Politicians hurt travel biz: Expedia CEO

NEW YORK Tue Mar 3, 2009 5:46pm EST

NEW YORK (Reuters) - This year is shaping up to be a "lost year" for group travel, not helped by politicians who have demonized company travel spending, the chief executive of online travel agency Expedia Inc (EXPE.O) said on Tuesday.

Dara Khosrowshahi said at the Reuters Travel and Leisure Summit in New York that he has seen first-quarter corporate travel, which includes day-to-day business trips, fall 15-30 percent.

Spending for group travel like conferences is likely to fall substantially more than 30 percent, he said.

"There has been this demonization of corporate travel and group travel, which really threatens to fundamentally hurt the infrastructure of travel," he said, urging politicians to support the travel industry.

Online travel agencies, already battered by falling travel demand amid economic recession, complain that politicians have unfairly criticized business travel in the wake of highly publicized, extravagant trips by executives at troubled companies like American International Group Inc (AIG.N).

Khosrowshahi said that as a result of the criticism, some companies have curbed travel costs -- especially group travel -- for fear that they, too, would be accused of extravagance.

"I think 2009 for group travel is a lost year," he said.

Khosrowshahi said it was "anyone's guess" when the U.S. recession would end, but "from our standpoint, we're certainly not planning for it to end any time soon, and certainly not in 2009."

The three publicly traded U.S. online travel agencies -- Expedia, Priceline.com (PCLN.O) and Orbitz Worldwide (OWW.N) -- posted mixed results for the fourth quarter. The total value of bookings were broadly lower, with only Priceline seeing growth. Some experts said that Priceline's growth reflected its traction in international markets.

The value of bookings fell by 11 percent for Expedia, the largest online travel agency. Expedia's North American bookings fell 13 percent, while European bookings fell 11 percent. Khosrowshahi said Expedia was working hard to expand in Europe and Asian markets.

"It's a huge potential market as far as the population and you've got kind of a rising middle class that is traveling out of the country and using hotels and using the Internet to book," Khosrowshahi said, referring specifically to Asia.

Asked about consolidation in the online travel business, he said there was certainly potential for it, but conditions were not right at present. "I don't see anything happening until the credit markets ... ease," he said.

"Right now access to capital markets is essentially nil and consolidation typically requires capital," Khosrowshahi said.

He added, however, that there was room for four players and more in the market.

(For summit blog: blogs.reuters.com/summits/)

(Reporting by Kyle Peterson and Claudia Parsons in New York and Karen Jacobs in Atlanta; Editing by Phil Berlowitz, Gary Hill)