Expedia CEO On Competitiveness In Chinese Market

The troubles faced by online travel company Expedia Inc EXPE don’t seem to be ending anytime soon. After recently losing its position as the world’s largest travel services company by bookings from Priceline Group Inc PCLN, the situation became more dire with worse-than-expected fourth-quarter earnings on Thursday on back of currency headwinds.

Related Link: Oppenheimer Explains Implications For Priceline, Following Expedia's Report

The company reported an EPS of $0.50 versus analysts’ expectations of $1.01, causing its stock to open significantly lower Friday than its previous close.

Dara Khosrowshahi, Expedia CEO, was on CNBC to discuss the company’s big plans for China and the competition in the Chinese market.

The 'Wild, Wild East'

“Well it is a very, very competitive market,” Khosrowshahi said. “We talk about China being the ‘wild, wild east’ around here. And it’s competitive because it’s a huge market and a really attractive market.”

“This is a travel market that’s worth over $100 billion. Online penetration is still pretty early; it’s only around 20 percent are the estimates that we have seen and the growth there is enormous.”

eLong

“So, we want to be in that market,” Khosrowshahi continued. “We have a majority stake in a separate publicly traded company, eLong, with a terrific management team and that company is very well capitalized. It has got over $300 million in cash, and we are in a mode right now of investing more aggressively because the market has gotten more aggressive.”

Competition To Slow Down ‘A Bit’

He continued, “We think that the competition in the market is going to continue through this year, and we think next year the competition is going to settle down a bit, but at this point we are investing. We saw room [sic.] growth in China actually accelerate in the fourth-quarter.”

“We are fortunate enough to have kind of a separate pooled capital, separate majority owned business right there that is operating on its own with a great management team.”