Skift Take

Despite challenges caused by the war in Ukraine, Europe's tourism recovery is expected to continue this summer and Expedia for Business is poised to take advantage of the surge in demand. In this video, its president Ariane Gorin explains why she's bullish about this summer and provides information about future plans.

Series: Skift Forum Europe 2022

Skift Forum Europe

Skift Forum Europe was held in London, England on March 24, 2022. Find out about future Skift events through the link below.

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Ariane Gorin, the president of Expedia for Business, does have concerns that possible Covid surges later this year could put a dent in the brand’s travel recovery. Nevertheless, Gorin told Skift Executive Editor Dennis Schaal at Skift Forum Europe on March 24 she expects the Expedia Group to have a strong summer in Europe. Gorin said her confidence stems from her brand seeing a 65 percent in searches in the United Kingdom for the Easter period as destinations worldwide eased travel restrictions.

Watch the full video of the conversation, as well as read a transcript of it, below, to hear what Gorin said about her optimism for a strong summer in Europe, living with Covid going forward, some of the company’s recent deals, and much more.

Dennis Schaal: Good morning, London. People online, good morning. Good afternoon. We see you, don’t we Ariane? Don’t we see them?

Gorin: We do. Good morning.

Schaal: Thanks for being here.

Gorin: It’s my pleasure.

Schaal: President of Expedia for Business. That’s not Expedia Corporate Travel, right?

Gorin: No, it is not.

Schaal: Please explain to everybody what your fiefdom is.

Gorin: Oh, my fiefdom?

Schaal: Your fiefdom.

Gorin: So Expedia for Business is actually an entity that we created last summer. And for the first time at Expedia Group, we’ve brought together all of our partnership businesses into one team. So that means it’s the teams that are working on partnerships with hotels and airlines who are supplying to our brands and to our marketplace, the team that’s working with advertisers and the team that’s working with other travel companies that we power. And in fact, the idea behind it all was to say, we want to be able to talk to partners and if you’re a hotel to say, “Look, yes, you want to distribute through us. You may want to advertise with us.” We might power your package business and making it such that there’s only one person and one team that you need to talk to, we think will really facilitate the relationships and open up more opportunity for everyone.

Schaal: So it’s a significant chunk of Expedia’s business. I think your B2B segment was about 17 percent of revenue in 2021.

Gorin: Yeah. That’s the revenue that we do through our B2B partners. So we have our brands and then the B2B partners. And then of course this team also works on all of the supply that supplies all of the brands as well. And I think you mentioned earlier that the corporate travel part, we had had Egencia as part of that, but that’s now part of Amex GBT.

Schaal: We saw that. So we’re going to talk more about Expedia for Business, but let’s first just talk briefly about Ukraine and the Russian invasion. So Expedia was, if not the first, among the first that announced that you were pulling out of Russia and Belarus. So tell us what went into that decision and what else you are doing to support Ukraine.

Gorin: So first I think just for all of us, especially being in Europe today, it’s almost unfathomable to think that there’s war going on in Europe. So I just want to take a moment, I think we all feel strongly about what’s happening. But as you said, what we did is, the first thing when you view a situation like this is to look at what do we need to do for the business. So we very quickly realized we would stop travel in and out of Russia. Then we needed to think about, “Okay, what about the travelers who are in trip? Travelers who have bookings already on the books? What kind of flexibility do we need to put in place for them?” Then you think about the employees. I mean, this is really, it’s almost the Covid playbook.

Then you think about our employees. Do we have employees in the region? What do we need to do for them? Do we work with tech partners? So many companies work with technology companies in Ukraine and thinking about how do we take care of them? What’s the business continuity? And then it became very much about how can we contribute to help the situation. And we have a lot of employees in Eastern Europe who our employees in Poland have brought in refugees to stay with them, have gone to the borders to bring supplies, have done fundraisers.

We did a corporate matching program, five to one employee matching. And we’ve donated over a million dollars to charities. So it’s really looking at then what can we do to help? And you and I are talking about this right before. I think for many of us in this room, we have job opportunities in Europe. And so I think the next step is then to look at, for refugees who are getting displaced, what can any of us do to help place them in jobs?

