1
00:00:00,160 --> 00:00:02,680
Speaker 1: This is Bloomberg Markets and I'm Shinali Bask and it's

2
00:00:02,680 --> 00:00:05,080
Speaker 1: time now for Stock of the Hour. This week, shares

3
00:00:05,080 --> 00:00:07,560
Speaker 1: of Expedia Group jumped the most intra day in about

4
00:00:07,600 --> 00:00:10,719
Speaker 1: three months, after Susquehanna raised its target on the travel

5
00:00:10,760 --> 00:00:13,240
Speaker 1: booking company to one hundred and forty five dollars from

6
00:00:13,240 --> 00:00:16,120
Speaker 1: one hundred and twenty dollars. The analyst expects twenty twenty

7
00:00:16,120 --> 00:00:18,680
Speaker 1: four revenue to grow at least ten percent and to

8
00:00:18,720 --> 00:00:21,239
Speaker 1: show margin expansion. And we're going to discuss it with

9
00:00:21,239 --> 00:00:23,280
Speaker 1: the most relevant man to talk about it, the CEO

10
00:00:23,360 --> 00:00:25,919
Speaker 1: of Expedia Group, Peter Kern, who announced last week that

11
00:00:25,960 --> 00:00:28,400
Speaker 1: he will step down as early as May. Peter, thank

12
00:00:28,440 --> 00:00:30,760
Speaker 1: you for joining us. When you think about how the

13
00:00:30,760 --> 00:00:33,839
Speaker 1: stock initially reacted from the last set of earnings to

14
00:00:33,880 --> 00:00:37,400
Speaker 1: the transition plan, how do you now resell the story

15
00:00:37,440 --> 00:00:40,120
Speaker 1: to investors in the wake of a management transition.

16
00:00:40,680 --> 00:00:42,680
Speaker 2: Yeah, I think it's the same story. I mean, we've

17
00:00:42,720 --> 00:00:45,000
Speaker 2: been working for four years on a transformation of the

18
00:00:45,040 --> 00:00:49,040
Speaker 2: company technologically, our brands, everything to reset the company for

19
00:00:49,080 --> 00:00:49,600
Speaker 2: the future.

20
00:00:50,000 --> 00:00:50,760
Speaker 3: That was the work.

21
00:00:50,800 --> 00:00:54,360
Speaker 2: I was focused on my contracts up in April, and

22
00:00:54,720 --> 00:00:56,120
Speaker 2: we felt like it was a really good time for

23
00:00:56,120 --> 00:00:56,720
Speaker 2: a transition.

24
00:00:56,840 --> 00:00:58,320
Speaker 3: We've rebuilt the teams.

25
00:00:58,920 --> 00:01:00,720
Speaker 2: We're in a really strong place, so I don't think

26
00:01:00,720 --> 00:01:02,200
Speaker 2: I have to resell the story. If they want to

27
00:01:02,200 --> 00:01:05,280
Speaker 2: sell us their stockback shape, we'll buy it. And you know,

28
00:01:05,319 --> 00:01:06,959
Speaker 2: we feel really good about how we're set up for

29
00:01:06,959 --> 00:01:07,360
Speaker 2: the new year.

30
00:01:07,400 --> 00:01:10,080
Speaker 1: When people think about Expedia, one thing that investors are

31
00:01:10,160 --> 00:01:14,440
Speaker 1: very concerned about is that move from post pandemic travel

32
00:01:14,480 --> 00:01:18,080
Speaker 1: spending to now a more strapped consumer, perhaps dealing with

33
00:01:18,160 --> 00:01:22,480
Speaker 1: inflation again. How much do you believe that that revenge

34
00:01:22,480 --> 00:01:24,600
Speaker 1: spending may start to subside?

35
00:01:24,920 --> 00:01:27,440
Speaker 2: Yeah, I mean, look, I think we had really robust

36
00:01:27,480 --> 00:01:30,039
Speaker 2: growth out of the pandemic, and it was growth on

37
00:01:30,080 --> 00:01:32,400
Speaker 2: growth on you know, we had years of double digit

38
00:01:32,440 --> 00:01:33,399
Speaker 2: strawng growth and a.

39
00:01:33,319 --> 00:01:34,800
Speaker 3: New part of the world would open.

40
00:01:34,840 --> 00:01:38,040
Speaker 2: You know, Asia's was rebounding last year after the West

41
00:01:38,160 --> 00:01:40,759
Speaker 2: kind of slowed down, and now Asia will slow down too,

42
00:01:40,800 --> 00:01:44,120
Speaker 2: So you know, we expect travel growth to be solid,

43
00:01:44,240 --> 00:01:47,560
Speaker 2: just decelerating as compared to some of the opening trades

44
00:01:47,600 --> 00:01:50,080
Speaker 2: that were happening. And you know, the good thing is

45
00:01:50,080 --> 00:01:52,120
Speaker 2: we were doing all the hard work on ourselves during

46
00:01:52,120 --> 00:01:55,120
Speaker 2: that period and we are in a different position internally

47
00:01:55,240 --> 00:01:57,080
Speaker 2: to grow out of this, so we feel really good

48
00:01:57,120 --> 00:01:59,400
Speaker 2: about where we are in terms of the business, the technology,

49
00:02:00,160 --> 00:02:04,000
Speaker 2: the consumer experience, and so even if the market tailwind

50
00:02:04,080 --> 00:02:06,000
Speaker 2: is not as strong, we feel like we're in a

51
00:02:06,000 --> 00:02:07,200
Speaker 2: really nice place to keep it going.

