Expedia defends high commissions

Expedia’s marketing costs are staggering, according to Mark Okerstrom, Expedia’s CFO. He said Expedia spent $2 billion on sales-and-marketing efforts during the previous 12 months.

Dara Khosrowshahi, Expedia’s CEO, defends the company’s high commissions by saying, “You don’t have to pay a nickel up front to get exposure to 60 million eyeballs on a global basis. You’re able to reach consumers all over the world… Chinese consumers, European consumers, Latin American consumers, US consumers who it would take a fortune for you to otherwise market to.

“Whether it’s marketing to them or building a local language website, or building payments etc, we only get paid when we bring you the volume. We believe that there are many, many circumstances when consumers come to our site, find a hotel, read about it and go directly to the hotel website. We’ve shown over and over the billboard effect of the traffic a hotel gets directly to their website from us. And we think when you take that billboard effect into account, when you take into account the global nature of our audience the fact that there’s zero up front marketing costs- it’s success-based only, we think it’s actually a pretty good deal.

“The market value of a good is based on the value that that good brings. If we weren’t worth the commission that we have then we wouldn’t be able to charge that commission.”

Expedia Inc includes the Expedia,, Hotwire, Egencia and Trivago brand names.

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