Expedia Group CEO Says He ‘Encourages Revenge Travel’ As First Quarter Revenue Dips 44%

Peter Kern, CEO of Expedia Group. (Expedia group photo)

Expedia Group CEO Peter Kern said the travel industry remains a “mixed study” – citing a booming US travel market and strong vacation rentals on the beach and other outdoor destinations. air. But at the same time, Kern, speaking on the Seattle-based company’s first-quarter earnings call, highlighted difficulties in business travel, traditional accommodation and international travel.

And he specifically noted the worsening COVID-19 situation in India, where Expedia maintains a strong presence.

“As the dire situation in India reminds us, in some markets things can get worse before they get better,” he said.

This is the life of the CEO of a publicly traded online travel agency. It is simply difficult to say where the market is going.

The company’s mixed message and reliance on all forms of travel has not dampened investor appetite for Expedia Group. Its stock has risen 148% in the past year, and shares have gained more than 6% after-hours trading after posting first-quarter results that beat analysts’ expectations. Some investors are betting that when the trip returns, it will come back with a vengeance and companies like Expedia could benefit.

It’s the concept of ‘revenge travel’, the idea that travelers who have been sidelined over the past year will travel and spend more once the virus is under control.

“I’m in favor of the revenge trip, whatever it is,” Kern said, in response to a question about the return trip. “Whatever type of trip people want to take, we are happy to welcome them, whether it is for revenge or not.”

Kern said people stay in vacation destinations longer and start spending more money as a result. Gross bookings fell 14% in the first quarter compared to the same period last year, compared to a drop of 66% in the fourth quarter.

“Revenge, or otherwise, places like Miami demonstrate that there is a huge pent-up demand to go to places where people can have a relatively normal travel experience,” Kern said. “And I don’t know if you’ve been to Miami recently, but it’s crowded. The hotels are full. People are everywhere. The restaurants are full. And their booking levels are way higher than they were two years ago. “

But with the uncertainty of COVID plaguing the travel industry, particularly in some international destinations, it’s far too early to say the travel is back. Kern dubbed it an “unpredictable moment”.

Expedia, which now has a market value of $ 24 billion, reported sales of $ 1.24 billion in the first quarter. That was a 44% drop from the same period last year.

  • Accommodation revenues fell by 41%.
  • Airline revenues fell 55%.
  • Advertising and media revenues fell 57%.

Expedia’s cash, cash equivalents and short-term investments totaled $ 4.3 billion at the end of the first quarter, compared to $ 3.4 billion at the end of 2020. The adjustable net loss of the company grew to $ 294 million. Full earnings report here.

“While a full recovery in pre-pandemic travel demand is still likely years away, domestic travel is clearly booming, driven by vaccinated consumers and strong demand pent up after more than a year of restrictions and security concerns, ”Wedbush Securities wrote in a report Thursday. “We continue to believe that [online travel agencies] represent high value compared to the COVID recovery, and EXPE presents a compelling combination of growth in alternative accommodation and substantial savings on restructuring. “

Expedia’s Vrbo division remains a bright spot as travelers book accommodation in the vacation rental market online. Kern noted that Vrbo hosts make more money than Airbnb hosts, which he says is a great story and that they need to spend more money to tell it.

But Kern was a bit reluctant to say that travel habits – including a shift to services like Vrbo – have changed permanently in the wake of COVID. Even still, he said it was too early to say if the flexibility that comes with the trend of working from home – which has spurred increased demand for Vrbo and similar services – will remain in the long term.

Here is more of his analysis:

“We haven’t seen a ton suggest that things are changing, and as you’ve heard me say over and over, I hate extrapolating too much from this COVID period. But, of course, there are a lot of new users to the Vrbo experience and in general I think the data suggests they come back to it more frequently. But, again, we are in COVID…. Now, is that sustainable and will people be returning to resorts and the like? I have said publicly that I believe, in general, that the trends of the past will continue. But one of the trends in the past was that people were focusing more on the vacation rental use case, so I think we’ve stepped up and exposed more people to the product and that’s a good long-term trend. for this category … and it’s will make people see vacation rental as their choice when they may not have done so before. But I don’t think we’re necessarily going to see a huge change that will stick around for the long haul, just like maybe a reset to the next level for vacation rentals and then more and more.

Expedia’s results come two days after the company announced plans to sell its Egencia business travel business to American Express Global Business Travel.

During Thursday’s conference call with analysts, Kern said they have found a “great new home” for Egencia, and the sale will allow Expedia to focus and simplify and move nimbly and quickly into other areas. keys.

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