6 Expedia Group Takeaways From Its Annual Report

Propelled by sales of travel insurance and car rental bookings, Expedia Group’s “other” service category in 2021 represented 15 percent of total revenue — and that was five times larger than flights and more than double the company’s advertising and media business.

“All other revenue, which includes car rental, insurance, destination services, fee revenue related to our corporate travel business (through Egencia’s sale in November 2021) and Bodybuilding.com (through its sale in May 2020), increased 103% in 2021 from growth in travel insurance products as well as car,” Expedia Group said in its annual 10-K report.

That category grew from 13.4 percent of Expedia Group’s total revenue in pre-pandemic 2019 to 15 percent in 2021 as lockdowns and ever-changing destination arrival and departure rules caused traveler angst, and car rental prices soared.

With the sale of Egencia to American Express Global Business Travel in November, the “other” category is likely to decrease as a percentage of total revenue because Egencia’s fee revenue won’t pump it up. Expedia breaks down its business into four service categories: Lodging, retail, advertising and media, and “other.”

Here are other takeaways from Expedia Group’s annual sum-up:

Expedia Tilts Toward Lodging at Expense of Flights

In the fourth quarter of 2021, in particular, Expedia Group became more lodging-oriented, driven by its Vrbo business, at the expense of flights, Chief Financial Officer Eric Hart said during the company’s fourth quarter and full-year 2021 earnings presentation earlier this month.

For full-year 2021, Expedia’s lodging revenue, including hotels and vacation rentals, accounted for 75 percent of total revenue, up from 70.2 percent in 2019. Its advertising and media category, which include Expedia-controlled hotel metasearcher Trivago and Expedia Media Solutions, was the third largest of its four service types at 7 percent of total revenue, down from 9.1 percent in 2019, and flights were just 3 percent of total revenue in 2021, compared to 7.2 percent two years earlier.

Accommodations is Expedia Group’s primary business, and it became even more so during the pandemic as the airline industry was deeply troubled, and advertisers held back on marketing through Expedia Group, pending the return of travel demand.

Expedia has often talked going back several years ago about making flights a bigger part of its overall business, but the pandemic quashed any potential strides in this area.

Improving Vacation Rental Bookings Not High Priority

Expedia Group has now added virtually all of Vrbo’s vacation rental listings to Expedia.com and Hotels.com with the goal of making them easily bookable for travelers, and third parties in Expedia’s white label distribution business.

However, the integration is subpar, CEO Peter Kern has said on several occasions, in part because not all of these vacation rental listings are instantly bookable.

Improving the user experience and the types of short-term rental properties that Expedia and Hotels.com can offer is “not our highest priority, but they’re far from our lowest priority,” Kern said during the earnings call. “They’re big, important thing. We have teams working on it, and we will — we expect to continue to see improvement.”

That’s not to say that Expedia doesn’t prioritize vacation rental bookings on its Vrbo brand. Kern was referring to the lower priority the company is giving to that user experience on Expedia and Hotels.com.

At the end of 2021, Expedia Group had 3 million available lodging properties, including 2 million alternative accommodations and 875,000 hotels. That’s roughly equal to its property count in 2019.

Most of that increase in vacation rental listings undoubtedly reflected taking properties on Vrbo and then integrating them into other Expedia and Hotels.com websites.

Expedia Owns Larger Piece of Amex GBT Than Expected

When it sold its corporate travel business, Egencia, to American Express Global Business Travel in November, Expedia grabbed a larger stake, 19 percent, and the initial value is greater, $815 million, than initially envisioned when the company first provided details about the deal in May. At that juncture, Expedia thought it was securing a 14 percent stake valued at $750 million.

As part of the deal, Expedia Group secured a 10-year agreement to provide American Express Global Business Travel with lodging inventory.

The travel management company expects to go public in a special purpose acquisition company deal in 2022.

Chump Change or Losses for Alice, SilverRail and Classic Vacations

In other 2021 asset sales, Expedia Group sold vacation packager Classic Vacations, as well as the hotel operations mobile app Alice, and recorded a net gain of $57 million, and received net cash of $27 million.

Expedia Group acquired what was then called Classic Custom Vacations in 2002 for $48 million and took on $30 million in debt.

In 2021, Expedia Group likewise sold UK rail aggregator SilverRail and supplement and wellness-product seller Bodybuilding.com, which it inherited in 2019 when Expedia Group bought out John Malone’s Liberty Expedia Holdings. Expedia Group incurred a net loss of $13 million and divested $21 million in cash on the sale of SilverRail and Bodybuilding.com.

Expedia’s brand sales were all part of its drive to simplify its operations, and to focus on the Group’s core business. Expedia said the sales of Egencia, Classic Vacations, Alice, SilverRail and Bodybuilding.com would not have a major impact on its financial results or operations.

Barry Diller Still in Charge

Long-time board chairman and senior executive Barry Diller wielded 27 percent of Expedia Group’s voting power at the end of 2021, down from 29 percent in 2020, and 55 percent, in combination with Liberty Expedia Holdings, in 2018.

“As a result of his ownership interests and voting power, Mr. Diller is in a position to influence, and potentially control, significant corporate actions, including corporate transactions such as mergers, business combinations or dispositions of assets,” the company said.

Let’s just say that Diller is Expedia Group’s biggest “influencer.”

Correction: Expedia Group’s count of hotels and vacation rentals numbered around 3 million at the end of 2021, roughly equal to its property count in 2019. The property numbers did not jump 87 percent, as we erroneously reported.