Schaal: So you’re trying to do that?

Gorin: Yeah. We’re looking at how we can work on that.

Schaal: Excellent. So I criticized Airbnb a little bit. A lot of people are booking stays in Ukraine. They’re not staying there as a way to support hosts. But what a lot of people didn’t realize is some of the contributions are going to big property management companies. Airbnb doesn’t really distinguish between individual hosts and property management companies. So somebody might have 33 or 35 listings or whatever. You might be giving money to a big company that’s not even based in Ukraine. It could even be based in Moscow. So are Expedia… I mean, VRBO, I’m sure it doesn’t have a big footprint in Ukraine, but is that going on?

Gorin: So we do have some properties in Ukraine and many of them are private hosts. And in fact, on our sites we label something private host. We did see a spike in bookings. And actually if you looked at the communication between the traveler and the homeowner it was very clear, it was the traveler saying, “Look, I’m not planning to stay there, but I’m donating money.” And you could see the response of the homeowner, obviously very thankful. So what we did is we waived our traveler service fees. And I think some of that is just organic behavior.

Schaal: Right. But you do identify as this is an individual host-

Gorin: It’s an individual. It says private host.

Schaal: Right. So we don’t know the name of the company that it is, but it’ll say private host if it’s an individual?

Gorin: Yeah.

Schaal: Okay. So in terms of what you’re seeing now in Europe, what are some of the trends you’re seeing for summer travel and that sort of thing?

Gorin: So I know we just saw a lot that was, “Oh God, here are all the problems we’re facing.” But I think we’re going to have an amazing summer. I mean, the stat about how much income or how much money people have saved, people want to spend it on travel and hopefully all of us in this room are seeing that. So when we look at what’s shaping up for Europe, first of all, we see in UK, France and Germany, that we’re already back to the same trends of mix of international versus domestic shoppers as we were pre-pandemic.

I think we’d all seen that during the pandemic a lot more travel was domestic. So international is opened up. When we look at U.S. travelers who are searching to come to Europe, that’s up quite a bit as well. And the booking windows are expanding, which to me tells me, it’s people who are going to be coming here for the summer. So I think we’re going to have a great summer.

Schaal: Right. It doesn’t sound like you’re overly concerned about the next variant that’s going to dampen the summer.

Gorin: Yeah. I think that everybody says you learn to live with Covid and I think the question is going to be, how much friction is there going to be in travel? What we saw is, even a couple weeks ago when the UK removed all travelers restrictions. And I would say even before that, there weren’t even that many, but once everything was removed, we saw 65 percent increase in shopping for the Easter period. So I think the question is really going to be what kind of restrictions that go back in place, if any, at all.

Schaal: So a lot of things are reverting to a semblance of 2019, but what about things like work from anywhere, digital nomads? What else? The comeback of cities. Are you seeing this sort of thing?

Gorin: Certainly the comeback of cities. I mean, again, we all probably saw that during the pandemic, there was more secondary and tertiary destinations that we’re seeing a lot of demand. I remember being in Madrid last summer and talking to a hotelier there who said, “We’re missing all of the international tourists that were coming to the city.” So in our shopping patterns, we’re seeing a lot of demand into the cities. On the digital nomad, I think we certainly are seeing the comeback of work travel, of business travel. I think it’s going to be longer trips. It’s going to be probably mixing work and pleasure a bit more. And as we start to see companies bringing employees back to the office, I think that’s also a moment that we’ll see what the trends show.

Schaal: Speaking of digital nomads, I noticed that right before the pandemic, Expedia opened a $1 billion office campus. That’s a big place to fill. I snuck in there once.

Gorin: I know. I remember that.

Schaal: So, but-

Gorin: I think we’re having a town hall. So yes, we have an amazing, beautiful office right on the water in Seattle. And actually even here in London, during the pandemic we renovated our office space so that we were on… We used to be over three offices and we’re now in one. And you could say, “Well, was that good timing given that people are now working hybrid?” I think as long as you can give people a great space to work in, it will generate creativity.

