Expedia Group, Inc. — 2024 Q1

Sure. Thanks, Eric. And for everyone's benefit, I've asked Ariane to chip in where she'd like along with these questions, in addition to whatever you have specifically for her.

And I would just add, again, yes, we have deep belief and conviction in Vrbo and also our other brands of Expedia and Hotels.com. We do sell some alternative accommodations on those brands, so we also have an opportunity to go after that market with those brands as well.

Yes. So let me take a crack. Thank you, Lee, and then Ariane and Julie can jump in. But I would say that what we see in Vrbo and -- sorry -- so there were 2 questions, the non-Vrbo piece and the Vrbo piece. On the non-Vrbo piece, we've been making improvements in the product consistently. HCOM went through a migration a while ago, but still, we are making improvements and getting it back to -- on the best footing we can.

I'll take a piece and Ariane can jump in. I would just say, we've said it before, but we look at all our marketing, all our things to drive consumer behavior as one big bucket of capital. So that's direct sales and marketing, it's the pricing work we do, merchandising work, and it's our loyalty spend.

And I would just add, as Peter said, we think about those buckets of pricing, of loyalty and of marketing sort of as all buckets that we can use to invest where we see opportunities. And going forward, we'll continue to do that. So which of those 3 will drive the most growth, whether it's in international, regardless of what brand it is, I think the teams have a very dialed-in view of where they can invest in order to get the best return.

Well, what I would say is part of our One Key program does include tiered member discounts. So if you're a silver member or a gold member, you'll get better discounts. And those are actually supplier-funded discounts. Those are when our hotels, for example, want to get access to the more valuable members who travel more, who spend more. So I don't know if that's what you're referring to, but that program is a supplier-funded program, and it's one of the benefits of One Key.

Yes. I think, Richard, just to think about it as clearly as we can give it to you, there's 3 opportunities. There's what Ariane just described, which is we've been able to get our customers more benefit, more tiered benefits, all of that provided by our suppliers akin to some of what you've seen from some of our competition. We also have discounting we do specifically that I mentioned to win on price and acquire customers efficiently.

And just to put a pin on it, obviously, we made the decision based on what is the best return. I mean at the end of the day, that's what we do. We look at everything and what are we going to get the best return for our spend, and at this moment, we saw that the pricing actions were going better than any other options.

Okay. Trevor, thank you for the question. Look, let me just start by reminding you that we run our consumer business as a whole portfolio. And so we invest behind where we see the best return. And so in some cases, that may mean some brands versus others. And Hotels.com was the most impacted by our migrations. And as I said, it's not where we want it to be. It's not growing.

So I'm happy to -- look, on One Key, as you know, we launched it last summer, and the goal was to get more members, have them repeat more and see them shopping across our brands. In terms of member growth on our loyalty programs, new membership is up 40% year-on-year, and we're really pleased with that. And we're seeing good repeat rates.

Sure. Let me take that. So first of all, it's -- for Vrbo, it's largely a traffic issue. So as I mentioned, we spent down last year while the product was going through migration. That has 2 effects, which is, while it's migrating, it's not converting as well, and we're not spending as much to build awareness through that time.

We have seen some short-term wins. And Peter is right, it's going to take a while to really see it in the P&L from your perspective because there's an investment time period, you have to build it up to get the return. But in international markets, in small ones like Brazil and Scandinavia, where we launched new campaigns, we did see double-digit growth on our brands there. So that's already reflected in our numbers, but they're not all in the total, we are seeing the benefits flow through.

This is Jacob on for Kevin. For Ariane, on the B2B side, can you comment on concentration within B2B, how large your top few customers and how many customers do you have? And also I wanted to know if there's [indiscernible] impact for regulatory changes from Google, any positive benefits there?

Okay. I think -- it was a little bit hard to hear, but I think the first question was about the B2B business and customer concentration. So let me take that one first. Look, we don't disclose information, obviously, about sort of the concentration of our customers, but what I will say is the B2B business is quite a mix of some very large partners, think of banks, think of some airlines, and also a very long tail of travel agencies, for example. So I would say it's a well-balanced business.

