We are getting better visibility of Expedia’s strategy under Barry Diller and Peter Kerns’ interim leadership. One of the key takeaways from the fourth quarter 2019 earnings call with analysts yesterday is the strategic shift away from a brand approach to a geographical market approach – a point Diller made a number of times during the call.

Diller was abundantly clear of the synergy and cost-savings that can be extracted, using the terms “simplification, precise, and efficient.” Both he and Kern underscored Expedia’s focus on consolidating businesses versus keeping them in silos. 

Specifically, the company will leverage brand strength based on the geographical market. This means they will drive supply through the strongest Expedia brands in a given market. Diller has indicated that its brands do not need to be in all markets.

This move makes sense given the expediency needed to return the company to stronger growth and profitability. Diller is not interested in the long game and the high cost of brand building in each market when he can leverage existing company brands that already have a strong market presence.

One goal is for their key global brands to offer a full range of lodging options to consumers so that the company could increase loyalty and be less reliant on Google.

This goal is already in progress. Management indicated that all VRBO listings are now available through Expedia.com. Some VRBO properties went live on Hotels.com and more will be added. 

Diller is bullish on alternative accommodations. He considers it a sustainable category that brings a different audience compared to hotels. While he acknowledged that VRBO is not where it needs to be and will have to be marketed better, he is committed to VRBO as a stand-alone category. Expedia has positioned VRBO as a great product for families given its inventory of larger homes and apartments. 

VRBO had 2.1 million listings and generated gross bookings of $11.9 billion in 2019, up 4% from 2018. VRBO’s full-year revenues were up 14% to $1.34 billion from $1.17 billion in 2018. Adjusted EBITDA declined by 2% to $281 million in 2019 from $288 million in 2018.

Industry leader Airbnb has over 7 million listings worldwide with 2019 revenues estimated at $4.6 billion.

Diller kept the tone of the earnings call upbeat. He believes he can turn around the company by the end of 2020 through this cross-pollination approach.



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