And in fact, earlier this week, we had a welcome breakfast for anybody who joined our company since the beginning of the pandemic in London. So about 75 people there. And I was at a table with six people, quite young people developers. And they were so excited to start to have people come back to the office because they said, “Ariane, this is how we’re going to learn from people. This is how we’re going to make connection.” For a lot of them it was their first jobs out of school. So I think the idea of being back in the office halftime was really exciting to them.

Schaal: And having people at a conference and actually-

Gorin: It’s amazing to see people-

Schaal: Seeing people and having a drink with people. It’s great. So Peter Kern, CEO of Expedia group has talked about your Berwick Expedia for Business, the B2B segment as being a big growth opportunity for Expedia. And one thing he mentioned is he would like to see Expedia start distributing VRBO’s inventory to your partners who include banks and travel agencies and whatever. Has that started yet?

Gorin: So I would say we’re dipping our toes into it, but we want to make sure that when we do it, there’s a great traveler experience. Because it’s not as straightforward, the reselling of VRBOs and homes, necessarily as hotels. So we have a pretty big business where we power other travel companies, other online travel agents, banks, corporate travel agents, and the like, and we do a lot of business with them in hotels. And so, as I said, we’re dipping our toes and they’re very interested in getting the homes, but we just need to figure out how do we make sure that it’s a great traveler experience.

Schaal: Right. So let me hit you up with one of my theories. My theories are often wrong. I mean, I thought that Reagan could never get elected president because he was too old. He had two terms. So during the pandemic, we’ve seen has launched flights. It’s greatly expanded its flights business. During the process of buying ETraveli, they bought Getaroom, a wholesaler. EDreams is expanding with a subscription business. Airbnb seems to be doing well. But Expedia, to me, seems like it’s still preoccupied with restructuring. I mean, you just said with VRBO we’re dipping our toe into it, we don’t have the guest experience right yet. So is Expedia being left behind while other companies made hay during the pandemic?

Gorin: I wouldn’t mind if people thought that because then we could be in stealth coming out even stronger. But I disagree with that. I think we’ve actually used the last couple of years. Yes, we’ve done some simplification of the company, and I would say for good. The deal where we sold Egencia to American Express Global Business Travel and retained an equity ownership, to me, that’s a pretty groundbreaking deal. And it’s great for the company because we’re now owners of, I think what’s going to be a really successful corporate travel business. And we’ve simplified our company.

We’ve done a lot of work in re-platforming our technology stack so that when we do develop things like our virtual agent with all the skills that will help travelers have better experiences, that will go across all of our brands. Whereas in the past, it would’ve just been on one brand. We announced a big loyalty refresh, so across Expedia Group we have about 145 million loyalty members, which is massive. But those numbers aren’t able to earn and burn points across all lines of business. And what research shows is that what travelers are interested in is the breadth of being able to earn and burn. So we’re in the process of creating that. It takes a little bit of time, but I think when it comes out, it’s going to be massive.

Schaal: Right. So that was announced last year and it was said, “We haven’t figured it all out yet.” But so that’s still… We’d be hearing something about that this year?

Gorin: We’ll be hearing something about that.

Schaal: Okay. And then with business travel, I remember the days when to be an OTA, you had to have a business travel unit. Expedia had one, Travelocity had one, Orbitz had one. You bought them all, and now you don’t have one. So…

Gorin: Well, what I would say is, now we power a lot of different corporate travel companies out there. And again, part of the Egencia deal was thinking about what do we need to own versus where can we power others? And again, I’m sure many of you in the room in the last couple of years have really had to think about, what do I need to do and where can I partner with someone else? And how do I spend my time and resources on the things that make a difference? And I think corporate travel is a massive part of the business. And if we can participate in it by powering others and benefit our hotel partners, because of course they’re interested in for the top part of the market, they may have corporate negotiated rates, but this idea of how do you aggregate and reach a bunch of the demand to small and medium businesses. If we, through our partnership strategy can add that value to them, I think it’s a win-win.

Schaal: I don’t want to fail to mention this. So I was looking at Expedia’s numbers. So Expedia in general, the revenue is about 80 something percent of what it was in 2019, but international including Europe is only about half. So Europe has really lagged the US, for example, right?

