Our technology is an anchor that holds back innovation

Traveling online this week

Peter Kern, CEO of Expedia Group, believes that Google’s meta-search offering for vacation rentals will not work because large partners, such as Expedia/Vrbo and Airbnb, have chosen not to participate, and he believes that legacy Expedia technology has stymied innovation over the years.

These were among the points Kern made during an interview with Skift at the Expedia Partner Conference in Las Vegas last week.

When it comes to innovation, Kern argued, competitors have not been similarly innovative, and have all done a lot to program travelers to look for lower prices rather than more value.

The interview edited for length and rules are as follows:

Dennis scale: I have a very smart friend. She told me, “Expedia is an online travel agency for your grandmother or grandfather. What have they really done in recent years that is so innovative?” And to that, you’d say?

Peter KernIt’s hard to be so innovative when it all takes six times as much work. I mean, to be fair. On what brand? Was Expedia innovative? Innovative Hotels.com? Vrbo Innovative? What does it take to be innovative? So, is [Expedia Group’s lack of tech integration] One of the anchors was a little bit on our ability to innovate because there wasn’t a single innovation that you could spread across everyone and everything.

Today, you’ll see we’re launching Smart Shopping, a new capability where it’s easy to compare hotel products because each hotel defines their world differently. Like, “Oh, that’s a superior queen, and that’s a junior suite.” Most customers look at the Marriott and think I don’t know what it comes with. We’ve now taken all the little bits of data and worked them into an easy way to compare what you get with each room.

Expedia Smart Shopping is a list of common amenities, cleaning practices and safety, displayed for comparison purposes, at the top of each hotel listing.

It gives you a way to compare things easily. Therefore, this would be a great innovation for anyone who is shopping for a hotel on any brand, and in just about anything. But we had to post it a million times in the old format. Now with our consolidation, we can deploy it at once. Expedia first I think. Hotels.com will benefit from a lot of their traffic. The best experience will be through the app.

By the way, to your clever friend comment, booking sites, as I tell our team, we don’t compete here with greatness. I think we all have room to be a lot better in terms of the shopping experience. This is what we want to innovate to make it better for the traveler. We also want to focus on making sure travelers get great results. We’ve all overly commoditized the market around price.

Booking.com had billboards and other advertisements in Las Vegas last week in an effort to lure short-term rental hosts to its platforms and to turn down the Expedia Explore 22 conference being held in the city.

Hosting an ad on Booking.com

Dish: Speaking of booking, have you seen the billboards?

Kern: I would say it feels cheating, but be careful what you wish for.

Dish: Why? What will we see?

Kern: Look, we want to be assertive in going after markets that we have historically been weaker than. We don’t feel we have a particularly strict strategy on that in places like Western Europe and elsewhere. I’ve said it on earnings calls and other things, and we’re going to be very tactical and aggressive to try to win back and learn and figure out ways to gain a real stake in those markets. They’re deceived and they come after us at our partner conference, whatever. It’s a bulletin board who cares? But I think in general they are doing what I expected them to do, which is they are looking to grow where they can, and we will do the same. Unfortunately for both of us, that means we’re after each other.

Dish: Maybe you’re tired of talking about Airbnb, but anything you take away from their earnings announcement. Anything popped up?

In response to Skift’s question at a press conference the next day, May 5, Kern said the Expedia group has historically had a “vanilla strategy” in Europe, and treats all countries reciprocally. Kern said Expedia will be more determined to focus on a smaller group of European markets. While his predecessor Mark Okström focused on adding more supplies in Europe to compete against Booking.com, Kern said he would have an “end-to-end strategy”.

Kern: no. We weren’t much surprised by that. I think vacation rentals have been strong. Cities are coming back and they are a big benefactor of city vacation rentals because we don’t really compete with that. We thought their numbers would still be strong. I think the numbers for the entire industry are going to be strong. I thought our numbers were pretty strong.

In terms of the upcoming recovery, recovery is coming in pretty much every sector. Some things lag, but it’s all to the right, except for countries at war and things like that. There’s no reason why we can’t all see continued good numbers, and Airbnb definitely benefits from more city travel. Although I don’t know if it matters to them, we benefit from more international activities. We get the most from traveling in the city. We benefit differently because we benefit in cities and hotels.

Dish: You said during your earnings call that 50 percent of Vrbo’s business or customers in the last quarter of last year were new customers. So what do you attribute that to? Well, you’ve been focusing on performance marketing for Vrbo, right?

Kern: We do some of them, but we’re out of Google [Vacation Rentals metasearch] And some of these other things. No, I would say they are two things. One is adoption during Covid. The brand is becoming more and more popular. We’ve invested in the brand, and we’ve invested in a lot more than we’ve ever had in outreach. I think this has doubled. It’s the advantage of having a great product at the right time, along with good marketing and feature push. So I think we have the tailwind and we’ve played in that tailwind really well, and that’s a constant adoption and people are becoming aware of it.

Dish: Is there anything new in the way you approach Vrbo’s sourcing strategy?

Kern: No, I think during Covid we all fell back a little bit in terms of trying to grab more stuff because we all contracted. And then, because we weren’t on contract, we focused on pressure markets, the places we were going to sell, where we knew we had excess demand. I think now that things are going in normal times, we are expanding in terms of our general approach to the acquisition of the real estate supply, and we will begin to roll out new marketing on a larger scale, new methods of acquisition of real estate.

This is another area where we have a lot of opportunities, on the B2B marketing side for suppliers. We used to do it as a kind of hand to hand combat. We used to have our hotel team separate from the Vrbo team. Marketing teams were divided. We’ve standardized it all so we can use that workforce in all categories and use marketing more efficiently. We think we’re going to get these machines working.

Dish: When we were talking about performance marketing and VRBO, I casually mentioned withdrawing from Google. To what degree did you withdraw from Google?

Kern: Google has a home identification product that it pulled a year and a half ago. The product wasn’t great and we didn’t think it was of increased value to us. So we decided to leave. We’re not in it, Airbnb isn’t in it. I don’t know who’s in it. I don’t think this product will really work with them because if you don’t have more than one player it’s not really a market. I don’t think there is much going on. I’m sure they’ll keep trying, but we’re not religious about that stuff. If the products work, they work, if they don’t work, they don’t work, and we won’t go after bad business. The product was not great and we didn’t think it was of increased value to us. So we decided to leave. We’re not in it, Airbnb isn’t in it. I don’t know who’s in it.

Dish: It has announced the Expedia Group Open World platform to enhance Expedia’s partner products and services. Tell me more.

Kern: We’ve done a bunch of this work. We make white label templates with partners like AARP, and offer strong rewards programs. It’s been a growing business, a great one for us. We have partner APIs in different places and other things. We had to build that technology and those integrations were very difficult because the technology underneath wasn’t really designed for that use. In the course of rebuilding our technology and redesigning the entire plan, we realized that we had the opportunity to build the platform in a way that would allow us to externalize all parts of the platform.

Not only would we have to go to enterprise level partners, we could reduce it to medium and easy partners, and even an influencer who wanted to be in the travel business could now, “Man, it’s a pain in the ass doing service and payments and all that stuff, and a manager asks me The main technology is constantly more people and it is very expensive.” It’s like, “No, you should take advantage of our technology.” If you want to take advantage of our ability to pay, or our ability to service, or our ability to defraud, or choose anything. You will be able to take these pieces and use them for your own business.

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