Motors Co. (GM)-owned Cruise in the autonomous ride-hailing sector.
This move could have transformative effects for electric vehicle (EV) companies.
Automakers recognize that cars sit idle around 95% of the time. If cars could drive themselves, a single vehicle could handle multiple trips throughout the day. Families could share one car instead of relying on the average of 1.8 vehicles per household.
Consulting firm Oliver Wyman predicts that driverless cars might cut overall car demand by up to 15% by 2035, even as the number of users increases. This urgency drives companies like GM to accelerate their self-driving vehicle developments, despite past setbacks from high-profile accidents.
The stakes rise for automakers as Tesla advances. With Tesla dominating the U.S. EV market—accounting for one in every two EVs—traditional car manufacturers must adapt quickly or risk falling behind. Therefore, industry analysts, like Eric, recommend caution regarding investments in companies like General Motors (GM).
In contrast, ridesharing serviceUber Technologies Inc. (UBER) sold its self-driving unit in 2020. The company realized that it is likely more resilient against being disrupted by self-driving technologies. Instead, Uber stands poised to leverage these advancements, creating a marketplace similar to Expedia’s for autonomous ride services.
Most American travelers prioritize getting the best deal over airline or hotel name recognition. If rideshare firms navigate this transition successfully, they could emerge as major beneficiaries, even more than the automakers refining the technology.
Interestingly, when Uber sought a new leader to replace its controversial founder Travis Kalanick in 2017, they turned to Dara Khosrowshahi, who was leading—yes, you guessed it—Expedia at the time.
The Future of Autonomous Driving
However, success is not guaranteed for Uber in the autonomous driving arena. The ride-hailing firm faces intricate negotiations with powerful suppliers. Should Tesla opt out of collaborating in a shared network, Uber could struggle to attract alternative partners.
Moreover, transitioning from human drivers to autonomous ones will require Uber to adapt its business model significantly. They will now navigate contracts with top legal teams instead of independent drivers, introducing uncertainty into their current profitability.
For those interested in high-potential opportunities, InvestorPlace Senior Analyst Luke Lango may have identified a company with even greater potential for success. On Monday, October 7, at 10 a.m. Eastern time, Luke will highlight this lesser-known firm, which could rise exponentially. (Sign up here)
This company is linked to Elon Musk’s technology for robotaxi development and has attracted significant investments from billionaires like David Shaw and venture capitalist Peter Thiel. Its low entry price leaves room for major growth possible for everyday investors.
This presentation is an opportunity worth exploring. Reserve your spot now.
Best,
Thomas Yeung
Markets Analyst, InvestorPlace