United States: Based in Seattle online travel agency Expedia reports a 57% drop in revenue [to $5.2 billion] and in gross reservations [to $36.7 billion] in its fourth quarter earnings report.
It was the fourth quarter in a row that Expedia posted a loss, after three successive profitable quarters before the coronavirus outbreak.
Peter Kern, who was appointed The CEO of Expedia in April last year showed cautious optimism in the near term, noting “signs of modest improvement” based on the steady rollout of vaccines in countries around the world that were generating reservations for the summer.
Along with promoting Kern, the company raised $ 3.2 billion in debt and equity from Apollo Global Management and Silver Lake Partners. The latter had only recently participated in a billion dollar fundraising round for Airbnb, which was comprised of debt and equity securities and backed by San Francisco-based Sixth Street Partners, while Apollo participated in a second $ 1 billion loan senior debt to Airbnb a week later.
Before the global lockdown, Chairman Barry Diller revealed plans for a major restructuring project at Expedia that involved cutting the company’s workforce by 12%. As the financial and health consequences of the pandemic became clear, employees were put on leave in various departments of the company and senior managers suffered pay cuts to cut costs.
A consolation for Expedia is the relative success of its vacation rental brand Vrbo, which now achieves higher revenue per room-night than the rest of the company’s other accommodation divisions and generates the majority of direct bookings.
This willingness was tempered by the emergence of Google in the online travel space, which prompted Expedia to remove Vrbo from the booking engine’s vacation rental metasearch product.
Commenting on the decision on Expedia’s quarterly appeal, Kern said, “We didn’t find the investment in Google’s vacation rental product to be particularly gradual, we didn’t think the experience customer was particularly valuable and of course we also have a period seeing great direct traffic for Vrbo. So we found other ways, and I would say more cost effective ways, to generate traffic.
The CEO added that Expedia will continue to invest in brand marketing through its alternative hosting brands, growing globally, albeit more conservatively in the event of further cancellation peaks this year.
Going forward, Kern suggested that the OTA would double down on its mission of leading travel “as a force for good,” while reassessing the impact of its brands on the environment.