The company’s financial result for 2022 shows good recovery from the aftermath of Covid-19, which severely impacted the travel industry. On a full-year basis, it reported total revenue of $11.66 billion in 2022, close to the $12.06 billion it had clocked in 2019. The company’s revenue had dipped to $5.1 billion in 2020, as governments around the world announced travel restrictions to curb the spread of the virus.
“The pandemic has had a lasting human impact where people have realised how much they have missed (traveling) during Covid and how their lives have enriched with travel. And it’s (travel) become a thing that they’ve put ahead of most other things,” Kern, who’s also the chief executive officer, told ET in an exclusive chat.
Kern’s comments come at a time when global economies have come under pressure to reduce inflation, with central banks increasing interest rates to keep inflation in check.
In March, the US Federal Reserve continued with its quarter percentage point rate increase, its ninth since March 2022, as it looks to temper inflation down to the 2% target.
“Before we had the bank issues, we had the question of inflation. How would inflation impact travel and other things? The good news we’ve seen is that travel appears to be relatively immune to inflation concerns,” said Kern. “Now other categories of consumption have seen an impact. But travel has not. Broadly, prices have held up and they inflated a lot during Covid and demand is held up quite strongly.”
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The US Fed’s successive hikes have also hit the share prices of global technology companies, including the Expedia Group. Its stock price was down 56% to $91.77 on Thursday from the highs in February 2022.“I do think if we look at the macro and inflation data, we are not yet at their targets. Probably we are not finished (in terms of rate hikes). And how much further we have to go I’m not sure. I think it will take the rest of the year to sort itself out,” said Kern. “The big hikes are probably behind us…”
Even as governments keep a close watch on Covid-19 cases, Kern said the company is focused on its long-term strategy. “We are looking at the longer-term and being tactical. We’re not particularly focused on Covid as an issue. We obviously have to think about ‘what would happen if’. But we’re not even particularly focused on the idea of another pandemic as an issue for now,” he said.
Loyalty push
During its recently concluded earnings call, Kern had said that the company is focused on “long-term retention of its customers”, and that for the fourth quarter of 2022 versus 2019, the travel group saw loyalty members grow by more than 60%.
He told analysts that Expedia entered 2023 with a record number of active loyalty members.
“So I think we’re still in the early days relatively in our journey on loyalty. Later this year, we will be combining all our member programmes to one which is going to be called ‘One Key’. And that’s going to give vast flexibility to consumers. So, whatever brand of ours you like to shop in, whatever product you might want, you can be rewarded for that,” said Kern, commenting about the company’s loyalty strategy. “We think just a simpler, bigger, more flexible model will benefit the most people.”
During its earnings call, the company said that each loyalty member drives two times the gross profit and repeats business over an 18-month period as compared with non-members.
AI impact on jobs
Earlier this week, Expedia on its app launched a chatbot tool powered by OpenAI’s ChatGPT to help users plan trips and receive personalised updates.
“Our journey in AI started a while ago. We’ve been using and developing machine learning models and AI models for many parts of the experience. And that goes you know, literally from the shopping experience, how we sort and search, how we deliver service with our automated service capabilities. Large language models and ChatGPT are just another step forward,” said Kern.
However, with the advent of generative AI tools such as ChatGPT and Google’s Bard, there’s increasing talk of the possibility of technology taking away jobs, as it drives efficiencies and reduces cost structures.
“We’re not treating AI as a tool to drive efficiency. We just think that’s a means to scale more efficiently and to get better outcomes for the consumer,” said Kern. “We don’t come at it from the you know, how can we make it cheaper to execute –we want to make the experience great so that consumers stay with us, come back, shop again. So that’s really our goal.”
Reducing dependency on Big Tech
In the past, several Indian travel marketplaces have shown their dismay and even sued competition for search bias and taking over key ad words on Google. Indian startups have also vowed to take on Google and its Android ecosystem, as they believe it to be stifling user choice and competition.
However, the new generative AI revolution brings back dependency on big tech for new-age businesses.
“Travel world is governed by the funnel from Google, and all these potential ideas will potentially rebalance the market, which will be good,” said Kern. “We all like to have less dependencies on one big tech player and spread it out to other big tech players. I think ultimately we want people to be direct consumers and have the app.”
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