Expedia Faces Challenges as New CEO Takes Over

Expedia Group Inc. shares experienced a significant drop, the largest since the onset of the pandemic, following the announcement of a leadership transition plan and a first-quarter outlook that missed Wall Street’s expectations.

Ariane Gorin, a longstanding executive at Expedia, will assume the role of chief executive officer on May 13, succeeding Peter Kern, who has been in the position since 2020 and will continue as vice chairman and board member. The transition comes amid a less-than-rosy outlook for the first quarter, with Expedia’s projected gross bookings and room nights booked falling below analysts’ estimates for high-single-digit growth.

The news led to a sharp decline in Expedia’s shares, dropping as much as 21% in New York, the largest decline since March 2020. This downturn also affected other online travel companies, with Booking Holdings Inc. falling 3.9% and Airbnb Inc. dropping 1.9%.

The change in leadership has raised questions about Expedia’s strategic direction, with Bloomberg Intelligence analyst Kevin Tsao noting that the move may signal another internal struggle.

Kern, who took on the role of CEO at the beginning of the pandemic, was tasked with steering the company through challenging times. Under his leadership, Expedia focused on technical upgrades and revamped its loyalty program, One Key, across its platforms.

However, Expedia has faced challenges in benefiting from the post-pandemic travel boom. The shift in consumer demand toward urban markets and shorter stays did not benefit Expedia’s Vrbo platform as much as it did Airbnb. Additionally, the company lacks the same international reach as its competitors.

Despite these challenges, Gorin’s division, which focuses on advertising and travel technology for corporate clients, has been a bright spot for Expedia, delivering strong financial results. As Expedia looks to drive more aggressive growth, it plans to increase marketing spending to raise brand awareness and compete more effectively with rivals like Airbnb and Booking.

The transition to Gorin’s leadership marks a potential shift in focus for Expedia, moving from a period of consolidation and cost-cutting under Kern to a strategy geared toward driving growth. As the travel industry continues to evolve, Expedia faces the challenge of adapting to meet the changing needs of travelers while maintaining its competitive edge in the market.