Expedia is taking advantage of the travel recovery in the U.S., a region that is the company's strongest, while Booking Holdings got pinched for its weaker presence. Don't read too much into it. These are Covid-impacted developments, not protracted trends.
The knock on Expedia Group over the years was that it was too U.S.-focused, but the online travel agency turned that into a strength during the first quarter — at least temporarily.
Referring to Covid’s uneven global trajectory as a “study in contrast,” Expedia Group CEO Peter Kern told financial analysts Thursday that the company “benefited greatly in our vacation rental business and our domestic U.S. business, but other parts of the business still remain challenged.”
So while in the first quarter of 2019, before the pandemic ruptured the world, Expedia Group generated about 62 percent of its revenue from the U.S. But in the first quarter of 2021, because the U.S. was relatively open, and much of Europe and parts of Asia were locked down, Expedia Group generated more than 80 percent of its revenue domestically in the U.S.
“We are already seeing booking trends well above 2019 levels for leisure destinations, beach, mountains, etc.,” Kern said during the first quarter earnings call. “And that goes for not only vacation rentals, but also for conventional lodging.”
Kern said Vrbo, which is the focal point of Expedia Group’s vacation rental business, picked up market share in all of its strongest regions.
Speaking of a study in contrast, Booking Holdings, which gets about 50 percent of its revenue from Europe, reported Wednesday that its first quarter of 2021 room nights fell 54 percent compared with the first three months of 2020, Expedia Group stated Thursday that its dip was a tad better at only a decline of 47 percent.
Expedia Group notched a net loss of $606 million in the first quarter of 2021, compared with a $1.3 billion net loss a year earlier. Revenue fell 44 percent to $1.24 billion.
Downplaying Google and Other Metas in Vacation Rentals
Kern said that while several months ago Expedia Group said it would be cautious about not over-spending on marketing prematurely, later in the first quarter the company invested heavily in marketing and recruiting vacation rental hosts to get out ahead of a hoped-for robust summer of travel, at least in some parts of the world.
“But in the course of the first quarter, we have sort of changed that bias and moved more, particularly in the back half of the quarter, towards investing and getting in front of the wave of demand, we think, is coming,” he said, referring to marketing.
Expedia Group spent $647 million on selling and marketing in the first quarter, up from $500 million in the traditionally seasonally slower fourth quarter of 2020.
The company spent fairly heavily on a Vrbo brand campaign, primarily using online video, and Expedia.com is in the early stages of its own brand marketing campaign, its largest in give year.
“We’ve relaunched our Orbitz brand with a focus on LGBTQIA+, and that’s sort of, again, a push as we try to differentiate brands and really focus each brand on who their market is,” Kern said. “And later this month, we have a great new summer ad campaign coming for Vrbo that we think will be really impactful.”
Part of the strategy is to downplay marketing in comparison-shopping, or metasearch engines, in the hopes of attracting more direct bookings and an enhancing return on advertising spend.
“We mentioned last time on our last call that we went off the Google meta product for VacationRentals,” Kern said, referring to Expedia Group withdrawing from Google Vacation Rentals. “And actually, over this last quarter, we have pulled back from other vacation rental meta players and so far, the results have been excellent and as good or better than we could have hoped for in terms of the returns we have seen in getting more direct bookings and traffic other ways more efficiently.”
An Expedia Group spokesperson declined to say which vacation rental metasearch engines the company has exited or reduced its exposure in. Vrbo still supplies Tripadvisor with vacation rentals, a Tripadvisor spokesperson confirmed, and Vrbo still has a presence in Kayak, Trivago, and HomesToGo.
Expedia to Take 14 Percent Stake in Amex GBT
Earlier this week, American Express Global Business Travel announced a deal to acquire Expedia Group’s business travel brand, Egencia.
Expedia Group Chief Financial Officer said Expedia Group would take a 14 percent stake valued at around $750 million in American Express Global Business Travel. The deal is expected to close in 9-12 months, he said.
The two companies also agreed to a 10-year deal that would have Expedia Partner Services providing lodging supply to Amex GBT. Hart said at 2019 business travel volumes that deal would generate about $60 milliion in earnings annually.
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Photo Credit: A 2015 Jaguar F-Type S Convertible as seen on on November 12, 2020 in Parkrose, Oregon. Expedia reported that its U.S. domestic business was strong during the first quarter of 2021. Soulrider.222 / Flickr.com
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