Although the onset of COVID-19 had catastrophic effects on virtually every corner of Expedia Group’s business, CEO and vice chairman Peter Kern has not let the pandemic dull his ambitions.
In fact, his objective for the company – for which he assumed leadership in April of this year – could be considered wildly optimistic, given the current climate.
Nonetheless: “I want to be the best travel tech platform in the world,” Kern says. “Period.”
Kern’s remarks came during day one of Expedia Group’s virtual Explore event – his first since replacing former-CEO Mark Okerstrom, who resigned in December.
In conversation with Yeoh Siew Hoon of PhocusWire sister brand WebInTravel, Kern outlined how playing to Expedia Group’s strengths will help the company and its partners recover from the impact of the coronavirus crisis.
“I’m an optimist. People need to travel,” Kern says. “I have zero doubt about it. We just have to weather the storm and support each other, and if we all come out OK it will be fine.”
Assessing strengths
“In a weird way, COVID is a blessing as a change agent,” Kern says. “It gives you an opportunity to look starkly and clearly at what’s going on and focus on what matters.”
As someone new to his role, Kern believes that having “fresh eyes” on the situation gave him the latitude to make difficult decisions as the crisis swiftly developed.
“Suddenly you have a crisis and no time for ‘maybes’ and you start to focus on what you’re good at,” he says.
“The best tech companies in the world tend to do a few things very well, not a thousand things very well. We had to think about it – brands, tech, everything. Doing that work, it’s a big change for us.”
Part of that work includes simplifying operations – which Kern says the company was in the process of doing prior to the pandemic. “[Expedia Group] was built to some extent on a lot of acquisitions. We ran that play as far as it could go, and we were thinking it was time to get a little more refined.”
Expedia Group’s strengths, Kern says, are its technology and marketplace, and the brand is “tripling down” on investing into its technology platform to power suppliers and customers.
Gaining that perspective is hard to do when it’s “business as usual,” but when it’s “something like this where the world stops for you, you have to take stock.”
For partners, the value is in the data – “we have the most complete set of travel data in the world” – and Kern says he wants all of Expedia Group’s supply partners to be able to optimize their businesses.
“If we can help with data, help them monetize the customer better, secure customers better, secure data better – whatever we can do to help. The agenda of driving things is what we’re really good at.”
He points to the work Expedia Group has done with partners such as Marriott International around optimized distribution, calling it a “win-win” for both parties. The program, which is available to all of its medium- and large-size lodging partners, gives Expedia Group exclusive distribution rights for the hotel chain’s wholesale and promotional room rates, availability and content to third-party travel providers such as bedbanks.
“The more supply partners that go that route will result in a more healthy ecosystem,” Kern says.
Vacation rentals
“We were lucky. Anyone in the vacation rental business got lucky,” Kern says. “But for every good thing we had, we had two bad things.”
The bright spot for Expedia Group during the past two quarters has been its alternative accommodations business Vrbo, which in Q3 saw both bookings and revenue increase compared to the third quarter of 2019.
The position for Vrbo is families – specifically, the “whole home” experience, which has been a particularly attractive experience for consumers amid the pandemic.
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As for Vrbo competitor Airbnb – which is now listed on the public markets - Kern says “there was nothing super surprising” in the home-share giant’s S1 filing, “nothing that made us go, ‘Oh my god, we’ve got to change course,’ or, ‘We didn’t know that.’”
That said: “They’re a big, impactful company. They created the [alternative accommodations] category in effect,” he says.
“To [co-founder and CEO Brian Chesky’s] credit, they took advantage of this moment to focus on their core strength and I think that will pay dividends for them.”
Looking ahead
The year 2020 “wasn’t just the year of the pandemic,” Kern says. “There were a lot of things that became even more obvious in the United States and around the world in terms of inequality.”
Kern says the events of this year have made him feel “compelled to comment frequently,” which he has done through blog posts and letters to his employees.
“It’s a complicated time. In the world and our country there’s plenty of division, but there’s still progress, and progress is great.
“As a company, we realized we had a lot more to do in terms of inclusion and diversity … and we have a long way to go. We have very definite plans about inclusion in our company and lots of plans about how we want to surface and serve underserved travelers around the globe.”
Certainly, becoming an inclusive and diverse company would help Kern on his mission to make Expedia Group “the best travel tech platform in the world.”
But there are two additional things the CEO says he wants to do “really well”: Understand the power of the customer, and “drive success for our suppliers with everything we have to offer.”