Skift Take

Vrbo is one of Expedia Group's core three brands, but the jury is out on whether the vacation rental unit will now recede more into the background as cities recover.

Expedia Group officials hope that its brand, which migrated its technology to the Expedia platform last year and saw 20 percent growth in gross bookings in the first quarter of 2023, is a model for good things to come for its Vrbo vacation rental brand this year and beyond.

Vrbo’s platform migration onto the Expedia tech stack, slated to be completed in 2023, along with the projected U.S. rollout of Expedia Group’s new consolidated loyalty program, One Key in July, will help unleash a growth spurt that has been otherwise lagging.

“We’ve got to get over these big humps and then we start — we’ve seen it already when we did the conversion, the migration,” Expedia Group CEO Peter Kern told financial analysts as part of the company’s second quarter earnings announcement Thursday. “We freed up a lot of talent to work on near-term conversion wins, and it’s been hugely productive for us. Again, every time we do one of these, we get more capability back to put against more near-term uplift in the business.”

The backdrop to Vrbo’s migration to the Expedia tech platform is that cities are coming back, which is helping Expedia Group’s hotel business but hurts its vacation rental unit, which has seen flagging demand so far this year.

The platform migration would solve several problems. For one, indeed has some urban short-term rental inventory that is not available on Vrbo, and not all of Vrbo vacation rental inventory is available on Expedia Group’s online travel brands, especially Expedia and

“So one of the things that the Vrbo migration brings us is the ability to get all that content together,” Kern said. “And that actually will help a lot. And as you think about supply because we’ve had it kind of in pockets as opposed to all available everywhere. And that makes a big difference in supply.”

The loyalty program, too, as well as Expedia’s investments in its app, are long-term plays for increased customer engagement and repeat business, which saves the company from having to spend money with Google and other channels to keep acquiring and reacquiring customers.

The company’s rollout of One Key, which would enable members to earns and burn rewards on its three core brands — Expedia, and Vrbo — would begin in the U.S, and would progressively be introduced abroad in different “flavors,” according to Kern, throughout the rest of the year and into 2024. That’s because some of these three brands are not available everywhere in the world or other brands in the Expedia Group portfolio may be more important in a given region.

Generative AI

Kern said it’s early days in terms of its two generative Artificial Intelligence launches: one as a plugin for OpenAI’s ChatGPT, and another as a travel planning tool in the Expedia iOS app.

“That is still only available in the paid and the developer environment,” Kern said, referring to the ChatGPT plug-in. “So it’s not like out in the wild. So it’s small still, but interesting to see how people behave. People are using it. And obviously, it’s not materially changing our numbers, but it’s definitely a lot of interesting learnings for us.”

With the similar ChatGPT rollout in the Expedia iOs app, users can query about hotels near the Eiffel Tower, for example, and then Expedia saves those hotels, shows images, and enables customers to comparison shop, he said.

“Again, early days, but people have engaged with it,” Kern said. “It’s been interesting to people, not a huge driver yet. And that’s why I say we don’t know how big a driver is going to be in behavior, but it’s definitely interesting.”

The Numbers

On the financial front, Expedia Group’s first quarter loss widened 18 percent to $148 million on revenue of $2.66 billion, an 18 percent jump.

Executive touted several positives, however. Lodging bookings hit $21.1 billion in the first quarter, a record, and total gross bookings grew 20 percent to $29.4 billion. At the same time, Expedia Group can count on record free cash flow of $2.9 billion.

Viewing its share price as undervalued — it closed Thursday at $89.17 per share — Expedia Group repurchased $600 million worth of shares, and plans to continue doing so in 2023.

The company’s business-to-business revenue climbed 55 percent to $668 million despite recently losing Chase’s flight business. Kern announced that SoFi is one of its newest partners, and Hilton and Accor will start using Expedia to sell vacation packages.

Chief Financial Officer Julie Whalen said the company forecasts double-digit revenue growth in full-year 2023 with expanding margins.


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Tags: apps, artificial intelligence, b2b, chase, chatgpt, earnings, expedia, future of lodging,, jp morgan chase, vrbo

Photo credit: A Vrbo advertisement. The brand is undergoing a tech platform migration. Source: Vrbo Vrbo

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