How Expedia Is Breaking Down Its Siloed Brands Approach

Expedia Group used to be like a sports team where the athletes were competing against each other rather than using the same game plan. According to Peter Kern, the vice chairman and CEO, his ongoing reorganization will help the online travel conglomerate win more often.

“We’re moving away from a competitive house of brands,” Kern said when speaking at Skift Global Forum on Wednesday in New York City. He said he wanted “a simplifying universe of brands” that are “working toward a common goal.”

Expedia Group earlier this week said it was consolidating its far-flung loyalty programs that used to compete to win customer loyalties.

“The goal [of the loyalty program change] was to make it simpler for the customer to understand how to get the most value out of our brands and products,” Kern said in an interview with Skift Executive Editor Dennis Schaal. “We’re letting them earn and burn their rewards however they want.”

An additional benefit will come to Expedia Group by reduced marketing costs. In the past, brands such as Hotels.com, Expedia, and Orbitz used different loyalty programs to fight for consumer attention. That meant that the group inefficiently spent its money, especially when it fought for the same customers’ attention by buying paid search marketing ads via Google.

“I prefer to our spend money on almost anything than give it to Google,” Kern said. He added the caveat that he was commenting on the degree of usage, acknowledging that Expedia Group would continue to buy ads via Google as long as it continued to make economic sense versus other forms of marketing expenditure.

Another reason the online travel conglomerate has been reorganizing by trimming business units is that Kern is looking to close the lopsided profit margin gap with its chief rival Booking Holdings.

“They have higher margins than us,” Kern said. “There’s no question.”

Yet Kern tried to pivot from that to argue that there was now “more upside” for investors by betting on Expedia Group rather than Booking Holdings.

“We’re like a great athlete that maybe hasn’t gotten all the best coaching,” Kern said. “But if we get everything right, we have more upside. We’re in this similar business, even though we’re heavier in air.”

Kern did have special praise for arch-rival Booking Holdings overall.

“They’re a nearly perfect machine at driving discounts through performance marketing,” Kern said. “Nobody’s better than them. I admire them greatly. But that doesn’t mean it has as much potential because, when we get it right, our machine will accelerate as we lean into our advantages.”

Kern mocked rival CEO Glenn Fogel’s much-touted concept of Booking Holdings building a “connected trip” for consumers as a novel thing.

“It’s a good set of words,” Kern said. “But we’ve been in the trip business for a long time, and we sell more multi-product trips than any other OTA [online travel agency] in the world. We’re going to keep doing it.”

He also ridiculed Booking Holdings’ loyalty program.

“There rewards program has no rewards,” Kern said. “It just offers discounts.”

In answer to Schaal’s questions, Kern said Expedia Group wasn’t talking about a subscription model for travel.

Vacation rentals will remain a growth area for Expedia Group, the executive said.

Earlier in 2021, Vrbo outpaced Airbnb in listings growth while also outspending Airbnb on advertising by 10-fold. Kern said he would continue to support the Vrbo brand.

On corporate travel, Kern weighed in on Egencia, the corporate travel arm Expedia Group. He said people shouldn’t misinterpret a deal earlier this year that made American Express Global Business Travel the company’s majority owner.

“We’re still a shareholder in Egencia, and it’s not like we’re saying goodbye to corporate travel,” Kern said. “[Egencia] has just had one of our best years in signing new business in corporate travel.”

“But we’re trying to make the business simpler,” Kern said.

Ultimately, Kern said some parts of the recovery of his company depend on forces beyond his control. He called on both governments and the private sector to do more for vaccine equity, a topic Skift has covered at length.

“The more people we get vaccinated, the better it is for the people, their economies, and the global economy,” Kern said. He cited a $10 million charitable donation his company made to the cause, noting that, like many travel sector companies, Expedia Group “doesn’t have bottomless pockets.”

“Maybe Google could contribute,” Kern joked. “Google has bottomless pockets.”