Expedia’s CEO Shift Leads to Stock Drop amid Underperforming Holiday Booking

(Bloomberg) — Ariane Gorin has been appointed as the new chief executive officer of Expedia Group Inc, succeeding Peter Kern, who has been in the role since 2020. She has been an executive at Expedia since 2013 and most recently served as the president of the enterprise division. Gorin will take over on May 13, according to a statement released by the company on Thursday. Kern, 56, will step aside at the end of his contract, but will continue to serve as vice chairman and member of the board. Expedia reported gross bookings of $21.7 billion in the fourth quarter, falling short of analysts’ average estimate of $22 billion. Room night growth also did not meet expectations. Revenue increased by 10% to $2.89 billion, in line with analysts’ projections for $2.88 billion, according to data compiled by Bloomberg. Consequently, the shares fell 13% in extended trading. The change in leadership was unexpected and may indicate another struggle over strategic direction at the Seattle-based travel booking website, as noted by Bloomberg Intelligence analyst Kevin Tsao. Kern took on the CEO role at the beginning of the pandemic, during a time when Expedia and other travel companies were facing significant challenges due to global lockdowns. However, Expedia had already been experiencing difficulties, and Kern was appointed by Chairman Barry Diller after the previous CEO and chief financial officer were removed following a clash with the board over a disappointing growth outlook. “When this started, the idea was for me to come in for a period of time and sort of right the ship, put us where we wanted to be, and build the team and make sure we have the people to take it forward for the next generation,” Kern said on a call with analysts. “The transformation turned into a bigger — I bit off more than I thought I was going to — and it was a bigger job than I thought it was.” During Kern’s tenure, Expedia focused on technical upgrades and carried out a long-awaited overhaul of its loyalty program across its various platforms. This program, known as One Key, enables travelers to use and earn rewards across the site, such as by accumulating cash on vacation-rental platform Vrbo and using it to book a flight on Expedia.com or reserve a room on Hotels.com. Kern had cautioned last summer that the technical streamlining might lead to some disruption, with analysts noting this resulted in a temporary loss of market share to Airbnb Inc. However, Kern emphasized that the platform changes would ultimately drive efficiencies and lead to “faster and more profitable growth.” Despite these efforts, Expedia has not experienced the same post-pandemic travel boom as some of its competitors. The shift in consumer demand toward urban markets and shorter stays did not benefit Vrbo as much as it did Airbnb. Additionally, Expedia does not have the same international reach as Airbnb or Booking Holdings Inc. Gorin’s division, which sells advertising and travel technology to corporate clients and powers travel booking websites for other major brands, such as Walmart Inc. and American Express Co., has experienced faster growth than the larger consumer-facing retail business in recent years. Her unit delivered “outstanding financial results,” including revenue growth of 33% in 2023, Expedia said in the statement. In the fourth quarter, revenue from the B2B unit increased by 28% to $864 million, and was the biggest contributor to overall sales gains. As Expedia aims for more robust growth this year, it must also manage increased expenses to raise brand awareness. The company plans to invest a record amount in marketing as it seeks to gain share in the consumer travel industry and compete more effectively with Airbnb and Booking. “We’re seeing a shift from an emphasis on consolidation, cost cutting, and transformation under Peter, who came in during a tough time and focused on leading the company out of it,” Tsao, of Bloomberg Intelligence, said. “Now you’re transitioning to potentially more of a growth focus with Ariane who’s been focused on driving and growing their B2B business.” The shares plummeted to $132.75 in extended trading after closing at $159.47 in New York. The stock has gained about 34% in the past 12 months, compared with a 30% gain for Airbnb and 58% for Booking.(Updates with comments from CEO in the fifth paragraph.)Most Read from Bloomberg Businessweek©2024 Bloomberg L.P.

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