Expedia Group closes 2021 with record Q4 profitability

Expedia Group had adjusted EBITDA of $479 million in the final quarter of 2021 – making it the highest Q4 adjusted EBITDA in company history and the third consecutive quarter of positive adjusted EBITDA. For the full year 2021 adjusted EBITDA was $1.5 billion. 

The quarterly adjusted EBITDA was up $1 million compared to the same quarter in 2019 – the most recent period not impacted by the pandemic – despite the fact that revenue in Q4 2021, $2.3 billion, was still 17% lower than Q4 2019.

In a call with analysts to discuss the results, Expedia Group CFO Eric Hart says, “The fourth quarter performance further illustrates how we are running a much more efficient business versus prior to the pandemic.” 

One marker of that efficiency – the company currently has about 10,000 fewer employees than it did at the end of 2019. 

Full year 2021 revenue was $8.6 billion, compared to $12.1 billion for the full year 2019.

Total gross bookings were $17.5 billion in the fourth quarter of 2021, the lowest quarterly decline for the year, despite the impact of the Omicron variant in December, but still down 25% compared to the same period in 2019. 

Hart says booking trends have been improving through January and are up versus 2019 in the most recent weeks, driven primarily by bookings in the United States followed by EMEA.

And CEO Peter Kern says the fact that international travel and travel to big cities are both still lagging actually bodes well for the company.

“Historically big cities and international have been areas of strength for us... so I think we’ve got some good runway ahead in where the puck is going and we feel good about that,” Kern says. 

Customer acquisition

Sales and marketing expenses in the fourth quarter were approximately $875 million, down 12% versus Q4 2019 but more than double the figure from Q4 2020. 

A key part of the marketing plan, Kern says, is about using a unified strategy that combines creative messaging and both brand and performance marketing to bring travelers into Expedia’s portfolio of brands. 

“We have so much opportunity to improve our direct relationship with consumers. We’ve historically fished out of the big ponds of Google and meta, etc., and brought customers in and generally not done a good enough job of retaining those customers, making it sticky and making sure the experience is good,” Kern says.

“We are keenly focused on bringing travelers in now, making sure they enjoy all the benefits of what we have to provide - member pricing, loyalty, etc. - and that they get a better app experience better CRM, which we are rebuilding like everything else, and we really focus on retaining them and keep them coming back as often as possible directly.”

And when asked if he considers Google to be a risk for Expedia Group, Kern says, “We believe that Google will stay Google. I always say Google is a shark, and you should expect a shark to be a shark. We operate in their marketplace, and we have to do our part of optimizing their marketplace. We have a lot of room to do better and that’s what we are focused on.”

Redesigning loyalty

A key component of Expedia Group’s customer retention strategy is through the redesign of its loyalty program, announced last fall. 

“The loyalty program will cover all our brands, all our products and you will be able to earn and burn across all of them, which is a great innovation. All the research shows that the most important thing to customers is having the breadth of product,” Kern says.

“It will take us the better part of this year to really have the product where we want it and to be starting to convert everybody over to it.”

Kern also says as the loyalty program goes into effect and brings the individuals brands closer together, it will help the company determine if consolidation is needed. “We may conclude that we need fewer, or certainly that we are going to lean into fewer, and if that makes sense we will do that,” he says. 

Looking ahead, Kern says he is optimistic about 2022 as a time of innovation and “delivery” for Expedia Group. 

“Ultimately we believe in the reigniting of travel, and we think we are going to play a central role in it. We are not content to just sit back and ride it. We want to be important in driving the future of the industry. And we believe we can bring benefits not only to travelers, not only to our own business but to the entire travel ecosystem and that is what we will be focused on this year,” he says.