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How Might Expedia's Phasing Out Of The “Dimming” Process Impact The Company?


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Expedia had been criticised as one of the biggest perpetrators of the "dimming strategy" among the OTAs. Dimming adversely impacts hotels, customers, and eventually, the OTAs themselves. The company has decided to phase out the dimming process depending on hotel and customer feedback.

"Dimming" is a process through which OTAs seem to 'punish' certain hotels which might be too aggressive with their direct booking policies. The OTAs push down the search results from these hotels or exclude pictures or other important details from the search results of  said hotels.

Some industry experts suggest that the dimming strategy ultimately harms both the hotels as well as the OTAs. Just as the chances of the hotel rooms being booked through the OTA lessens, similarly the OTA forgoes the commissions it might have received from the hotels upon successful booking. Travelers also start to question the neutrality of the OTA platform with some hotels being given less significance than others by the OTA.

Expedia has been criticized earlier this year as being the "most prominent dimmer in the travel business." Dimming impacts the customer's decision making process as well as their choices. It might be owing to these criticisms, that the Expedia management has finally decided to listen to feedback and do away with the process.

The hotel industry and OTAs are at a perennial tug of war trying to attract customers to their own respective platforms. However, it is undeniable that they both require each other to grow. If Expedia had been so aggressive with its dimming strategy then that might eventually cost it customer loyalty, as well. Once users find out that their choices are being manipulated through dimming, they might not have faith in Expedia's credibility. Hence, phasing out this strategy might work better for Expedia in terms of customer loyalty as well as gaining more commissions through the hotels which might erstwhile have been dimmed. Overall, this strategy might help Expedia grow further in terms of brand loyalty and better commissions from hotels.

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  • Have more questions on Expedia? See the links below.
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    • What Is Expedia's Fundamental Value On The Basis Of Its Forecasted 2015 Results?
    • Expedia Year 2015 Review
    • How Have Expedia's Different Segments Performed Over The Last Five Years?
    • Expedia Q1 2016 Earnings Results
    • How Does Expedia's Financial State Currently Look?
    • What Percentage of Expedia's Stock Price Can Be Attributed To Growth?
    • Who Relies More On Debt: Priceline Or Expedia?
    • What Might Be The Long-Term Impacts Of Brexit On The Online Travel Agencies?
    • Where Might Expedia Be Looking For Acquisition Opportunities Currently?
    • Expedia's Q2 2016 Earnings Preview
    • Expedia's Second Quarter Growth Was Undermined By Integration Issues Of Its Acquired Entities
    • How Do We Expect Expedia's Hotels Division To Trend?
    • How Is Expedia's Top Line Trending?
    • Expedia's Evolved Relationship With Marriott International And Its Significance

    Notes:

    1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com

    2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Expedia

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Stocks , US Markets , Investing Ideas
Referenced Symbols: EXPE , PCLN , TRIP , TZOO , CTRP


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