Expedia Not Backing Away From Costly Pursuit of a More Loyal Customer

Skift Take

The online travel agent is playing the long game when it comes to onboarding as many long-term value customers as possible, turning them into members and eventually putting them onto its loyalty program. CEO Peter Kern is clearly a patient man.

Expedia will continue to invest in gaining long-term value customers despite the risk of losing bookings to its competitors, as it focuses on brand awareness, paid app downloads and its loyalty program.

Expedia is prioritizing these customers in its marketing, shifting towards longer-term channels, including app downloads and other methods to capture traveler intent outside of classic performance channels.

Costs for “selling and marketing — direct” were $1.5 billion, 55 percent up on the same quarter last year, it revealed in its third-quarter results on Thursday.

That means fewer paid ads, which could allow competitors to benefit from cheaper keyword bidding.

Peter Kern, Expedia Group vice-chairman and CEO, said there had been up a “ramp-up of loyalty that we are balancing against other types of investments,” during an earnings call on Thursday.

Overall, Expedia wants to build a larger base of more valuable, repeat customers. Eventually that means there’s less need to spend marketing dollars to win them back.

App downloads were strong, but app usage was at an all-time high with quarterly active app users increasing nearly 40 percent versus 2019, Kern said. Almost two-thirds of its gross bookings resulted from direct traffic in the quarter.

Kern’s comments came as Expedia reported net income for the third quarter of $482 million, on revenue of $3.62 billion. That turns things around significantly after the last quarter’s losses. The quarter also produced record earnings before interest, taxes, depreciation and amortization, or EBITDA, of more than a billion dollars.

Pipeline of the Future

The CEO also gave a glimpse into what lies further ahead. Kern discussed microservices during Skift Global Forum in September, and he now wants to “externalize” those capabilities.

That will include social commerce, and Kern said Expedia was in a unique position to roll out those services at scale. “So we’re extremely bullish there. We’ve expanded and improved our partnerships with many of our biggest supply partners through these kind of technological relationships, and we’re feeling quite good about it,” he said.

“It’s a real opportunity for us to take our technological advances and bring them to the industry and help create greater efficiency in our partners running their businesses and then ultimately expand the universe of partners who can sell travel,” he added.

On Thursday Expedia confirmed that it had already signed up a customer to its fraud prevention technology.

The company will also invest more in new features like price tracking, trip boards and smart shopping. These are designed to reassure customers that they are finding the right product at the right time at the right price.

“Flight tracking has been a great engagement tool,” Kern said.

New chief financial officer Julie Whalen added during the call that she was attracted to Expedia because she felt it was at a “pivotal point” in its history.

“Some of the things they were doing are just game changers. And some of this have happened actually at my previous company,” she said. “And once we have finished, some of that really enables the business to take off in a big way. So I knew they were at the pivotal point as the company to launch these changes.”

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