Expedia Group CEO says metrics show strategy is working

Expedia Group CEO Peter Kern says the company’s strategy to add
loyalty members and drive app usage is “showing accelerating improvement” and is
the foundation of the company’s growth.

In a call with financial analysts to discuss the company’s results
for the fourth quarter and full year 2022, Kern did not share the number of
loyalty members and app users but says, “We enter ’23 with a record number of
active loyalty members … and quarterly active app users increased by
approximately 46%” in Q4.

He also a reiterated a point he has made in the past – that over
an 18-month period, loyalty members drive two times gross profit and repeat business and
app users drive 2.5 times gross profit and repeat business.

“When you combine these two and have a loyalty member that
also uses the app, this drives the highest production of all, and that group
represented the fastest growing customer cohort for us in 2022,” Kern says.

The most notable benefit of the company’s efforts to invest
in high-lifetime value consumers is brand Expedia in the United States – the
first of its brands to “deploy new capabilities and marketing strategies” and which
Kern says delivered nearly 20% revenue growth in 2022 compared with 2019.

“With the proof now very clear that our strategy is working,
we will begin more aggressively rolling it out to our other brands and our non-U.S.
markets,” Kern says.

Fundamental to that growth, he says, is the company’s
efforts to move all of its brands to the same front-end tech stack, a process
he says will reach a milestone in “the coming months” as Vrbo becomes the final
brand to migrate to the new system.

“This last step will
then allow us to launch our new OneKey
loyalty program
, which will span all of our main brands. It will be the broadest,
most flexible loyalty program in the world and for the first time give vacation
home renters the benefits of a loyalty program. And importantly, it will
complement our many partners’ loyalty programs as well,” Kern says.

“No travel player in the world has
done more over the last few years to innovate around the shopping and service
experience, to improve the travel journey for the consumer.”

Financial results

Expedia Group is reporting record full-year and Q4 lodging
bookings and lodging revenue.

Gross bookings were valued at $20.5 billion in Q4, a 17%
increase year over year, and $95 billion for the full year, up 31% compared with 2021.

Revenue in the quarter increased 15% compared with Q4 2021 to
$2.6 billion. For the full year, revenue came in at $11.7 billion, up from $8.6
billion in 2021 and inching closer to pre-pandemic 2019 full-year revenue of $12.1

Adjusted EBITDA in the fourth quarter was down 6% year over year
to $449 million but up 59% for the year-over-year measure, at $2.3 billion. 

As a percentage of total revenue in Q4, lodging accounted
for 77%, air accounted for 4%, advertising and media accounted for 7% and all
other revenues accounted for the remaining 12%.

Selling and marketing expenses for the full year were $6.1
billion, on par with full year 2019 spending and up from $4.2 billion in 2021. Selling
and marketing expenses in 2022 were just over 52% of revenue.

For the quarter, selling and marketing expenses were up from
$1 billion in Q4 2021 to $1.4 billion in the same quarter of 2022.

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