With its technological migration and Launch of OneKey in rear view,
Expedia Group CEO Peter Kern said the company was now well-positioned to deliver “even faster and more profitable growth” in 2024 – a bold statement accompanying the announcement of record third-quarter revenue and profits this year. year.
On a call with financial analysts to discuss the company’s third-quarter results, Kern repeatedly expressed excitement about the opportunities the multi-brand loyalty program and unified technology platform will create in terms of efficiency and growth for the company’s three main brands: Expedia.com,
Vrbo And Hotels.com.
“Our high-level strategy will not change: better products, better loyalty program, better market and better service,” Kern said.
“But instead of spending most of the year operating in our own business, we will focus on growth, innovation and efficiency.”
Kern acknowledged that the effort to get to this point took many years and that the company had to give up “many short-term opportunities,” but he said it was now in a position to “get back to offensive”.
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“No one in the travel industry is innovating faster than us, and with so much important platform work behind us… we will be over-innovating the space for many years to come.” »
Specifically, Kern said he expects to see Vrbo’s share of vacation rental bookings improve, in part due to the “fundamental differentiation” OneKey offers.
“This allows all of our Expedia members to have the ability to use OneKey Money on Vrbo…it’s a way to attract a lot more customers to Vrbo, it’s a way to make Vrbo significantly better as a value proposition than its competitors,” he said. .
But for the third quarter, the technology migration process created a “conversion drag” for Vrbo. According to Julie Whalen, Expedia Group’s chief financial officer, this, coupled with the impact of the wildfires in Maui and a shift in demand towards more urban rentals, has dampened the overall growth in accommodation bookings for the business. While its hotel business grew 14% in the third quarter compared to the same quarter of 2022, total gross lodging bookings – which include Vrbo rentals – were up just 8% year-over-year. on the other. Still, at $18.5 billion, it was the company’s highest gross lodging bookings for a third quarter.
Record growth in B2B
Alongside the new technology stack and OneKey program, Expedia Group has prioritized growing its B2B business, where the focus is on leveraging private label and co-branded programs to sell travel through sites Third-party brand web.
In October, the company announced several new B2B partners, starting with a chain of travel agencies in Asia-Pacific and a few weeks later, with news, he works with the Air Miles and Afterpay rewards programa buy now, pay later provider in Australia.
Expedia Group’s third-quarter B2B revenue was $995 million, up 26% year over year and a record for the company.
Kern said the company continues to add new partners and increase its “share of wallet” with existing ones, particularly in China where Expedia Group powers some offline and online travel agents. Kern said it has seen a 150% increase in demand from these partners, primarily due to an increase in intra-China and intra-Asia travel.
“We are still finalizing our plans for next year… but in terms of double-digit growth, we are confident that the B2B business can continue to grow,” Kern said.
Asked about Expedia Group’s work with generative AI such as ChatGPT, Kern said the company recently began highlighting the ChatGPT tool that has been part of the Expedia website and app since April to users and, as a result, he sees “a lot more engagement” with him. But, he acknowledged, this is still in its early stages and is not yet having a noticeable impact on conversions or revenue.
Beyond that, Kern said the company is still in the midst of “a lot of discovery” in determining how best to use the technology, but that he sees “generative AI as a bigger story for us in the long term.” In September, the
the company announced several new features using generative AIsuch as the ability to answer questions about a property’s amenities and services by using technology to extract details from user reviews.
Revenue and adjusted EBITDA for the quarter were records for the company. Revenue was $3.9 billion in the third quarter, up 9% from the same period in 2022, while adjusted EBITDA for the quarter was 1.2 billion dollars, up 13% year over year. Sales and marketing expenses in the quarter were $1.85 billion, up 11% from the third quarter of 2022. Whalen said this was primarily due to increased commissions paid in the B2B sector.
The company also announced that it has completed a record $1.8 billion in share repurchases since the beginning of the year and now has a new share repurchase authorization of 5 billion dollars from its board of directors.
“We are confident that we are on the right track and that there is a huge opportunity in front of us,” Whalen said.
The Phocuswright Conference 2023
Join us in Fort Lauderdale November 13-16 to hear from industry leaders, including Julie Whalen, executive vice president and CFO of Expedia Group.