Many will argue that Barry Diller's views are contrarian, but he's indeed correct that many sustainability programs are puffery.
Barry Diller, the senior executive at both Expedia Group and IAC, thinks many Environmental, Social and Governance programs amount to “empty calories,” remote work options have been foisted on corporations by a few California tech companies, and the mid-term elections in the U.S. could be a “grim” precursor to the Presidential vote in 2024.
Skift Editor-In-Chief Tom Lowry interviewed Diller on these and many other travel-related topics on stage at Skift Global Forum 2022 in Manhattan on September 20.
Diller said the several-year-old reorganization of Expedia Group has revolutionized the company, that the future of the casino hotel is bright, and airfares and hotel rates will have to get lower.
Watch the full video of the conversation and you can read the transcript, as well, below.
Barry Diller: What are you supposed to do with these? They look like you could eat them. Oh God. All right. Hello.
Tom Lowry: There’s a price to pay for design forward, Barry.
Diller: Oh yeah, backwards.
Lowry: Welcome to Skift Global Forum.
Diller: Thank you.
Lowry: Great to see you again, in person this time.
Diller: Thank you. This is everybody.
Lowry: The last time we spoke was September of 2020. That was less than six months after the start of the pandemic. And you were quite adamant, at that time, about people returning to the office to work. If we were to go outside right now and go the 30 blocks down IAC’s headquarters…
Lowry: … south of here, and we walk through the door, what would we see in IAC today?
Diller: You wouldn’t see too many people. You’d see big open spaces with relatively few people in. First of all, the concept work from home is stupid when you think about it. This started, obviously, because of we were all shut in so nobody could go to work. But the idea that, and mostly done by the tech companies in California, which started this absurdity of three days, three and two, which is basically a four day weekend. There’s actually been no real thinking about this. You can only do this in a granular way, which means if you’ve got a workforce of thousands of people, then there are relatively few that can genuinely do work outside of the office and only touch the office very occasionally. But, you really have got to do it granularly.
Any mass concept of three days or two days, or we must come on, now you must come on Tuesdays and Thursdays, for sure. And Wednesdays are optional and whatever. We had this imposed on us. It didn’t come out of a lot of really thoughtful work on, all right, how does work get performed with these new tools that are available? It got pushed on us. And I think that we’ve just, because of the job market and because of, basically, these surveys asking employees what they think is really insane, asking employees what they would like to do, they will all answer you, “I want to work for home from home and I want to get paid more money. Thank you. Leave me alone.”
Diller: OK. But, who would pay attention to that?
Lowry: Some might characterize that as an old school way of thinking, Barry.
Diller: I think it’s new school. Thank you.
Lowry: Do you worry about your competitors?
Diller: The problem look is in every conversation I’ve had about this in my own companies is, “We can’t do that because we’ll lose employees to X or Y.” You have every company saying, “We’ll lose employees to X and Y,” which renders the whole thing kind of meaningless. If you operate a company and you want people to grow in it, if you want people to get promoted, there’s hardly much vitality or inspiration sitting at a laptop computer on a dining room table. I don’t know how you get people, if you have a culture, if your company’s lucky enough to have some culture and most successful companies do, how you get that without people being in a communal arena is almost impossible. How do you get promoted?”
Lowry: Did you implement a policy at IAC?
Diller: No, I’m hopeless. I’ve not.
Diller: I’ve tried. I’ve made them maybe a little better, but mostly it’s, “You can’t do that because of this or that.” I said, “OK, I’m up for this four and three concept, except Mondays and Fridays have to be mandatory attendance.” They looked at me as if I had lost my mind. They said, “No one will work for us.” I said, “Oh really? Why is that?” And they said, “Mondays and Fridays, those are the days that people want to work from home.” Why is that? It’s all a crock.
Lowry: Let’s move on to corporate travel, which is related to what we’re talking about. This morning, Skift posted a deep dive story by our corporate travel editor, Matt Parsons, and the headline was In Search of Corporate Travel’s Elusive Recovery, which pulled together all the prognostications about whether travel would come back fully or whether it’s just going to come back partially.