52
00:02:07,360 --> 00:02:10,359
Speaker 1: How do you respond also to any threat of more competition?

53
00:02:10,520 --> 00:02:13,040
Speaker 1: You know, another company reporting today's airbramb a lot of

54
00:02:13,120 --> 00:02:16,080
Speaker 1: questions about whether they will expand in the booking space.

55
00:02:16,320 --> 00:02:17,640
Speaker 1: How would xpedia respond?

56
00:02:18,040 --> 00:02:21,520
Speaker 2: Yeah, again, there has been plenty of competition in travel

57
00:02:21,560 --> 00:02:24,240
Speaker 2: for a long time. Obviously, we have big competitors who

58
00:02:24,280 --> 00:02:26,320
Speaker 2: are very good at what they do. But the nice

59
00:02:26,320 --> 00:02:28,240
Speaker 2: thing for us is we spent the last three years

60
00:02:28,240 --> 00:02:31,120
Speaker 2: rebuilding ourselves, and those companies have pretty much been going

61
00:02:31,120 --> 00:02:33,680
Speaker 2: steady state, which has set us up in a new

62
00:02:33,720 --> 00:02:37,560
Speaker 2: place in terms of AI and machine learning, our service experience,

63
00:02:37,600 --> 00:02:40,480
Speaker 2: all the things that really impact the consumer. Our rewards program.

64
00:02:40,480 --> 00:02:42,760
Speaker 2: We have a big new rewards program. Airbnb doesn't have

65
00:02:42,760 --> 00:02:45,960
Speaker 2: a rewards program. Verbo customers can get rewards. So we

66
00:02:46,040 --> 00:02:48,800
Speaker 2: think we're set up competitively very well. Obviously, those are

67
00:02:48,800 --> 00:02:51,440
Speaker 2: big companies, they're going to do fine too, But we

68
00:02:51,520 --> 00:02:54,000
Speaker 2: felt like we made more improvements on ourselves and what

69
00:02:54,040 --> 00:02:56,720
Speaker 2: we're capable of giving the consumer than our competition has

70
00:02:56,880 --> 00:02:57,840
Speaker 2: well rewards.

71
00:02:58,000 --> 00:03:00,360
Speaker 1: Right, we were talking so much about the consumer and

72
00:03:00,400 --> 00:03:02,079
Speaker 1: the pain they may or may not feel over the

73
00:03:02,120 --> 00:03:04,639
Speaker 1: next six or twelve months. Things like rewards, How much

74
00:03:04,760 --> 00:03:06,520
Speaker 1: do they matter in an environment.

75
00:03:06,280 --> 00:03:09,320
Speaker 2: Like this, Well, we think rewards matter to our customers.

76
00:03:09,360 --> 00:03:12,960
Speaker 2: And it's not just rewards, it's the benefits of being

77
00:03:13,040 --> 00:03:16,400
Speaker 2: a member include member discounts and other kinds of service benefits.

78
00:03:16,680 --> 00:03:18,880
Speaker 3: So we're really focused.

79
00:03:18,440 --> 00:03:21,600
Speaker 2: On getting members into our universe because they get a

80
00:03:21,600 --> 00:03:23,880
Speaker 2: lot of benefit and they can find the best prices,

81
00:03:23,919 --> 00:03:26,040
Speaker 2: they can make their money go farther. We have package

82
00:03:26,080 --> 00:03:28,760
Speaker 2: deals that make the money go farther. So I think travels,

83
00:03:28,800 --> 00:03:31,080
Speaker 2: you know, we're pretty confident travel is going to remain strong.

84
00:03:31,160 --> 00:03:33,960
Speaker 2: There may be some trades as consumers trade out certain things,

85
00:03:34,120 --> 00:03:36,000
Speaker 2: but there's lots of ways to make their dollars go

86
00:03:36,120 --> 00:03:38,560
Speaker 2: farther if they're focused, if they come to the right place.

87
00:03:38,760 --> 00:03:41,720
Speaker 2: And so we feel really good about that positioning and

88
00:03:41,760 --> 00:03:45,080
Speaker 2: we're not feeling a lot of consumer pulled back. You know,

89
00:03:45,120 --> 00:03:47,960
Speaker 2: I think our forecast is travel will be solid. As

90
00:03:47,960 --> 00:03:50,800
Speaker 2: I said, just a slightly decelerating environment.

91
00:03:50,960 --> 00:03:53,960
Speaker 1: Something that's really ailing a lot of consumers as well.

92
00:03:54,240 --> 00:03:56,800
Speaker 1: I'm sure we've all felt it, that sky high cost

93
00:03:56,840 --> 00:03:59,800
Speaker 1: of traveling right now. How much do things really have

94
00:03:59,840 --> 00:04:01,920
Speaker 1: to to give to get people back on the road again.

