When it comes to growing brands -- or at least buying companies with capable management teams -- Expedia knows what it's doing. You can count on Trivago and HomeAway both becoming more formidable than they are today.
Expedia Inc. expects to be a fast-growing company over the next few years and that spurt is led by HomeAway and Trivago, which CEO Dara Khosrowshahi characterized as “the superchargers within the portfolio.”
In the first quarter, which ended March 31, HomeAway’s revenue grew 30 percent to $185 million, and Trivago made HomeAway’s mark seem relatively ho-hum. Trivago’s revenue leaped 62 percent to $286 million. In contrast, parent company Expedia Inc. saw revenue tick upward a slower 15 percent to $2.2 billion.
Interviewed on an episode of Jim Cramer’s Mad Money show [see video embedded below], which was broadcast Wednesday, Khosrowshahi revealed that the company will be increasing HomeAway’s marketing spend by 50 percent through search engine marketing, TV and offline campaigns. The biggest push for HomeAway, which doesn’t have much experience in marketing through Google, will be coming in the second half of the year.
Trivago, a hotel-search engine is renowned on its commitment to growth through marketing as it spent 87 of its revenue on marketing last year.
Overall, Expedia GAAP selling and marketing expense grew 22 percent to $1.27 billion during the first three months of the year.
Cramer pointed out that Expedia isn’t fearful of directing marketing dollars and other resources to growth areas.
The Expedia CEO expressed frustration with financial analysts on this point, saying analysts focus on margins while Expedia is willing to sacrifice margins for growth.
“It means we are not on a quarterly game,” Khosrowshahi said. “We are on a compounding game over the long term.”
The Expedia CEO repeated talking points on how three “M’s” are transforming the travel arena. Mobile is providing the company with information about customers in a “location context;” Messaging brings engagement and the ability to individualize marketing and product, and Machine Learning enables Expedia to strive to deliver “perfect” services for the individual.
Khosrowshahi, who immigrated from Iran to the U.S. with his family when he was 9 years old, criticized the Trump administration for damaging the American brand, although he said Expedia hasn’t felt much of the impact financially because of its marketing spend and diverse, global portfolio.
“The American Dream is stronger than Apple and Google and Microsoft times 10,” he said in urging the Trump administration to keep that dream alive.
The interview follows:
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Photo credit: Expedia CEO Dara Khosrowshahi called on the Trump administration to stop ruining the perception of the American Dream around the world. He appeared on Jim Cramer's Mad Money show May 3, 2017. Jim Cramer/Mad Money