Diller: But will.
Lowry: What is the future of corporate travel? And what are your views on that?
Diller: Back and growing. Not necessarily this year, maybe a little more next year. But, the year after that and for years on, yes. Corporate travel will completely be back. Why wouldn’t it be? You have all these facilities, all these places around the world that are organized for people in business to come to travel to. There’s such an incredible infrastructure for it. And it will, of course, return. We are still coming out of, it’s very hard, I think, for any of us, living in the moment does obscure things. We don’t realize the incredible impact of a year of imposed relative isolation. In all areas. Corporate travel is going to be fine.
Lowry: You mentioned earlier that you’ve done a ton of traveling even through the pandemic. How about your team? Are they up and running and are budgets still the same?
Diller: Yes. In terms of traveling, for sure.
Lowry: Do you think there’re some companies that might look at that differently? That a CFO is now looking at what the savings was over the last two years and change their mind.
Diller: They can look at all the savings they like, but there is an imperative to see your customers, to be out in the world, to be visiting other places that have businesses either similar to yours or those you want to enter. That will push against it. And I think for successful companies, they’ll force the budgets. Or they’ll tell their CFO to be quiet.
Lowry: Let’s talk Expedia. You’re the chairman. Peter Kern is the vice chairman and CEO and he’ll be on this stage tomorrow talking about what’s going on in Expedia. Let me ask you, at the next board meeting, will you say, “Peter, let’s pick this up. Let’s pick this up.”
Diller: I don’t think you can pick it up anymore than we’re picking it up. We’ve, basically, in the last couple of years, revolutionized the company. We’ve gone from a very complex, very siloed operation with endless duplications, seven different checkout paths for different properties of ours, multiple platforms, et cetera, into making Expedia one tech platform. Basically, redesigning every single crook in the machine. And it is performing now, obviously, far better. Again, we had this imposed in an odd way. We were doing it anyway. We had decided, before the pandemic, that we were, so to speak, a bloated operation and that we were going to see to that. Obviously, the COVID accelerated that. So we dropped from 25,000 employees to 17,000 or something like that. It’s leaner, it’s more efficient, it’s more capable of productivity and it is growing in any terms.
Lowry: It sounds like you’re satisfied with the pace of the restructuring?
Diller: No. How could I ever say I’m satisfied with anything? That’d be a disaster. That would just make the people who work with me happy.
Lowry: Okay. We’ll be sure to pass that on to Peter tomorrow.
Lowry: Right before the pandemic, you (IAC) took an investment in MGM Resorts.
Lowry: Which was largely…
Diller: Not right before, during. Quite during.
Lowry: Largely a bet on online gaming and sports betting?
Diller: No, it was a bet. It was certainly that we thought we had some expertise in online activity that they did not have. And we thought we could spur that along. Not that they didn’t think optimistically about it, but we thought even more optimistically. But, what struck me is their infrastructure. In Las Vegas alone, 468 restaurants, 150 performance venues from 20 some odd thousand seats down to thousands, seven or eight million feet of convention space, 11 properties on the strip of Las Vegas. More than 40 percent of every transaction that goes through Las Vegas goes through one of our properties. I was just knocked out by that and by what I thought could help that begin to innovate, which had not really happened for some time in Las Vegas.
Lowry: Last month you boosted your stake to 16 percent?
Diller: I’m not sure the exact percentages.
Lowry: What did you see that changed your mind?
Diller: Changed my mind? What do you mean changed my mind?
Lowry: Just in terms of your confidence in the investment?
Diller: I wasn’t unconfident. I began confident and as we got into it, I got even more confident. And we’ve been buying, in addition to our initial purchase, throughout the last year. And we’ll continue to do so.
Lowry: Are there other opportunities for you in that space, in the gaming space?
Diller: I think the opportunities for us are inside our MGM investment, not outside of it. And that is, I just think it’s an extraordinary opportunity. I mean those you, of course, know Las Vegas is doing extraordinarily well. Will it continue if there’s a recession? It’ll probably go through a cycle. But, the opportunities, and particularly as online opportunities worldwide, are immense.
