Expedia Says Half of Recent Vrbo Customers Were New

If Expedia Group’s Vrbo secretly wanted to be another brand, Airbnb would be it. Vrbo has been playing second fiddle to its short-term rental rival, the word-of-mouth sensation. But Vrbo racked up some marketing accomplishments in the first quarter worth crowing about — and that might catch the eyes of rivals Airbnb and Booking.com.

“We’re seeing lots of new customers coming to the product [Vrbo],” Peter Kern, Expedia Group vice-chairman and CEO, during an earnings call on Monday. “I think in the first quarter around 50 percent of it was new customers.”

Vrbo generated bookings “above 2019 levels” in the quarter. One driver was a group marketing push — think brand marketing, such as TV ads during cable TV news, and “performance marketing,” such as buying ads to appear in Google paid search results.

“Our teams have done a great job driving Vrbo and app downloads,” Kern said. “Vrbo, according to our third-party data from a company called Sensor Tower, was the number-one downloaded app in North America in the first quarter of the year.”

Expedia Group spent only 6 percent less on direct sales and marketing in the first quarter than it did in the same period in 2019. Kern implied the group proportionally pushed its Vrbo brand more than most or all its brands in the quarter. If true, the group’s marketing outlay on Vrbo may have been higher than two years ago.

The blitz won’t last forever, though.

“Our emphasis will change through the year,” Kern said. “We’ll push into our other brands as well.”

Shortage of Vacation Rentals?

Vrbo’s sales are doing so well that the brand is running out of whole-home vacation rentals to offer in popular non-urban leisure spots.

“We will certainly sell out of many of our top locations for this summer,” Kern said.

“Yes, we are a little bit supply-constrained,” Kern said. “We could certainly move more supply in our most high-demand markets.”

The group has teams scrambling to persuade managers and owners of vacation rentals to list their inventory on Vrbo.

Ukraine War’s Impact Just a Blip So Far

Expedia Group anticipated that the post-pandemic recovery would continue to roll on broadly as expected.

The war in Ukraine did impact the group’s European markets. But not for long.

“The market — the consumers — seem to absorb that information, and now EMEA [Europe, the Middle East, and Africa] is back to its highest levels since covid hit,” Kern said.

“All in, while we are keeping an eye on various macro indicators, including inflation and ongoing geopolitical tensions, we continue to see positive indicators for a strong recovery in leisure travel this summer,” Kern said.

A Quarter of Near Recovery

Expedia Group’s first-quarter results underperformed its pre-pandemic numbers on a few counts. Its total revenue of $2.25 billion was down about 14 percent compared with the first quarter of 2019. But it was up 81 percent from the same period a year ago.

The group handled $24.4 billion in gross bookings, up 58 percent year-over-year — but down 17 percent compared to the first quarter of 2019.

The group generated a loss of $122 million in the first quarter. It has been stanching the flow of losses, though. In the same period a year ago, it lost $606 million.

One takeaway from Monday’s earnings call was that the post-pandemic boom in vacation rentals hasn’t faded with the lifting of restrictions on urban travel.

At first, the rental boom seemed driven by people’s interest in non-urban locales. Now the trend appears to be fueled by a rise in family and group reunions. Or maybe rentals are popular simply because of increased awareness of them.

If awareness is the main driver, then maybe Vrbo owes a bit of debt to Airbnb for popularizing the category.