Gorin: Yes. Well historically, our company has been quite strong in the US, in North America. And of course, what we saw in the last couple of years is, with more domestic travel you get stronger in your home market. And a lot of our business in Europe and in Asia was international long haul or international short haul. And so I would say those were the demand patterns that were just disrupted and you see that in the numbers. But I think it’s going to come back.

Schaal: Right. So I don’t know if this is your terrain or not, but Expedia last year launched a program in the UK and France to lure Airbnb super hosts. To lure, to entice them, to steal them. Not really steal them because you’re not requiring exclusivity. You could be an Airbnb super host and also be on VRBO, but how is that gone? Has that been successful?

Gorin: So I actually don’t have the stats to tell you how it’s going. But what I will say is that kind of thing is, look when you meet with a hotel or an airline or a host or whoever it is, everybody’s looking at how do they maximize their distribution? And sometimes that’s adding more distribution. Sometimes that’s going deeper with one provider because they can do more for you. And I think we want to make sure that every time we have partnerships, that we understand what value we’re bringing and that our partner understands it. So if we did a program like that, it’s because we think that we can add value to these hosts.

Schaal: Again, with Expedia being preoccupied, I’ve talked to hosts in Europe who said you launched the program in the U.S. early last year. You launched it in France, in the UK towards the end of the year. And they’ve said, “What is taking them so long?” There’s a lot of anger among Airbnb hosts about how they handled the pandemic refund policy. Why is Expedia blowing this opportunity? There’s so much opportunity there.

Gorin: There’s always a lot of opportunity, I would say. We’re going to look at how do we capture it?

Schaal: Right. So you guys have been doing a lot of deals. You have a deal with Amex GBT to provide them inventory. You also just recently announced a deal with IHG to be what I call their rate parity police.

Gorin: I wouldn’t use those terms. I would say that the deal that we did with IHG, which is similar to the deal we did with Marriott, which we call optimized distribution, is basically looking at how do we help them to simplify and to get consistency in the way that they’re forward distributing their inventory. It actually was an interesting story. It started a few years ago with Marriott. What they were saying was, look A, we want to simplify the technology of how we’re distributing. We want to have a better traveler experience with more consistency in the content and the photos. We don’t want people showing up to the front desk and saying, “Oh, we thought we were going to have a pool, but it turns out you don’t have.” So a lot about making sure the content is up to date. And of course, having price consistency. That program has worked very well for Marriott. They’ve made comments publicly about it. So we’re really excited about working in a similar way with IHG. And by the way, I think it’s something that can help the whole industry.

Schaal: So no one in this room will remember this, but in 2004, IHG exited Expedia for several years over trademark issues and things like that. And now they’re partnering with you on rate parity.

Gorin: So I wasn’t in the travel industry back in 2004, but it does seem like in our industry sometimes there’s big arcs of things. But it really represents I think what we’re trying to do with the partnership business in Expedia, which is to say where are there areas that we believe that when we listen to our partners and what their needs are that we can contribute to them. And I think it opens up a lot of new possibilities and I think the years ahead are going to be rich in possibilities.

Schaal: So as part of shedding brands this year, you sold SilverRail back to its owners. I don’t know if anybody from SilverRail is here. There we go. But so here we have Expedia doesn’t offer rail now. It doesn’t offer business travel. So there seems to be some… You’re not pursuing the connected trip strategy.

Gorin: Oh, well, I would say we’ve been doing connected trips. We were the first to do connected trips. If you look at what we were doing-

Schaal: There’s no business travel there’s no-

Gorin: So I wouldn’t say… I mean, there’s not that there’s no business travel. Business travel requires a lot of complexity beyond what a leisure business does. It requires duty of care. It requires policies, approvals. It requires all of those things. And again, I think during the pandemic, we all had to think about, in the limited resources we have, where do we want to focus them? And is there someone who could be even better if they’re 100% focused? So again, we have exposure to the business travel through the partners that we have, and we think that they do a great job in that.

Schaal: It seems Airbnb has some advantages because they’re focused pretty much solely on short-term rentals whereas Expedia has got its hands all over the place.

