Expedia Has No Plans to Spin Off Vrbo for Valuation ‘Games’

Expedia Group is doubling down on what it sees as core assets during the coronavirus pandemic despite some pressure to spin off assets like home rental site Vrbo to boost shareholder value following Airbnb’s blockbuster initial public offering in December.

The Seattle-based company does not plan to play valuation “games” even as it weathers the crisis, Expedia Group CEO Peter Kern said during Skift’s Online Travel and Distribution Summit on Wednesday.

“Just to spin off Vrbo, which is everyone’s favorite question these days, just to get a moment of valuation upside, and then screw up the long-term strategy of it doesn’t make a lot of sense to us,” Kern told Skift Executive Editor Dennis Schaal.

Expedia stocked opened at $146.50 per share on Wednesday compared to $207.05 per share for Airbnb. The market cap of Expedia stood at nearly $22 billion while Airbnb was more than five-times that at just over $121 billion.

But the comparisons between the two companies are limited. While Airbnb is larger than Vrbo in the vacation rental market, Expedia includes broad array online travel agencies (OTAs), including its namesake site, Hotels.com, Orbitz and Travelocity, in addition to vacation rentals.

Expedia CEO Peter Kern talks with Skift’s executive editor Peter Schaal.

This array of portals are at the center of Expedia’s plans to build on the success of Vrbo during the pandemic. Room nights booked on the site have risen during the crisis, partially offsetting declines at the company’s other properties. Expedia plans to leverage the demand for whole-home rentals by using its existing OTAs to expand the reach of Vrbo into more markets, said Kern.

“We’re going to take Vrbo, push as hard as we can in the places where we have strong brand for standalone home rental, but we’re also spending a lot of time wiring it through our core OTA,” he said.

Kern did not elaborate on where Vrbo has seen strength during the pandemic except to say the site has “gained share” against Airbnb in places where it was already strong.

Outside of Vrbo, Kern was optimistic about Expedia’s core online travel agency business. The company’s sites and its suppliers — including both hotels and airlines — can benefit more from working together than haggling over “pennies on the table.”

“Given what our platform can do, there are many other places we can help our travel supply partners … in terms of monetizing their customers better,” he said.

Working with suppliers has not always been easy. Expedia and United Airlines came to blows over fare listings in 2019, prompting the Chicago-based carrier to threaten pulling fares from the OTA’s sites until the parties reached an agreement that September.