TripAdvisor Update: Expedia Q3 Earnings Call
November 10, 2023
- Share Buybacks: We have continued buying back our stock at an accelerated level, have announced a new $5 billion share repurchase authorization.
- B2B Commissions: Commissions paid to our B2B partners are overall more expensive as a percentage of revenue than our B2C business.
- Prepaid Bookings: Last year, as the business emerged from the pandemic, we saw meaningful year-over-year increases in our deferred merchant bookings balances.
- VRBO Integration: We've just completed the final leg of our VRBO migration onto our single front-end stack with the conclusion of our global launch of the new VRBO app this past Monday in the U.S. This marks the last of our major migrations associated with our multiyear transformation.
- Scraping Reviews: We now also leverage generative AI to scrape reviews
- B2B Growth: Our category-leading B2B business remains on track for a strong year with Q3 revenue growing 26% versus last year. We anticipate continued strength from B2B going forward, driven by our continuing push into the addressable market along with the advantages that our platform improvements will bring to the B2B business, whether in core technology, the application of AI and machine learning or in service and payments. As we unify stacks, this will also further enhance the capabilities on offer for our B2B partners.
- One Key: One Key unifies our major brands, Expedia, hotels.com and VRBO, allowing our members to earn and burn one simple currency, One Key cash across our vast marketplace.
- We actually have OTA brands that don't live on VRBO yet that we will be moving.
- Interestingly and anecdotally, we've seen that customers who have gotten One Key cash where they didn't have it before, we introduced higher discounts for our silver and gold members at certain properties that people -- customers are typically using it to get a better room type as opposed to take the money to the bottom line.
- VRBO is now getting the benefit of a lot of successful winners that we had rolled out on our OTA brands across Expedia and Hotels.com.
- I would say what we're most excited about is the ability to get customers to cross shop and to get them to use -- stay in our group of brands and spend their money there, and that gives us a lot more opportunity to drive direct business because we already have a big base of customers in each of those brands that we can now bring to other brands, whether it's an HCOM customer who needs a flight or a car or whether it's an Expedia customer who needs a VRBO.
- We took a group that didn't have membership basically, and turn them into new members in a big pool of membership where they can get a lot of benefit across a bunch of different products that they couldn't get before from VRBO.
- Our goal is to drive much more direct business through that.
- In principle, when we were rolling it out, the idea was that between our collective loyalty programs, it would not be net additive to the cost. It would be allocated differently among our customers and the benefits spread more evenly across our base of customers.
- Focus on Expedia’s Core Brands:We are happy to have customers on any brands they enjoy. But if you look at how we've invested capital, we have not been really investing in those smaller brands [Orbitz, Hotwire, Travelocity, the legacy brands have been a drag on growth over the last few years for the last few years].
- There are still customers who enjoy those brands. We're not planning to turn them off or make them go somewhere else. We, obviously, think they'd be better off in our main brands with the best-in-class loyalty program and everything else. But at this point, and really, to your point, as we've centralized the technology, the lift of maintaining those things has gone away. So as we get rid of having multiple stacks and old jacks to keep up and other things like that, we get to an efficient state where one or 21 doesn't really matter. Now it's a matter of brand marketing, as a matter of consumer experience, we are focused on the big three, and we will keep doing that. And in different parts of the world, that may look slightly different. We may have fewer than three. We may have one or two that's under a different name. But in general, we are going to be focused on a small group of brands where most of the -- where all the spending goes and then to the extent we have these other brands, we don't want to run customers off. As you say, that's been a drag. It's increasingly small drag, if I can say that, like it's getting smaller and so the drag is getting smaller, which is helping us, honestly, as we start to accelerate the bigger pieces and they outrun the drags.
- But we're also not trying to accelerate their drag on us, and we will maintain those as long as customers like using them, but you should expect those to continue to shrink and for virtually all our energy certainly are spending energy to go into the core brands.
| Larkin Hoffman is brand counsel to a wide variety of premier hotel and car rental brands worldwide, from elite brands, to focused brands, to global multi-brand portfolios, in every area of practice including online booking, call center outsourcing focused on the hospitality industry, sales and group contracting, leisure contracting, hotel industry joint ventures, hotel technology contracting, compliance, vendor contracting, employee recruitment and training, litigation, real estate, labor and employment, intellectual property, information technology and franchising. This newsletter is provided as a service to our clients and firm associates. While the information provided in this newsletter is believed to be accurate, it is general in nature and should not be construed as legal advice. |
