Microsoft has sold its majority stake in online travel firm Expedia to USA Networks.
Microsoft on Monday announced that it would sell its 70% stake in online travel company Expedia to media company USA Networks for approximately $1.5 billion in stock. USA Networks, which is also buying offline travel agency National Leisure Group, expects the two deals to generate $4 billion in revenues per year.
The sale comes as no surprise. While Microsoft originally created Expedia as part of its MSN portal, the two sites have been operating as separate entities for a number of years. Expedia is not core to Microsoft’s strategy, and the software giant doesn’t have any other travel operations.
Expedia looks like a good buy for USA Networks. In B2C eCommerce, a multi-channel strategy is vital to winning market share, allowing firms to target more than just the limited proportion of consumers who are prepared to carry out transactions fully over the Internet.
USA’s TV experience, which includes the successful Home Shopping Network, will be a major advantage here. It will allow the company to promote Expedia and National Leisure Group’s products on TV on its newly created Travel Channel, as well as putting it in a strong position when interactive TV commerce becomes a reality.
The company already owns Hotel Reservations Network and Ticketmaster, which sell hotel rooms and tickets for events respectively. Expedia and National Leisure Group widen this range, putting USA at an advantage over rivals such as Travelocity by ensuring it can offer solutions in all areas of the travel market.
Overall, the deal will put USA Networks in a strong position in online travel. It should be better placed than its rivals to withstand the onslaught from airline-backed portals such as Orbitz in the US and Opodo in Europe. However, its rivals will doubtless broaden their offerings and sales channels to compete, so the company will have to keep innovating if it is to stay ahead.
