Travel online this week
Expedia Group CEO Peter Kern thinks Google’s vacation rental search offering won’t work because big partners, such as Expedia/Vrbo and Airbnb, pulled out, and he thinks the Expedia’s legacy technology has stifled innovation over the years.
These are among the points Kern made during an interview with Skift at Expedia’s Partner Conference in Las Vegas last week.
When it comes to innovation, Kern argued that competitors haven’t been innovative either, and they’ve all done a lot to program travelers to seek lower prices instead of more value.
The interview, whose length and grammar have been edited, follows:
Denis Schal: I have a friend, who is quite smart. She said, “Expedia is your grandma’s or grandpa’s online travel agency. What have they really done in the last few years that’s innovative?” And to that, would you say?
Pierre Kern: It’s hard to be super innovative when everything takes six times as much work. I mean, to be fair. On what brand? Was Expedia innovative? Innovative Hotels.com? Innovative Vrbo? What do you ask for to be innovative? So he [Expedia Group’s lack of tech integration] was a bit of an anchor on our ability to innovate because there wasn’t an innovation that you could roll out to everyone and everything.
Today, you will see that we are launching Smart Shopping, a new feature where it is easy to compare hotel products because each hotel defines its universe differently. Like, “Oh, it’s a superior queen, and it’s a junior suite.” Most customers look at a Marriott and think I don’t know what’s inside. Now we’ve taken all the zillions of bits of data and whittled it down to a simple way to compare what you’re getting with each coin.
This allows you to easily compare things. So it’s an innovation that will be great for anyone looking for a hotel on any brand, on anything. But we should have deployed it a million times in the old format. Now that we’re consolidated, we can deploy it just once. Expedia first, I think. Hotels.com will benefit from a large portion of its traffic. The best experience where it’s going to be is through the app.
By the way, to your clever friend’s comment, booking websites, As I tell our team, we are not competing with greatness here. I think we all have room to be much better in terms of shopping experience. It is around this that we want to innovate to make it better for the traveler. We also want to focus on ensuring travelers get great results. We have all contributed to the over-commodification of the market around price.
Booking.com had billboards and other advertisements in Las Vegas last week in an attempt to woo short-term rental guests onto its platforms and as a rebuff to the Expedia Explore 22 conference taking place in the city.
Schal: Speaking of Booking, have you seen the billboards?
Kern: I’d say it’s pretty cheeky, but be careful what you wish for.
Schal: Oh why? What are we going to see?
Kern: Listen, we want to be aggressive in attacking markets where we have historically been weaker than them. We don’t feel like we’ve had a particularly tight strategy on that in places like Western Europe and other places. I’ve said that on earnings calls and stuff, and we’re going to be very tactical and aggressive in trying to win back and learn and find ways to gain real share of those markets. They’re cheeky chasing us at our partner conference, and whatever. It’s a billboard who cares? But I think in general they’re doing what I expect them to do, which is they’re looking for growth where they can, and we’re going to do the same. Unfortunately for both of us, that means we’re following each other.
Schal: You’re probably tired of talking about Airbnb, but all you get from their earnings announcement. Something stood out?
In response to a question from Skift at a press conference the following day, May 5, Kern said Expedia Group has historically had “a vanilla strategy” in Europe, treating all countries the same. Kern said Expedia would be more intentional in focusing on a smaller set of European markets. While his predecessor Mark Okerstrom focused on increasing the offering in Europe to compete with Booking, Kern said he would have “an end-to-end strategy”.
Kern: No. We weren’t very surprised by this. I think vacation rentals have been strong. Cities are coming back and they’re a big beneficiary of city vacation rentals because we’re not really competing in that area. We thought their numbers would continue to be high. I think the numbers across the industry will be strong. I thought our numbers were pretty strong.
As for the recovery to come, recovery is coming in just about every industry. Some things are hanging around, but they’re all up and to the right, except countries at war and things like that. There’s no reason we can’t all see good numbers, and Airbnb is definitely benefiting from more city trips. Although I don’t know if it’s important for them, but we benefit from more international. We take more advantage of trips to town. We benefit differently because we benefit in cities and hotels.
Schal: You said on your earnings call that 50% of Vrbo’s business or customers in the last quarter were new customers. So what do you attribute that to? Well, you focused on performance marketing for Vrbo, right?
Kern: We do, but we got out of Google [Vacation Rentals metasearch] and some of these other things. No, I would say it’s two things. One is adoption during Covid. The brand has become more well known. We have invested in the brand, we have invested much more than ever in notoriety. I think it snowballed. That’s the benefit of a great, suitable product at the right time, along with good marketing and the benefit. So I think we’ve had the tailwind and we’ve played well in that tailwind, and that adoption continues and people have taken notice.
Schal: Is there anything new in your approach to Vrbo’s sourcing strategy?
Kern: No. I think during Covid we all kind of backed off a bit trying to grab more stuff because we all contracted. And then, since we no longer had a contract, we focused on the squeeze markets, the places where we were going to sell, where we knew we had excess demand. I think now that things are returning to more normal times, we are broadening our general approach to real estate acquisition and will begin to roll out new marketing and property acquisition approaches more broadly.
This is another area where we have a lot of opportunities, on the B2B marketing side with suppliers. We used to do it as a kind of hand-to-hand combat. We used to have our hotel team separate from our Vrbo team. The marketing teams have been split. We have consolidated all of this so that we can use this workforce across all categories and use marketing more effectively. We think we’re going to get this machine going.
Schal: When we were talking about performance marketing and VRBO, you casually mentioned Google pulling out. How far have you withdrawn from Google?
Kern: Google has a meta-product for homes that we retired a year and a half ago. The product wasn’t great and we didn’t think it had added value for us. So we decided to leave. We are not there, Airbnb is not there. I don’t know who’s in it. I don’t think this product will really work for them because if you don’t have more than one player, it’s not really a market. I don’t think there’s much going on there. I’m sure they’ll keep trying, but we’re not religious about it. If the products work, they work, if they don’t work, they don’t work, and we’re not going to chase bad deals. It was the product wasn’t great and we didn’t think it had added value for us. So we decided to leave. We are not there, Airbnb is not there. I don’t know who’s in it.
Schal: You announced an Expedia Group Open World platform to enhance Expedia’s partner products and services. Tell me more about it.
Kern: We had done a lot of that work. We create white label models with partners like AARP, we power rewards programs. It’s a growing business, great business for us. We have APIs to partners in various places and stuff. We had to develop this technology and these integrations were quite difficult because the underlying technology was not really designed for this use. During the rebuilding of our technology and the reorganization of the whole plan, we realized that we had the opportunity to build the platform in a way that would allow us to outsource all elements of the platform. -shape.
We wouldn’t have to just go for enterprise level partners, we could narrow it down to easy, small to medium size partners, even an influencer who wanted to be in the travel business could now, “Man, it’s a pain in the ass to do the service and the payments and all that stuff, and my CTO keeps asking me for more people and it’s so expensive. It’s like, ‘No, you should leverage our technology.” If you want to take our payment capability, or our service capability, or our fraud capability, or whatever. You’ll be able to take those things and exploit them in your own business.