Big news from the travel industry yesterday as Groupon and Expedia have announced a joint venture: Groupon Getaways

These will be typical Groupon deals ("up to half off") distributed through e-mail via the Groupon Getaways list. Groupon handles the user interface and deal distribution, Expedia will source the deals.

So here we go, a new frontier!  Innovation like we've never seen before!

Or, is it more of the same? Groupon offered a Virgin America deal a few months ago and it appears the world is still turning. More so, it didn't even get abnormal buzz (anyone know how many they sold)?

In reality, I think Expedia was forced into making this deal by market conditions, strategic needs, and competitive threats. In short, they had no choice but to do this, and do it with the #1 player in the market. They were unable to succeed in this space on their own and they have a pricarious hold on the top spot in a market with iffy long-term fundamentals. To be fair, I do think this will be a good product and could do quite a bit of sales. But I don't think it's all that big news to the travel industry. I see it as a fancy new marketing channel for Expedia -- not necessarily changing how we purchase and get inspired for travel, but more just adding an element to how we interact with an OTA.

Here are the big questions and my stab at answers:

1) Why partner at all?

Expedia is the biggest travel brand in the US and Groupon already has a big salesforce that knows how to sell. Are you telling me Groupon sales reps can't sell to hotels? Or don't know how to put together packages? Living Social does it, so why can't they? Expedia, on the other hand, has already tried this with SniqueAway, which apparently isn't doing all that great. Expedia's failure to innovate is well documented. It took them years of their own mediocre mobile development before they bought Mobiata. I'm glad to see they figured out they couldn't do deals right alone, either. As for Groupon, they can go door to door to small hotels and certainly has the clout to call up Starwood and Marriott. What does Expedia really bring to the table? Maybe enhanced distribution and a marketing agreement to get members of both companies signed up for each other's lists. But to make this big deal just for marketing seems like a lot. My bet is it's the marketing dollars and existing booking engine that made this deal good for Groupon. With Expedia, they don't even need suppliers on board, Expedia simply can do it themselves by funding deals and providing a booking platform to execute. That is a deal that Groupon couldn't turn down.

2) What's the business model?

They didn't answer this publicly, but my guess is Groupon is getting a really sweet deal from Expedia. Part of it likely includes Expedia acting as the merchant itself early on and promising to fund many of the deals. Perhaps the deal breakage will help them re-coup losses, or perhaps they'll just use their really fat margins with some properties. The result makes this agreement free money for Groupon to leverage their mailing list and build a great user experience.

3) What are the competitors going to do?

By competitors, I mean Priceline. I have a hunch that Priceline was sniffing really hard on this one, and Expedia did something drastic to make the deal happen and keep them out. Priceline has quite a bit of money -- almost $2b cash on hand and a market cap of $25b!  Expedia also has a bunch of cash (~$1.7b), but with a market cap of only $7.6b -- that's a lot less stock to give out in an acquisition or strategic investment. Am I saying Priceline was going to acquire Groupon? Probably not (although I wouldn't have been shocked to see something that big), but they could have made a major investment, or inked a big partnership. Or perhaps Priceline is about to buy someone else big in the space and Expedia needed to act first.

4) Will consumers like it?

If I knew what consumers would like, I'd be spending my evenings counting my money instead of writing a blog (see Jason's blog for our philosophy on that: Don't give bulls$^t advice). But I do think that the: "Pay $25 for $50" model might be more challenging for travel. You don't just buy credit to a hotel in Cancun in case you decide to go there in the next year, you plan a trip! The dollar values are higher and the trips take more time investment. This could be perfect for weekend getaways -- I see that as a major niche potential. Lots of sites have tried to inspire vacations in the past, but there is a reason Expedia and all the OTAs start with a destination box: It's what they're good at and why people use them. If I get e-mails from Groupon with cool destinations (as I do with Jetsetter et al now), it definitely piques my interest, but aside from a weekend getaway I'm not liable to purchase. Also remember the repeat business model is completely flawed here. In theory, people buy restaurant and local service Groupons many times over. Travel is a once or twice per year thing for most people. So even if you do successfully inspire someone to buy, they are only going to do it on occasion. Despite a higher average purchase, the scale here doesn't exist like it does in your local deals. Also, the entire merchant incentive to give 50% off is to get repeat customers. Do you think a Barbados resort thinks that by giving 50% to Groupon it will get repeat business? Likely not. That segues into my last question below:

5) Will suppliers like it?

Suppliers are already doing what they can to discount inventory. Like restaurants, travel inventory is perishable. Once the date passes, it's over. That is why revenue management became big in travel and is now ubiquitous for airlines, hotels, and car rental agencies. You might say that this will work just like restaurants, who currently give carte blanche Groupon deals all the time. Turns out, not so much. Despite also having perishable inventory, restaurants do not revenue manage! When you go in on a Friday, the menu is not more expensive than a Thursday. (Yes, they do very basic revenue management like early bird deals, and happy hour specials for sure, but not nearly as sophisticated as the travel industry). So my issue here is not that travel suppliers will not like the idea of Groupon promos, but that they'll want them to be revenue managed, which means a clash is coming. Andrew Mason in this video said explicitly there would be no restriction deals, but I'll believe it when I see it. Look for a mixed reaction from suppliers trying to figure out the long-term impact. In the meantime, expect Expedia to foot the bill. I bet they'll plow a significant marketing investment in funding early deals to show suppliers that it works. Then it will be up to them to make the pitch. For a while, I'd expect us to see great hotels and resorts in the marketing material, but really just Expedia credit that makes up the deal. Innovation? You be the judge.

I do not expect this deal to change any fundamental in the industry. It could be a great new marketing channel, but I'll eat my hat if in 12 months I'm expecting to use a Groupon to get 50% off coupons before buying my United Airlines tickets. To me, this is an opportunistic marketing arrangement for Expedia in an age when the long-term climate for OTAs is poor and Expedia wants to ride the daily-deal wave ahead of Priceline. Do I blame them? Nope. Kudos for making it happen. But just like local merchants will eventually rebel at consumers expecting 50% deals, I suspect the travel supplier is going to approach this like a lagoon full of alligators. Carefully. And with a shotgun.

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I'm Evan, the co-founder of FlightCaster and travel industry incendiary.

You should follow me on twitter at: twitter.com/evankonwiser