Sorry, say that again?

Yes. Any benefits you're seeing from the regulatory changes from Google in Europe?

In terms of our core B2C business? Not really, no. I think -- yes. I think Google is still trying to push back. They've introduced some new things in the hotel funnel with Carousels and other things. So as much as we're hoping for help from regulators where we operate within the balance of what they're doing, and they continue to operate pretty much how they have in terms of looking for new ways to monetize and push SEO traffic down, et cetera. So no, no real noticeable impact.

One more on traffic on how big the [indiscernible]?

Sorry, it's really hard to hear.

On direct traffic, is there any -- can you provide any commentary on that?

I don't think we provide commentary on that. I'd say about 2/3 of our business remains coming from direct traffic, and we've seen strong improvement in the app, which we -- as you probably recall, we've been pushing into for several years, I think, 600 basis points improvement in how much of our business came through the app.

Yes. We've done a lot of experimentation in GenAI, obviously, user-facing as well as within the company from an efficiency standpoint, from customer service, all kinds of places. And I won't steal any thunder, but Ariane and the team will be announcing a lot of really cool new things at our EXPLORE Conference in 10 days or 2 weeks.

Yes. I would just add, as Peter said, we're excited to share some things in a couple of weeks at our partner conference. And again, in addition to what we're doing for travelers, there's a lot of work that we're experimenting with for partners.

Mark, thanks for the question. I'll take the cost question. I would say that literally, we are just getting started. So I mean, we did have an announcement back in February where we had impacted about 1,500 associates. We're still on the journey of that. We haven't done all of that yet.

And I'm happy to take the second part about products that we bundle. Look, we don't disclose what percentage of our business comes from packages or from cross-sell. But what I would tell you is, one, a unique value proposition of the Brand Expedia is our package path and this ability to dynamically bundle an air ticket with a hotel and the like. And we're seeing really good results as we continue to lean into the package path, and we think it's a great value proposition.

Yes. Look, we're not sharing projections of how we see things long term. I guess I would just remind everyone that there's a huge market out there for travel. And our B2B business serves a lot of different types of partners, whether they're airlines, whether they're banks. Last year, we launched a partnership with Walmart. We work with off-line travel agencies. We work all over the world.

Sure. I'll take the cost actions question. We have not broken out in detail how much is impacting each line. As I mentioned, you can see it within cost of sales improvements, you could see it in the overhead improvements, you can kind of deduce how much of that is due to that. But you can also see it in our cap labor, in our capital expenditures, at least this quarter, how they've come down. A significant portion of that is associated with capital labor.

Yes. And I'll just jump in on the hotel segment. I mean, obviously, a couple of things to keep in mind. It's all our businesses. As Ariane mentioned, our B2B business has more exposure to international, so that has some of the better tailwinds, has been in international. Our international investments have been doing well, but that's a fairly small part of our B2C business and all.

Yes. Well, I'll do the bad news first. We can't help you with the splits. We don't break out the business that way. But I'll talk about the beginning part, which is, yes, we saw a huge pandemic surge. That was great for customer acquisition. It was great for the Vrbo business. And to be clear, we are still well above 2019 levels even as we sit today.

Thanks, Tom. Look, on the next quarter or 2 -- like let me say, even if I've been in this business for 11 years, stepping into the CEO role is a new perspective. And so I will listen and learn with our teams over the months to come. I think we have set really solid foundations. And as I said in my prepared remarks, one thing is helping the teams get back to the basics of traffic and conversion and delivering the acceleration that's implied in our guidance.

And then on the margins question, now going to relatively in line with last year as opposed to margin expansion, it's really a function of where we end up in the range of possible outcomes on the top line. Because we're still generating cost of sales leverage, we're still generating overhead leverage, we're still motivated, obviously, to get back to marketing leverage.

Thank you, everybody. I think that's our last call. Thank you, operator. I think we're finished.