Gorin: Our hands all over the place.

Schaal: We’re talking about-

Gorin: So certainly we have a broader range of product offerings. And if I go back to the loyalty program, I actually think that’s something that’s really attractive to travelers. They’re going to be able to earn and burn across all lines of business. And I was reading somewhere recently, traveler trends are changing quickly. They did during the pandemic, now are they reverting back, are they not? And for us having this diversified business is it cities? Is it not cities? Is it home rentals, hotels? Actually allows us to respond even better when there are changes.

Schaal: Let’s take an audience question from Carlos. Ariane noted that they want to make sure there’s no friction in the travel experience for business travel with VRBO. Well, I don’t think it was business travel with VRBO, but what are the challenges?

Gorin: So some of it was business travel, but some of it was just in general. When you’re booking a home and there may not be obviously a front desk there, there’s more communication between the traveler and the homeowner. So saying, “Hey, either I want more information about how I’m going to check in.” Or whatever it might be, that communication’s path, I would say we’ve done that really well on VRBO where we’re owning the interface. But if we think about powering partners who we’re providing them this information via an API, and they’re building their own interface, figuring out how to get that flow to work well, can be a bit tricky. So some of that is what we need to do in the APIs that we’re providing. And then some of it is then on the partner side, how are they integrating it and how are they servicing it.

Schaal: I think even on, Peter has said that the user experiences isn’t where you want it to be.

Gorin: It’s not where we want it to be. That’s right.

Schaal: There’s been so much talk about quote-unquote FinTech in the travel industry. Hopper seems to be growing like crazy and makes a lot of its money on price freezes and that kind of thing. Is Expedia looking at that, or do you find that interesting?

Gorin: And we saw the slide earlier, Hopper’s doing a great job on that. So yes, we’re looking at when… We already have an insurance product. So we’re looking at how do we evolve that. I think we’re always looking at what’s interesting for travelers and how do we respond to it.

Schaal: Given that you’re trying to simplify the businesses, M&A not on the agenda the next few years, or will Expedia see a Hopper or something interesting and go for it?

Gorin: Yeah. Right now we’re very focused on what’s in front of us. We’ve got big tech things to launch. We’ve got our big loyalty program to launch. There’s so much opportunity in B2B. So of course, if there’s something that is interesting that can complete the portfolio, why not look at it? But I would say, right now the focus is very much on just what’s in front of us.

Schaal: Ditto for subscriptions. I see Tripadvisor having, I’ll kindly put it mixed success with subscriptions, but eDreams is-

Gorin: Doing really well.

Schaal: Doing really well with it.

Gorin: Yeah, I would say you’re right. EDreams is doing quite well with it. I think we don’t have a plan right now to go into it. I think we’re, as I said, focused on what are the things in front of us, the loyalty program, the re-platforming, the B2B part.

Schaal: Right. So in Europe, what are the biggest challenges now to get back on track?

Gorin: Yeah, I think probably the biggest one when I talk to a lot of our hotel partners, our airline partners, and we saw it before, is staffing shortages. It’s having enough people in the hotels, having enough people in the flights to be able to service travelers. What we’ve noticed is actually, if you look at travel reviews in hotels there are more and more, when you look at the recent ones, complaints about, “Hey, I didn’t have the service level.” And interestingly, when hotels signpost it that there are going to be lower services, we’re not going to clean the rooms as often, or they respond to the comments, travelers are pretty accepting of that. So probably the biggest issue that the industry’s going to be facing is service levels. And in fact, some hotels, probably people in this room, aren’t running at full capacity intentionally, so you make sure that they keep the service levels. And of course we saw before the ADRs aren’t going down.

Schaal: So this will be an ongoing challenge. And our ongoing challenge is the next speaker.

Gorin: Thank you very much.

Schaal: Thank you so much.

Gorin: I hope it’s not a challenge.

[UPDATE: The article has been updated to correct information that originally appeared in the article. Expedia for Business is an Expedia Group brand and it did not woo superhosts]

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Photo credit: President of Expedia for Business Ariane Gorin speaking at Skift Forum Europe Skift