Skift Take

Expedia Group's equity stake in American Express Global Business Travel has taken a shellacking to date, but other aspects of the deal have long-term benefits.

Expedia Group frequently talks up the benefits of its sale of corporate travel agency Egencia to American Express Global Business Travel. Benefits include: A 10-year pact to supply Amex GBT with lodging inventory, and Expedia’s equity stake in it, initially valued in 2021 at $815 million.

But in 2023, Expedia Group recorded a $26 million loss on the fair value of that stake in Amex GBT, and that came on top of a $300 million loss in 2022, according to a recent financial filing.

Expedia confirmed Monday that the fair value of its equity stake in Amex GBT was around $490 million at the end of 2023 — a 40% plunge.

That loss will not shake the financials of Expedia Group, which notched $797 million in net income in 2023 on $12.8 billion in revenue.

Expedia’s deal to sell Egencia to Amex Global Business Travel may have been advantageous to Expedia on a number of levels. It enabled Expedia to lock in that long-term deal to offer hotel stays and vacation rentals to business travelers through Amex GBT, the largest corporate travel agency in the world.

Expedia Group CEO designee Ariane Gorin played a key role in the Egencia sale to Amex GBT, an Expedia spokesperson said Monday.

The deal enabled Expedia to shed a non-core business during a period when Expedia was trying to simplify its far-flung operations. And Expedia saw the deal as innovative because it enabled the company to secure a significant minority position in the leading player in business travel without having to operate its own business travel firm. Expedia has 16% voting power in Amex GBT, has a board seat, and is the third largest shareholder.

Expedia’s Stake in Amex GBT Battered

But that Expedia equity stake in Amex Global Business Travel has taken a battering since the closing of the deal, the financial filing showed.

Here’s what happened:

  • On November 1, 2021, Expedia Group sold Egencia to privately held Amex GBT in an all-stock deal. Expedia took a 19% stake in Amex GBT valued at $815 million.
  • At that time, Expedia Group removed Egencia, which was part of Expedia’s B2B arm, from its results of operations, and recorded a $401 million gain.
  • Amex GBT went public in a special purpose acquisition company merger in May 2022, and that deal reduced Expedia’s stake in the successor company to 16%.
  • In addition, after shares started trading, Amex GBT’s price fell 14% by December 29, 2023. It’s fallen another 8% since then.
  • In 2022, Expedia recognized a $300 million loss in the fair value of its Amex equity stake.
  • In 2023, Expedia recorded a $26 million loss.

The Expedia-Amex GBT Partnership

An Expedia spokesperson noted that that Amex GBT was a private company when it initially estimated the value of its stake. Once its shares began trading, there was a known public value.

“Amex GBT was a private enterprise when we made our initial investment in the company, and the value of that investment was based on an assessment of AmexGBT’s fair value using discounted future cash flow and other techniques,” an Expedia spokesperson said. “Amex GBT became a public company in 2022, and we now mark-to-market our equity ownership in the company. So the value of our stake changes based on the changes in AmexGBT’s public value.”

Beyond the value of Expedia stake in Amex GBT, Expedia sees the supply relationship as advantageous.

“Our 10-year supply agreement with Amex GBT is working very well and we do not publicly disclose those details,” the Expedia spokesperson said. “The value we get from our supply agreement is separate from the equity value of our stake in Amex GBT.”

Stocks prices fluctuate so Expedia may indeed recoup its losses on its Amex GBT stake in the long term.

Meanwhile, the two companies have begun to cooperate on ventures other than the lodging supplier agreement. The companies announced earlier this month that Amex’s Egencia will use an Expedia fraud prevention solution to curb any problematic Egencia bookings.

Travel Tech Sector Stock Index Performance Year-to-Date

What am I looking at? The performance of travel tech sector stocks within the ST200. The index includes companies publicly traded across global markets including online travel, booking, and travel tech companies.

The Skift Travel 200 (ST200) combines the financial performance of nearly 200 travel companies worth more than a trillion dollars into a single number. See more travel tech sector financial performance.

Read the full methodology behind the Skift Travel 200.

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Tags: amex, amex gbt, ariane gorin, corporate travel, egencia, expedia, expedia group, m&a, mergers, mergers and acquisitions, spacs

Photo credit: A business traveler about to catch a flight. Source: Pxfuel Pxfuel

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