The honeymoon is over: Expedia and Groupon no longer co-branding travel deals
Groupon and Expedia are scaling back a 3-year-old partnership that focused on selling heavily discounted travel deals together. A Groupon spokesman confirmed today that the daily deals company and the online travel agency …
Context & Ripple Effects
The co-branding arrangement traces back to June 2011, when Groupon began booking travel inventory through Expedia (the original partnership); a Groupon spokesman has now confirmed the two are scaling back what was billed as a way to move heavily discounted rooms through Groupon's email list. The unraveling was arguably seeded months earlier: by January 2014 Groupon had added 20,000 properties to its own hotel feature, building the supply relationships it once rented from Expedia.
Both companies were already pulling in different directions by mid-2014. Groupon was recasting itself as more than a deals company — an iPad point-of-sale pitch to tens of thousands of merchants in May, and Groupon Basics positioned against Costco and Sam's Club, with CEO Eric Lefkofsky explicitly modeling Goods on Costco. Expedia, operating as a focused travel company since spinning off TripAdvisor in 2011, was spending on direct supply, agreeing in late June 2014 to acquire European car-rental firm Auto Escape Group.
First-order effects
- Discounted hotel deals lose their flagship co-brand distribution: distressed room inventory that moved through the joint channel has to find homes elsewhere, and Groupon's own hotel feature — expanded with 20,000 properties in January 2014 — stands to absorb demand it previously fulfilled with Expedia supply.
- Expedia gives up a cheap acquisition funnel for price-sensitive leisure travelers, while Groupon keeps the customer relationships and the merchant-side deal machinery.
Second-order effects
- Expedia's response pattern favors owning supply outright over renting reach from deal-site audiences, consistent with its Auto Escape car-rental acquisition weeks earlier — expect inventory partnerships judged on margin contribution, not brand halo.
- Groupon's exit frees it to make travel a fully self-run vertical under its 'more than deals' repositioning alongside the point-of-sale push and Groupon Basics, deepening its bet on first-party commerce.
Third-order effects
- If deal platforms and online travel agencies keep converging on the same hotel inventory, co-branding gives way to owned channels and the thin distribution layer between them compresses.
- Discount-travel economics tilt toward whoever holds the direct hotel relationship, pressuring intermediaries whose main asset is audience rather than supply.
The trend: Online travel is consolidating around first-party inventory control, unwinding the co-branding era in which deal platforms rented OTA supply to monetize their email lists.