Lowry: As more gaming moves online, do you think the notion or the idea of the casino hotel faces some sort of extinction?
Diller: Not at all. I think it faces enhancement because the relationship between being able to do games and things in sports betting and all sorts of gambling online connects you to the bricks and mortar resort hotel, et cetera, in all sorts of ways that have not been able to be done before. No, I think they benefit each other.
Lowry: One of the topics that we have been running an awful lot about over the last two years is sustainability and pledges that companies are making towards sustainability and their ESG (Environmental, Social and Governance) initiatives.
Diller: Yes. Come into my room.
Lowry: How much of this will end up being rhetoric and how much will be real action, Barry?
Diller: I think it’s difficult for the travel business. Travel business by its very nature is not, quote, in the sustainability business. Meaning if what you’re after is reduced carbon footprint, in order to travel, you got to get someplace, and that’s going to eat up that, it’s going to increase that. Resorts and things are not, of course, they’re not particularly carbon neutral, but they can offset it to some degree. But, most of ESG is virtue signaling, I’m afraid. And it’s nothing terrible about it.
It’s sensitized everybody to a whole host of issues that are worth paying attention to. Expedia, for instance, is now paying real attention to audiences that have not really had access before in different generic groups and different all sorts of definitions. That’s good. And we’re also doing another thing, which again it’s small beer, I think, but we’re trying to promote places that are not on everybody’s hit map for selfies and whatever. Because when you get into sustainability and you think of overrun places that are big, big attractions, that’s hitting at it. And so to try and help popularize other less trodden places is a good thing. I don’t think it’ll have much impact on, quote, sustainability. But, there it is.
Lowry: Some critics have called it, not Skift’s phrase, but their phrase woke capitalism. Larry Fink at BlackRock got himself caught in the crosshairs of that recently.
Diller: Crossing back quickly as he can.
Lowry: Do you think so called woke capitalism has gone too far?
Diller: Yes, of course I do.
Lowry: Can you elaborate on that?
Diller: No, I mean yes. Can I? Any bird brain can tell you that most of the things that are instead of are in support of that really don’t make very much sense. Yes, to be more aware of your surroundings of people, et cetera, more sensitized, that’s a nice thing. But, all of the woke rules, I shouldn’t say all of them, most of those woke rules have no brain in them. And so I think that it’s been popular for a while. Just talk about pendulums. It’s naturally beginning to swing back, meaning that there’s a lot of people who were afraid to speak out about it.
Listen, what Larry Fink said and led America’s companies to do with, quote, ESG for several years was above criticism. And people would frightened to death to criticize it because they get slammed everywhere. I think people are now saying, “Let’s make some real sense of this.” Given that most ESG programs, most of them, not all of them, there are some very specific things that people have done, companies have done, that make great good sense. But, the mass of them are truly empty calories. They’re just a lot of people employed by these companies to write glossy reports that generate nothing but glossy reports.
Who do you think is getting it right? Can you give us a company?
I actually think that some of the energy companies are, many of the energy companies, are beginning to get it right. When you talk about the big issue, in practical terms, they’re at the crux of it. And so that has, I think, changed a lot. I think, generally, other than sensitizing people, and I think sensitizing people is always a good thing, I don’t think this ESG movement has amounted to very much. Again, except reports.
Lowry: Let’s talk about the global economy. You obviously keep a close eye on that. It’s far from certain what’s going to happen over the next year or so with the war in Ukraine, pop threats of recession. What are your thoughts and what sort of makes you a little bit nervous?
