Expedia's CEO on the Great Opportunities in Travel

Well, I think what you're referring to is the offline to online trend that drove North America and the West. It's still happening in other parts of the world to different degrees, but the easy money of just being online and collecting everybody who decided to book online has lessened over time. There's still a lot of offline travel, and Seth had a slide about a tendency we're seeing of people, when they're nervous about travel, wanting an actual agent to talk to. We power thousands of travel agents with our products. But as the online products get better and better, and we're heavily invested in service technology and capabilities, I think we'll see more offline to online conversion generationally. It's a huge market. You mentioned the big four: Booking, Airbnb, and Trip probably together are maybe 20% of the multi-trillion dollar travel market. The other 80% belongs to small players, offline players, airlines, hotel chains direct. Those are all opportunities for us to participate and help those partners drive their businesses. So there's huge opportunity; you just have to innovate the products and the business model. I don't know about exponential, maybe it got to geometric and then linear, but there's plenty of growth for all of us.

It might, but it's not first and foremost. We were the first in the market and bought a lot of things. We've spent the last couple years focusing on bringing our technology and brands together. That was the whole plan I got here to do. COVID gave us an opportunity to focus aggressively on it. It's a journey we're not finished with, but we've made huge strides. When we're set up in a great way and have tons of organic growth, we'll be in a position to potentially buy other things if they're interesting. If anything, we went the other way during COVID: we merged Egencia, our corporate business, with Amex GBT and made a great corporate company. We own a stake and power them with supply and technology.

We still have over 20 around the world.

I don't think it's a matter of coming down. We're focused mostly on our biggest brands: Expedia, Hotels.com, and Vrbo. We continue to service all our customers and brands, but when it comes to marketing and branding, we're pulling most of that energy towards those three. This coming year, we're launching an overarching loyalty plan called One Key that will touch all our brands. If you're in Vrbo and book something, then want an airline ticket on Expedia or a hotel room on Hotels.com, all those pieces will attach. That will further bring the brands together and unite them. It's not about getting to five, three, or one; it's about pulling them together in a logical way for the customer and letting the customer drive that.

I think loyalty plays a huge role. It's not a competitive role. There are people like our friend Tony, a Bonvoy member who travels all the time for business, but most people are not like that. There will always be concentration in airline and hotel loyalty programs. With us, you get airline miles plus our points, so it's not an either-or. Hotels is different. The real point is that most people don't earn enough in rewards programs to get much reward. We have tens of millions, hundreds of millions of members who can get benefit even if they're traveling once, twice, three times a year to different places, staying in different hotels, and taking different airlines. They can get member prices, package prices, and points that are worth money, not like having to save up 80,000 to get a toast or a waffle. We serve a really important role there. We haven't done it in a synthesized way; we've had different programs. Now we want everybody to get the benefit, be tied together, and enjoy our brands as a family of products.

We sort of thought of it that way because it wasn't exactly like our retail OTA consumer business, but it wasn't the same at all. It was driven by an end user we had to service differently with a different set of products. During COVID, we decided it's a very different undertaking to sell and service corporate partners. There are companies wholly focused on it, like Amex GBT, whom we power. The real power of what we're doing is to power partners with supply and technology. We started the Open World project to turn all our technology into microservices so partners can take some or all of it. We turned Egencia into the same thing, put it in the best place to succeed, and focused on what we're really good at: powering supply and technology. So now it looks like the rest of our B2B business.

It's a very big business. In 2019, it was nearly a billion dollars in throughput. It's going to evolve not just because it can grow, but because different kinds of partners are coming on board. We power lots of loyalty programs, bank loyalty, ARP, and we power Hopper. We just announced a deal with Bilt, a fintech company for renters. Anytime a company has a special relationship with a pocket of consumers, we can help them use travel to monetize that relationship. The new world is where someone pilots just using our fraud service, which is best-in-class. Many partners are interested in using service as a service, where we use our service technology and people to answer calls for their customers. We think there's a future where smaller players can use our technology. We want to get to the point where small entrepreneurs can use our technology to get into the travel business. If you're an influencer with 100,000 followers writing about travel for people with physical disabilities, we can empower you to turn those ideas into trips, hotel options, and you can power your own travel business.

We're working across all the fronts you'd expect. It's not where we want it yet, but it's all linked together. Our ability to drive a trip end to end, we've been selling all the products for a long time. I'm happy to talk to Seth about all the innovations we've delivered recently. Those same innovations play through all our partner relationships. We have a new tool called Trip Boards, which is an ability to build a trip, save things into trips, and pull your friends or family in to collaborate. Those kinds of technologies we bring to our business partners so they can drive it.

We're not closed for business, but we don't have a big aggressive M&A plan. It's never going to be a one-player market. We don't expect to own 100% of the market. We have great products and great service, which is important if you're going to entrust your customers with a partner. We have best-in-class service. The way we're building our technology, we had a problem with multiple stacks and technology constructs. Now we're pulling it all together into one unified platform. The opportunity is that we're rebuilding many things in a way that's purpose-built for extensibility to drive it to other partners. The idea of just saying it or buying companies with old technology that did some things pretty well, getting to the future of APIs and microservices is a tough journey. We've been involved in it for the last two years and have more time to go. Whoever starts next will have to start at the beginning.

