How Expedia breaks down its approach to brands into silos
Wow, Expedia CEO Peter Kern isn’t afraid to speak his mind.
Expedia Group was like a sports team where athletes competed against each other rather than using the same game plan. According to Peter Kern, vice president and CEO, his ongoing reorganization will help the online travel conglomerate win more often.
“We are moving away from a competitive brand house,” Kern said during an address at the Skift Global Forum on Wednesday in New York. He said he wanted “a simplifying universe of brands” that “work towards a common goal.”
The Expedia Group said earlier this week that it was consolidating its large-scale loyalty programs that compete with each other for customer loyalty.
“The goal [of the loyalty program change] was to make it easier for the customer to understand how to get the most out of our brands and products, ”Kern said in an interview with Skift editor-in-chief Dennis Schaal. “We let them earn and burn their rewards however they want. “
An additional benefit will come to Expedia Group through reduced marketing costs. In the past, brands such as Hotels.com, Expedia and Orbitz used different loyalty programs to fight for consumer attention. This meant that the group was spending their money inefficiently, especially when they were struggling to gain the attention of the same customers by buying paid search marketing ads through Google.
“I’d rather we spend money on almost everything than give it to Google,” Kern said. He added the caveat that he was commenting on the degree of usage, acknowledging that the Expedia Group would continue to buy ads through Google as long as it continued to make economic sense compared to other forms of marketing spend.
Another reason the online travel conglomerate has reorganized by downsizing its business units is because Kern is looking to close the imbalanced profit margin gap with its main rival Booking Holdings.
“They have higher margins than us,” Kern said. “There is no question.”
Still, Kern tried to shy away from it to claim that there were now “more benefits” for investors by betting on Expedia Group rather than Booking Holdings.
“We’re like a great athlete who maybe hasn’t gotten the best training,” Kern said. “But if we get everything right, we have more advantages. We are in this similar endeavor, even though we are heavier in the air.
Kern praised his big rival Booking Holdings as a whole.
“It’s an almost perfect machine for generating rebates through performance marketing,” Kern said. “No one is better than them. I admire them enormously. But that doesn’t mean it has so much potential because when we get there, our machine will speed up as we dig into our advantages.
Kern scoffed at rival CEO Glenn Fogel’s much-vaunted concept that Booking Holdings is building “connected travel” for consumers as something new.
“It’s a good set of words,” Kern said. “But we’ve been in the travel business for a long time and we sell more multi-product travel than any other OTA. [online travel agency] in the world. We will continue to do so.
He also ridiculed the Booking Holdings loyalty program.
“The rewards program has no rewards,” Kern said. “He’s just offering discounts.”
In response to questions from Schaal, Kern said that the Expedia Group is not talking about a subscription model for travel.
Vacation rentals will continue to be an area of growth for Expedia Group, the executive said.
Earlier in 2021, Vrbo topped Airbnb in ad growth while outperforming Airbnb’s ad spend by 10. Kern said he will continue to support the Vrbo brand.
On business travel, Kern weighed on Egencia, the business travel arm of the Expedia group. He said people shouldn’t misinterpret a deal earlier this year that made American Express Global Business Travel the majority owner of the business.
“We’re still a shareholder in Egencia, and it’s not like we’re saying goodbye to business travel,” Kern said. “[Egencia] just had one of our best years signing new deals in business travel.
“But we’re trying to make the business simpler,” Kern said.
Ultimately, Kern said parts of his business turnaround depended on forces beyond his control. He called on governments and the private sector to do more for vaccine equity, a topic Skift has covered at length.
“The more people we vaccinate, the better for people, their economies and the global economy,” Kern said. He cited a $ 10 million charitable donation his company made to the cause, noting that like many companies in the travel industry, Expedia Group “does not have bottomless pockets.”
“Maybe Google could help,” Kern joked. “Google has bottomless pockets.”