Diller: Except for certain places, the obvious places, the economy is very strong. Our economy is very strong. You can get any dope to give you their predictions about when this recession will come. You only know that the big issue is inflation. That is the issue, economic issue. And attempts have to be made in every way to get it down. We cannot live with inflation, sustaining or increasing. And so interest rates will rise. The result of that has to be that there will be some somewhat of an r, uncapitalized, hopefully, recession at some point. But, not soon. Meaning soon, I don’t think certainly… Well, the year’s almost over. Maybe ’23? Look, if the Fed keep raising rates, it’s an inevitability that you’ve got to get a slow down. Again, maybe a little r, some r. But, it’ll be something like that. We have lived through endless cycles of recession, strong or weak or whatever. Okay, there is pain, but we will plow through it. I don’t care very much.
Lowry: What implication would a recession with a small r have coming after what we’ve just been through the last two years?
Diller: We haven’t been through a recession. We’ve been through enormous growth beginning about a year ago. Many, many companies are back to ’19 levels and exceeding them. In our vacation rentals business, VRBO, we’ve been exceeding ’19 for a year or more. Will hotel room prices sustain at this level? No, they can’t. They’re too high. We all know that they will have to come down. Will air travel prices stay at this level? No, they can’t. They will also come down over time. Those have effects. For consumers, they’re good effects.
Lowry: The last time we spoke, it was about six weeks shy of the 2020 presidential election.
Lowry: And you described that, at the time, there’s an anvil hanging over our heads. President Biden was elected. Here we are again. We’re facing a midterm elections. What do you think the state of the country and democracy right now?
Diller: My God, my God. I don’t real much care about the midterms. The only worry I have is that if we elect people who deny the 2020 election or say the election was a fraud, which we are in danger of doing in many places, to me, that is the enormous danger. If you have people who we willingly elect, who actually denied that that election was a fraud, God knows what’s going to happen when the big ticket comes in ’24, which is the real great fear. My worry about this midterm, and I think it’s a little better than it was, certainly for the only side that denies the election are the Republicans. Obviously, they lost so who would do it? But, the idea that you would actually, institutionally deny it and every single person who’s gotten that, whatever you would might call him, fill in the horrible blank, Trump.
Everybody who’s gotten his endorsement has had to pledge, one, that they will come out publicly and say the election was a fraud. And two, they’ll commit to reverse it. How do you like that one? That’s my worry because that presages the big game in ’24 when it’s incomprehensible to me that we would reelect Donald Trump. But, we might. Or we might have real, real difficulty, either side. People who say that this upcoming election will be fraudulent. Everybody’s going to stick a claim on either side. If the prospects are really grim for what might happen in ’24. And ’22 is a precursor. Of course, many things will change in the two years. I won’t say what I hope will happen.
Lowry: Wince we have these sit downs every two years and the election cycle is here, will you come back in 2024 and talk about?
Diller: I’ll come back in two years.
Lowry: I want to shift gears really quickly to wrap up, Barry. So Yvon Chouinard at Patagonia made a lot of news last week, giving away his company to put everything into the climate.
Lowry: You and your wife, Diane von Furstenberg, have been philanthropists forever through your foundation.
Diller: Yes. We are lucky we can be.
Lowry: Would you ever consider a similar type of move that Yvon Chouinard announced last week?
Diller: I think I’m really charitable. I’m not that charitable.
Lowry: We have about a minute left. Do you want to give a plug to the Little Island?
Diller: No, not plug to it. It’s down the street. Go visit it. It’s crowded but it’s awfully nice.
For those that don’t know. What was it, $260 million investment?
Lowry: And what was the old Pier 50?
Diller: It was Pier 54 and they were tearing it down. And so we got very ambitious, architecturally, and did the stupidest thing that you can do is to build an island in the waters of the Hudson River. But by the way, we did it. It’s there. It’s nice. Go visit it.
Lowry: Great. Thank you so much. I appreciate it.
Diller: Pleasure. Nice to be with you all.
Lowry: Pleasure always.
Diller: Thank you.
The Daily Newsletter
Our daily coverage of the global travel industry. Written by editors and analysts from across Skift’s brands.
Have a confidential tip for Skift? Get in touch
Photo credit: Skift's Tom Lowry (right) interviewed Expedia Group senior executive Barry Diller at Skift Global Forum in Manhattan on September 20, 2022.