Give Richard N. Barton credit for gumption. In 2002, the 35-year-old stood up to none other than media mogul Barry Diller, dodging maneuvers by Diller's USA Interactive (USAI
) to acquire the 38% of the online travel agent that it didn't already own. In July, an independent board committee dominated by Barton allies told Diller he'd better bring a much bigger wad of money, calculating correctly that he would back off.
It was that sort of year for the youthful, clean-cut former Microsoftie. Amid the dot-com rubble, he lifted Expedia (EXPE
) to new heights, jetting past rival Travelocity to land the top spot among Web travel agents in billings. He even stared down the launch of Orbitz--the site started by the airlines to reclaim their booking business--which is still a distant third in market share.
Ultimately, Expedia could be as successful as dot-com darling Ebay Inc. (EBAY
) Spun out of Microsoft Corp. (MSFT
) in 1999, Expedia has blossomed into a digital powerhouse in its own right. In 2002, Expedia sold roughly $5 billion worth of tickets, hotel bookings, and other travel services. Analysts say its 2002 revenue--that is, Expedia's slice of the ticket price--should nearly double, to $580 million, producing a profit of $60 million. That compares with a $21.5 million loss the previous year. What's more, with online travel still in its infancy, Expedia is expected to post healthy growth for the next few years.
Barton's key strategy revolves around the hotel business. Instead of selling rooms on commission, Expedia buys them at a discount, using the bargaining power that comes with its size. Then the rooms are resold, often packaged with airfares, and Expedia keeps the spread. "We made a big bet that people cared more about trips than tickets," Barton says. That helped insulate Expedia from the post-September 11 dips in air travel that have pinched rivals. Investors have noticed: At a recent price of $67, the stock has almost climbed 80% since the beginning of 2002.
Barton's next battle? Business travel. Barton is targeting American Express' travel business, which at $1.5 billion in revenue is nearly three times Expedia's size but exists largely to drive business to Amex credit cards. So far, Barton has proved adept at using technology to squeeze costs out of the travel process. That's why some travel consultants believe Expedia may be able to slash 75% of corporate travel reservations overhead. Count on Barton to take up the fight.
KEY ACCOMPLISHMENTS
-- Flew past Travelocity to become the No. 1 online travel agency
-- Entered the corporate travel market, putting price pressure on stalwarts such as American Express (AXP
) and Carlson Wagonlit
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