In a game-changing move for both the travel and ride-sharing industries, Uber CEO Dara Khosrowshahi is reportedly considering the acquisition of Expedia, the same company he led for 12 years before accepting the top position at Uber. A potential acquisition of Expedia would reunite Dara Khosrowshahi with the company he helped shape into a global travel giant, a development that might be the first move in the strategic shift as Uber goes deeper into expanding beyond ride-hailing and delivery services.
The Background
Dara Khosrowshahi was the CEO of Expedia for twelve years between 2005 and 2017. The then modest online travel agency he took over turned into one of the global largest travel platforms after several strategic acquisitions, including brands like Hotels.com, Trivago, and HomeAway. Clearly, under his tenure, revenues skyrocketed, and its footprint became massive in every corner of the globe. Khosrowshahi surprised many industry observers when he announced his intention to shift to Uber, one of the world’s leading ride-hailing companies, in 2017.
At Uber, Khosrowshahi has navigated it through different challenges, like regulatory pressure and the threat of others. For a long time, he even deliberately diversified Uber, making it not just primarily a transportation service but actually a food delivery service and even a grocery delivery service, going all the way into autonomous vehicle development. So no one is shocked to hear that Expedia has been discussed with respect to an acquisition, as this really lines up with Khosrowshahi’s plan – an expanded Uber ecosystem.
Why the Acquisition Makes Sense
An Uber-Expedia merger might be helpful for both the companies. Uber has been diversifying its activities gradually. It is no longer just a ride-hailing platform but a logistics and food delivery service to name a few, and even giving transport services for healthcare services. Combining the wide travel network of Expedia and the mobility platform of Uber could give users an experience less fragmented in their travels: booking of flights, accommodations, and other related ground transportations.
A merger between Uber and Expedia might just be the answer that brings in the required technology and logistics muscles to stay ahead in the face of increased pressure in the travel business due to the COVID-19 pandemic and increased competition from a search engine like Google and home-sharing service provider, Airbnb. The fusion of an Uber ride-hailing and delivery service combined with travel booking capability by Expedia will create a holistic platform that could radically transform the global travel industry.
Challenges Ahead
Such a merger would be such an exciting thing to consider with Uber and Expedia, but there are some hurdles. For starters, the regulatory setting on mergers and acquisitions cuts across both tech and travel sectors and is rather strict, especially in large deals with multinational corporations. This means antitrust concerns may arise, especially if one is dealing with situations where both have significant influence in particular markets.
However, even the merger of two goliaths presents logistical headaches in terms of operations and culture. Uber’s fast moving, tech driven model is likely to clash with the more travel-centric operations of Expedia, and this is just one area where variations would have to be found so the successful harnessing of a merged company can be considered possible.
What’s Next?
Although Khosrowshahi has neither confirmed his plans to acquire Expedia nor issued any formal statements, the rumors indeed show the aspect of Uber’s broader approach to diversify and strengthen its position in the global market. Thus, if these rumors are proved true, the proposal of a merger between Uber and Expedia will not only revolutionize the travel industry but also further strengthen the former to be seen as a one-stop solution for transportation and travel needs.
As Khosrowshahi weighs his options, shareholders in both Uber and Expedia will be eagerly following any development. Such a deal would likely involve several regulatory approvals around the world and raise questions about antitrust concerns but would also birth a powerhouse in the mobility and travel industries.
Meanwhile, the world waits to find out if Dara Khosrowshahi’s next big move will be back to the travel industry and to regain leadership over the company he once had led to greatness.
