Expedia Group CEO Peter Kern said the travel industry remains a “study in contrasts” — citing a rebounding U.S. travel market and strong vacation rentals in beach and other outdoor destinations. But at the same time, Kern, speaking on the Seattle company’s first quarter earnings call, pointed to rough patches in business travel, traditional lodging and international travel.
And he specifically noted the worsening COVID-19 situation in India, where Expedia maintains a large presence.
“As the dire situation in India reminds us, in some markets, things may get worse before they get better,” he said.
Such is life as the CEO of a publicly-traded online travel company. It’s just hard to tell where the market is headed.
The company’s mixed message and reliance on all forms of travel hasn’t dampened investor appetite for Expedia Group. Its stock is up 148% in the past year, and shares gained more than 6% in after hours trading after posting first quarter results. Some investors are betting that when travel comes back — it will return with a vengeance and companies like Expedia could be well positioned to benefit.
That’s the concept of “revenge travel,” the idea that travelers who’ve been sidelined for the past year will travel and spend more once the virus is under control.
“I am rooting for revenge travel, whatever that is,” said Kern, in response to a question about the return to travel. “Whatever type of travel people want to do, we are happy to accommodate whether revenge or otherwise.”
Kern said people are staying at vacation destinations longer, and starting to spend more money as a result.
“Revenge, or otherwise, places like Miami demonstrate that there is huge pent up demand to go to places where people can experience a relatively normal travel experience,” said Kern. “And I don’t know if you have been to Miami recently, but it is packed. Hotels are full. People are out everywhere. Restaurants are full. And their booking levels are well above two years ago.”
But with the uncertainty of COVID plaguing the travel industry, especially in some international destinations, it’s far too early to say travel is back.
Expedia, which now boasts a market value of $24 billion, reported revenue of $1.24 billion in the first quarter. That was down 44% compared to the same period last year.
- Lodging revenue decreased 41%.
- Air revenue decreased 55%.
- Advertising and media revenue decreased 57%.
Expedia’s cash, cash equivalents and short-term investments totaled $4.3 billion at the end of the first quarter, up from $3.4 billion at the end of 2020. The company’s adjustable net loss grew to $294 million. Full earnings report here.
Expedia’s Vrbo division remains a bright spot, as travelers book lodging through the online vacation rental marketplace. Kern noted that Vrbo hosts make more money than Airbnb hosts, which he said is a great story and one they need to spend more money on to tell.
But Kern was a bit reluctant to claim that travel habits — including a shift to services like Vrbo — have permanently changed as a result of COVID. Even still, he said that it’s too early to tell whether the flexibility that comes with the work from home trend — which has sparked more demand for Vrbo — will stick long term.
Here’s more of his analysis:
“We haven’t seen a ton to suggest that things are changing, and as you have heard me say many times, I am loathe to extrapolate too much from this COVID period. But, for sure, there are a lot of new users of the Vrbo experience and in general I think the data suggests they are going back to it more frequently. But, again, we are in COVID…. Now, is that sustainable and will people go back to resorts and other things? I’ve said publicly that I believe, in general, that the trends of the past will continue. But one of the trends of the past was that people were getting more into the use case of vacation rentals, so I think we have accelerated and exposed more people to the product and that is a good long-term trend for that category … and it will make people consider vacation rental as part of their choices where maybe before they had not. But I don’t think we are necessarily going to be seeing a huge shift that sustains itself long term, so much as maybe a reset at a higher level for vacation rentals and then growing off of that.”
Expedia’s results come two days after the company announced that it plans to sell its corporate travel business Egencia to American Express Global Business Travel.
In Thursday’s conference call with analysts, Kern said that they’ve found a “great new home” for Egencia, and the sale will allow Expedia to focus and simplify and move with agility and speed into other core areas.