Online Travel This Week
Expedia Group CEO Peter Kern, on the job for five months but a board member there for a decade-and-a half, thinks Google is a “shark,” and that Expedia in the past “paid lip service” to reducing its dependency on the travel business formerly known as a search engine.
Asked at Skift Global Forum last week if he had the silver bullet to reducing Expedia’s reliance on Google, Kern said: “Google is a shark. Sharks have to hunt. That’s what they do. We are not going to stop them. Maybe the governments will get involved and curtail some of their activities. But, we by ourselves can’t do it. So we have to be good about all the things we can control.”
Skift Research estimated that Expedia likely paid Google some $2.7 billion for performance marketing in the 12 months up to September 30, 2019.
Kern said there is no magical solution to the high cost of marketing through Google, which he likened to skimming the ocean for a wide net of customers, and not making a lot of money on the catch.
He said the solution to getting a traveler to start their search in the Expedia app rather than with Google, and securing that direct visit, is creating a robust and more “sticky” consumer experience, which includes improving the Expedia and Hotels.com loyalty programs.
“That’s what we have to do,” Kern said. “It’s not a silver bullet. We are all trying to do it. But we haven’t done a particularly great job of it. Frankly, we paid lip service to it. But I don’t think we put as much effort into it as we could in terms of resources and care.”
At first, when Kern made the “lip service” comment, I thought he was taking a shot at his CEO predecessors, Dara Khosrowshahi and Mark Okerstrom — and perhaps he was. But I think Kern would readily admit that if Expedia fell too hard for the allures of performance marketing through Google over the years, then he was part of the problem, as well, since he’s been an Expedia board member since 2005, and vice chairman starting in 2018.
One also has to wonder, barring regulatory intervention, to what degree Kern and Expedia are chasing an unachievable goal. Sure, outliers like Amazon attract a ton of direct traffic, but the typical online travel agency customer is likely highly price-conscious and fickle, chasing the next bargain rate with brand loyalty a casualty.
Still, Kern isn’t trying to eliminate marketing on Google entirely, and if Expedia can get travelers used to its loyalty programs, then the savings in reduced advertising costs would obviously be beneficial.
Kern Making Nice With Airbnb
Although Kern thinks “Google’s gonna be Google,” as he said, and exhibits shark-like behavior, he has a lot of sympathy for Airbnb even while conceding that Expedia’s Vrbo vacation rental unit has “seen some benefit” from the Airbnb host backlash.
“We are all in a tough spot, everyone in travel,” Kern said. “Our goal is not to hit another player (Airbnb) while they are down. We are certainly down. We hope they don’t do it to us.”
In talking about his Expedia Partner Solutions business, which powers travel for the American Express and Chase loyalty programs, Kern repeated an earlier overture to Airbnb. Referring to Expedia being a third-party travel provider, Kern said: “We are definitely open to hoping to powering more of the industry so if there are opportunities that make sense for us and Airbnb, we’d certainly consider it.”
On Airbnb’s potential initial public offering, Kern noted that Expedia faces off against Airbnb in short-term rentals, and Airbnb may decide to increasingly compete on Expedia’s terrain, presumably in the hotel and attractions’ sector.
“I wish them well,” Kern said of Airbnb. “I’m sure they will be highly valued.”
In Brief
Amazon Takes Next Step in Travel
Amazon is launching virtual tours. After having a couple of stilted efforts in hotel booking, Amazon could potentially launch offline experiences that could stick. Game on — again. Skift
Domio Is Back on Airbnb But Still in Penalty Box
We called it on September 9. It wasn’t a question of whether Airbnb would restore Domio’s suspended listings, but when. Domio is now back on Airbnb, but Domio’s co-founders, CEO Jay Roberts and Chief Strategy Officer Adrian Lam, had to go. Skift
Despegar Gets $150 Million Investment From Private Equity
Liquidity — and attractive investments — are the name of the game in the pandemic era, and Buenos Aires-based Despegar picked up a $150 million investment from an affiliate of private equity company L Catterton Investment. The firm got a 13.64 percent stake in the Latin American online travel agency, and a board seat. Securities and Exchange Commission
ANA Ties Into Book on Google
Japan’s All Nippon Airways is digging deeper into its Google relationship, enabling passengers to book international flights using Book on Google functionality, meaning they no longer have to navigate from Google to the airline’s websites to make a reservation. The arrangement uses New Distribution Capability services from Travelfusion. ftnNews
Airbnb Is Winner of Our Loudest Quiet Period Award
While the U.S. Securities and Exchange Commission peruses Airbnb’s confidential registration statement, filed five weeks ago, Airbnb has been making a flurry of announcements — although not seemingly verboten ones about its valuation. Airbnb publicized crackdowns on house parties, its overtures to digital nomads, a data solution for governments and tourism boards, and a marketing partnership with Brand USA, for example. ShortTermRentalz
Tripadvisor Giveth and Tripadvisor Taketh
While Tripadvisor’s Viator subsidiary announced a new fee a few weeks ago that charges tours and activities vendors to onboard their new listings, another Tripadvisor subsidiary, its Bokun tours’ reservation system outfit, last week promised “a reduced service fee on direct-bookings, and a low monthly subscription fee” for existing customers. Tourpreneur
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