Expedia collapses due to sudden CEO change and missed vacation bookings
(Bloomberg) — Expedia Group Inc. Ariane Goren is CEO of the online travel company, succeeding Peter Kern, who has held the position since 2020.
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Goren, who has been an executive at Expedia since 2013 and was most recently president of its enterprise division, will take over on May 13, the company said Thursday in a statement. Kern, 56, will step down at the end of his contract. He will continue to serve as Vice President and member of the Board of Directors.
Separately, Expedia reported total bookings of $21.7 billion in the fourth quarter, missing analysts’ average estimate of $22 billion. The room’s overnight growth was also below expectations. Revenue jumped 10% to $2.89 billion, in line with analysts’ expectations of $2.88 billion, according to data compiled by Bloomberg. Shares fell 13% in extended trading.
The change in leadership surprised the market and may signal another struggle over strategic direction at the Seattle-based travel booking site, according to Bloomberg Intelligence analyst Kevin Cao. Kern was appointed CEO at the start of the pandemic, as Expedia and other travel companies were being devastated by global lockdowns. But Expedia was already struggling and Kern was given the job by Chairman Barry Diller after the previous CEO and CFO were fired following a disagreement with the board over disappointing growth forecasts.
“When this started, the idea was for me to come in for a while and right the ship, get us where we wanted to be, build the team and make sure we had people who could move forward for the next generation,” Kern said in a call with analysts. “The shift turned into something bigger – I did a little more than I thought I would – and it was a bigger job than I thought.”
Under Kern, Expedia has spent the past two years focusing on technology upgrades and making a long-overdue revamp of its loyalty program across its various platforms. The program, called One Key, allows travelers to use and earn rewards through the site, for example, by collecting cash on the vacation rental platform Vrbo and spending it to book a flight on Expedia.com or book a room on Hotels.com. Kern warned last summer that technological simplification behind the scenes could cause some disruption. That translates into a temporary loss of some market share for Airbnb Inc., analysts said. But Kern said the platform changes will ultimately help increase efficiency and lead to “faster, more profitable growth.”
But Expedia has not benefited the way some of its competitors have from the post-pandemic travel boom. The shift in consumer demand toward urban markets and short stays has not been as boon for Vrbo as it has been for Airbnb. Expedia also doesn’t have the same international reach as Airbnb or Booking Holdings Inc.
The Goren division, which sells advertising and travel technology to corporate clients and powers travel booking sites for other major brands, such as Walmart Inc. and American Express Co., have been growing faster than larger consumer-facing retailers in recent years. Expedia said in the statement that its unit achieved “outstanding financial results” including 33% revenue growth in 2023. In the fourth quarter, revenue from the B2B unit increased 28% to $864 million, and was the largest contributor to overall sales gains.
As Expedia strives for stronger growth this year, it is also balancing larger expenses to increase brand awareness. The company plans to spend a record amount on marketing as it seeks to gain share in the consumer travel industry and increase competition with Airbnb and Booking.
“We are seeing a shift from the focus on consolidation, cost-cutting and turnaround under Peter, who came in during a difficult period and focused on getting the company out of this crisis,” said Bloomberg Intelligence’s Cao. “You are now moving into a greater growth focus with Ariane focused on leading and growing his B2B business.”
Shares hit a low of $132.75 in extended trading after closing at $159.47 in New York. The stock is up about 34% in the past 12 months, compared with gains of 30% for Airbnb and 58% for Booking.
(Updates with CEO comments in fifth paragraph.)
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