The announcement that Expedia bought Orbitz has been making the rounds today. Expedia is clearly on an acquisition streak and according to CEO Dara Khosrowshahi they have no plans to slow down. Expedia bought Australian travel site Wotif at the end of 2014 for a cool $650 million, then picked up Travelocity in early 2015 for just shy of $300 million. The Orbitz deal is by far the biggest at $1.6 Billion.
Acquisitions and consolidations are no surprise, but I think the biggest news here is that even after all that Expedia still only commands around 6% of the global travel industry. In the U.S. we often have a very ethnocentric point of view, forgetting that the U.S. makes up less than 5% of the world's population.
For anyone in the travel business (I'll throw myself in that group) that has got to be a driving force and exciting number. According to Skift the global travel market is a $1.3 trillion industry. That obviously leaves room for many players.
A quick search on Angel List lists 1,227 travel related start-ups. That can vary from Uber type companies to Hipmunk, bustripping, and hundreds of others. Expedia and Priceline lead the way in the U.S. but the real growth opportunities are international.
According to Venturebeat 40% of Americans booked travel on a mobile device in 2014. This is up 20% from the same period last year. The growth in travel and the biggest opportunities are in mobile. Pair that with a developing country that hasn't historically been big in mobile, say almost every country in Africa for example, and it's quick to realize there are still HUGE pockets of opportunity.
Africa historically hasn't had huge internet penetration due to the cost and infrastructure limitations of running phone and cable lines into homes. Those limitations don't exist with mobile though. One tower can cover miles and miles of a country side and a cell phone is much less expensive than a desktop or laptop computer. Mobile use in Africa is expected to grow 20x in the next five years according to The Guardian. And that's just one example. South America and Asia are huge markets with billions of people that are quickly catching up to the U.S and Europe when it comes to travel and eCommerce.
So as big a deal as this is in the U.S., it is still the tip of the iceberg when it comes to international travel companies and opportunities for incumbents and start-ups alike to jump on board and get a piece of this trillion dollar pie. That excites me way more than another billion dollar buy-out.