(Bloomberg) — Expedia Group Inc. followed its peers in the online travel industry in witnessing a staggering decline in business since the spread of the coronavirus, with total gross bookings down 39% in the first quarter.
The Seattle-based company reported total gross bookings of $17.89 billion, including a decline of as much as 90% in the second half of March as the pandemic took hold. Revenue fell 15% to $2.21 billion, its first quarterly drop in eight years. The adjusted loss before interest, taxes, depreciation and amortization was $76 million, or 1.83 a share, compared with a loss of 27 cents a year earlier. Analysts had projected a loss of $1.45 a share on $2.11 billion in sales.
Chief Executive Officer Peter Kern said Expedia has seen cancellations stabilize and growth return in May as parts of the world emerge from pandemic lockdowns and people start to think about their summer holidays. One of the businesses leading the improvement is Vrbo, the company’s vacation rental unit that competes directly with Airbnb Inc.
“We’ve seen a higher bounce back from Vrbo,” Kern said in an interview, including an uptick in demand from travelers renting a house within driving distance of their own homes rather than flying or booking a hotel.
In March, Expedia withdrew its full-year forecast as stay-at-home orders began to halt flights and travel around the world. The company had already been struggling, cutting 3,000 jobs in February to simplify what had become a “bloated organization,” as it faced increasing pressure from Google in advertising and nimble startups such as Airbnb. As part of the company revamp, Kern, then vice chairman, took over as CEO in April. At the same time, Expedia announced it was raising $3.2 billion as the impact of the coronavirus began to weigh on the industry. In addition, the company made a “significant reduction” in costs for marketing and discretionary expenses and deferred certain capital expenditures, it said in the earnings report.
“We already had pretty ambitious goals about how we would simplify and strengthen the business,” Kern said. “This creates an energy and an ambition that is hard to get when you are just in regular old fine times.” The pandemic crisis could help Expedia “turbo charge“ through some difficult changes, he said.
Expedia’s shares gained about 3.7% in extended trading in New York after closing at $79.58. The stock has dropped 26% this year compared with an 8% decline of the S&P 500.
As the pandemic raged in March, Expedia saw “unprecedented” cancellation volume and moved to build self-service options for customers to cancel lodging and air bookings without speaking to an agent. As a result, cancellation inquiries for air travel managed without an agent increased to more than 95% in April from 65% in February.
“If there was an industry on the front lines bearing the full impact of coronavirus, I would say it’s travel,” said Naved Khan, an analyst at Suntrust Robinson Humphrey Inc. “It is one of the sectors that has been hurt the most and is likely to lag during the recovery because until there is a vaccine people will limit their travel activities.”
Airbnb and TripAdvisor Inc. cut a quarter of their workforces and Booking Holdings Inc. has been forced to apply for government aid.
Kern acknowledged his appointment as CEO came at a “messy time,” but said it has also provided a rare opportunity for sweeping action. “A lot of friends and business acquaintances have been like, ‘Wow, you really stepped into it in a very tough time,’” he said. “Not a lot of fun is being had, but on the other hand I see this as a crystallizing moment of change for this company.”
(Updates with comments from CEO beginning in the third paragraph.)
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