That's not exactly what I said. What we mean is we want to focus on customers who have high value to us. That might be somebody who books a bunch of two-star hotels but is loyal to us and a regular customer we don't have to buy out of the market from Google. It could be somebody like you who stays in six-star hotels. Is Aman open? Anybody stayed there? You're not going to raise your hand. Who's got five grand a night for the Aman? You won't even get into the hotel at five grand; you can buy dinner maybe. It's really about the types of customers who get the benefits we offer, like member pricing and loyalty, enjoy the product features, and are likely to stick and be long-term customers, as opposed to just buying in meta and pushing everyone through the funnel. We're just getting smarter about how to get people to take the right actions to turn them into long-term valuable customers, which means getting our app, member price, or points. Every time we do that, the customer becomes more valuable to us.

We all do it to bring traffic in. The question is how good are we at turning that traffic into long-term customers. We've talked a good game for years. Everyone said shame on us, we got to get rid of Google, and still shame on us. But now, the One Key loyalty program, our focus on member benefits, and our brand marketing always talks about that. You guys haven't actually been... Expedia has been the best at brand marketing for years. The TV ads were early, way more than anybody else in the online travel world. So you've been very focused on brand marketing for Expedia and Hotels.com. It's not just about the marketing. We can have the best ads and marketing team, but if we're not promoting the right things, if when you get in the product it's not clear why you want to take certain actions, then shame on us. Today, we are getting way more people who come through the funnel to turn into members and app users than we did two years ago. That's exciting because these people have seen the value and will be much stickier and long-term customers. That is before we've gotten most of the technology improvements and the One Key loyalty program. It's a constant drive. It's not just about making that number lower. We believe we'll be able to drive more customers into long-term relationships, so we may well be able to spend more money because it'll be more valuable every time the customer hits our product.

Vrbo continues to do really well. Even in 2022 with cities back and Europe busy, Vrbo has done terrific. Two things happened: we had the tailwind of the pandemic, and people liked the idea of a whole home dedicated to their bubble. We were a great beneficiary. The benefit is not just the money; people experienced the product, downloaded the apps, and got to know the name. When I saw Vrbo in a New York Times crossword puzzle, I felt like we had made it. Now, being number one in downloads, lots of people around the world have that app and dream on it. We got a step function adoption change to the brand and product. That pays long-term dividends. Next year, when they become part of our overall loyalty program, which no other player in alternative accommodations has, that will be another added benefit. Other players have more inventory in New York or other cities, but we're really focused on whole homes. We have plenty of product in cities, but we don't have shared accommodations. Our brand proposition is the whole home experience, and we want to be rigid around that. We're super strong in beaches, mountain destinations, and resort destinations. Would it be nice to be big in New York? Yes, but not if it wasn't consistent with our other products. We like where we are.

I don't know if there's a left or right. I share Barry's belief that being together creates a lot of energy, innovation, and ideas. We're trying to foster it and have said 50% of the time or more you need to be in the office. But we've been a global company for a long time, with teams working across time zones. We've adopted different practices to accommodate that. Hybrid works hard; we're all trying to figure it out. Personally, anytime I'm in a city with an office, I'm in the office. I travel all over. We have an office here; I was there yesterday and will be later today. In Seattle, London, Austin, I do the same thing. I'm there to see people and meet with them, not coding by myself. We have many different job classes. People in commercial jobs in sales are on the road talking to hotels, airlines, and potential business partners. We don't want them in the office all the time. It's very job dependent and company dependent. The biggest problem with hybrid work is the onus on managers to be really good at getting production out of people. We need to educate and train them; that's a new set of skills. There's clear evidence it can work, but we have to make it work. If we can't, then Barry's right, we should all be back in the office. But we're making it work and believe we can drive the best outcome with a hybrid model.

We own it, so there's plenty of space.

I would say two things. What he said, which I don't disagree with, is that it has to mean something. It can't be throwaway trite comments or platitudes. He does more social good than all of us combined personally, so it's not that he doesn't believe in it; he doesn't want it to be a waste. We feel the same way. The things we announced are either relevant to our business or our industry. We announced sustainability, the ability to get more underserved groups into entrepreneurship and travel, which is totally consistent with the product we're rolling out, and getting more people who haven't had the opportunity to travel to travel, because we believe travel is a force for good. That's all super relevant. As far as sustainability, we don't provide hotel rooms, clean sheets, or fly planes, but we provide information to consumers. The more and better information we can provide, the more able they are to vote with their wallets and drive the outcomes we hope they want. There's lots of research about people's interest in sustainable travel, but people don't always make the trade of money over sustainability. We want to put them in the best position to do it. The biggest challenge has been the quality of the information. There's a lot of self-reporting and things in sustainable numbers that are not hard math. We want to be a conduit for information, allowing customers to see what their flight or hotel choice means from a sustainability standpoint. The information has to get better over time. There's lots of legislation about companies having to report on carbon footprints, which will help get better data for customers to make good choices.

We have many fewer people, so I doubt it will come back to what it was before. But we are traveling. As soon as things opened up and we went back to the office in April, our people have been traveling. Many are here. I'm on the road all the time. There were comments about recession or other things from Seth. We'll see how that goes, but we're very bullish on our position. The macro world may get tighter, but we have so much opportunity in what we're building that we don't think that's a big issue. We're invested in driving it. We're going to keep building and traveling. That looks like most of the corporate world to me for now. There will be some pinch points, and corporate travel may feel it a little more than consumer travel, but I'm not worried about corporate travel long term. The good news is all of you, Expedia will keep coming to Skift conferences. We'll keep coming to Skift.