95
00:04:02,360 --> 00:04:04,880
Speaker 2: Well, again, if you look in pockets, it's different. So

96
00:04:05,160 --> 00:04:08,320
Speaker 2: for example, car rentals got super crazy during COVID. Now

97
00:04:08,360 --> 00:04:11,320
Speaker 2: the prices have come down considerably and that's been a

98
00:04:11,360 --> 00:04:14,000
Speaker 2: headwind to our business. But prices are getting more reasonable

99
00:04:14,000 --> 00:04:16,440
Speaker 2: for travelers. We're seeing units go way up, but the

100
00:04:16,440 --> 00:04:18,760
Speaker 2: price come down. Air is starting to get cheaper, and

101
00:04:18,920 --> 00:04:22,080
Speaker 2: finally domestically, first in the US, but now it's starting

102
00:04:22,080 --> 00:04:24,760
Speaker 2: to spread and generally over the world. It is again

103
00:04:25,000 --> 00:04:27,880
Speaker 2: there may be growth in price, but it's slower, and

104
00:04:27,920 --> 00:04:31,240
Speaker 2: then lodging seems to want to hold pretty well. There

105
00:04:31,240 --> 00:04:33,400
Speaker 2: will definitely be pockets, I think at the lower end

106
00:04:33,400 --> 00:04:36,279
Speaker 2: of vacation rentals, at the lower end of hotels you'll

107
00:04:36,279 --> 00:04:39,360
Speaker 2: see pockets of price pressure, but the middle and top

108
00:04:39,440 --> 00:04:41,719
Speaker 2: seems to be holding. So you may not get many

109
00:04:41,760 --> 00:04:42,800
Speaker 2: breaks anytime soon.

110
00:04:42,920 --> 00:04:45,120
Speaker 1: You were talking about AI. A lot of companies thinking

111
00:04:45,120 --> 00:04:47,240
Speaker 1: about AI right now. What does it really do for

112
00:04:47,320 --> 00:04:49,760
Speaker 1: you to set you up for competition or reduce costs?

113
00:04:50,160 --> 00:04:52,840
Speaker 2: Yeah, so it does both of those things. First of all,

114
00:04:52,880 --> 00:04:55,120
Speaker 2: on the consumer experience, what we've been focused on is

115
00:04:55,160 --> 00:04:58,359
Speaker 2: putting AI throughout the front end experience. Also, as we

116
00:04:58,440 --> 00:05:00,760
Speaker 2: put all our technology onto one stack, we can now

117
00:05:00,800 --> 00:05:04,320
Speaker 2: deploy it across any of our brands super simply. So

118
00:05:04,520 --> 00:05:06,720
Speaker 2: what it does is from discovery you know you're searching

119
00:05:06,760 --> 00:05:09,440
Speaker 2: on chat, GPT, all the way through to how you search,

120
00:05:09,560 --> 00:05:11,760
Speaker 2: how we serve up the right pictures to you, how

121
00:05:11,800 --> 00:05:13,880
Speaker 2: we service you, and if you have a service problem.

122
00:05:13,960 --> 00:05:16,440
Speaker 2: All of that is enabled by various kinds of AI

123
00:05:16,560 --> 00:05:20,119
Speaker 2: or machine learning. And then on the on the efficiency side,

124
00:05:20,200 --> 00:05:22,360
Speaker 2: we're experimenting with all kinds of things, how we work

125
00:05:22,360 --> 00:05:25,440
Speaker 2: in the call centers to answer questions, to help our

126
00:05:25,560 --> 00:05:29,080
Speaker 2: representatives do things, all kinds of repetitive tests, through the

127
00:05:29,240 --> 00:05:32,440
Speaker 2: through the X through the process. And even when hotels

128
00:05:32,520 --> 00:05:35,640
Speaker 2: are verbo needs to describe themselves, maybe they're not the

129
00:05:35,640 --> 00:05:38,719
Speaker 2: great greatest writers, etc. We can use AI to help

130
00:05:38,920 --> 00:05:41,280
Speaker 2: enhance what they write to help them down that path.

131
00:05:41,360 --> 00:05:45,159
Speaker 2: So there's a lot of really cool things we're experimenting with.

132
00:05:46,160 --> 00:05:48,080
Speaker 1: You were saying as you step down that you're ready

133
00:05:48,080 --> 00:05:51,120
Speaker 1: for your own vacation. Where does the CEO of Expedia

134
00:05:51,360 --> 00:05:53,000
Speaker 1: head out I'll.

135
00:05:52,880 --> 00:05:55,599
Speaker 2: Take just about anything at this point, although I've traveled

136
00:05:55,600 --> 00:05:57,719
Speaker 2: a lot, so I'll probably go to Italy that's my

137
00:05:58,200 --> 00:06:02,279
Speaker 2: you know, favorite spot, but but I'll take.

138
00:06:02,200 --> 00:06:04,640
Speaker 1: Anything, right, Peter, thank you so much for your time.

139
00:06:04,680 --> 00:06:07,400
Speaker 1: That is outgoing CEO of Expedia, Peter Kurn