US: Expedia Group has named Peter Kern and Eric Hart as its new chief executive and financial officers, taking over from Mark Okerstrom and Alan Pickerill, who both resigned abruptly in December over reported disagreements with the company’s board on strategy.
At the same time, the group confirmed through its chairman Barry Diller that it had raised $3.2 billion in incoming capital, made up of $2 billion in debt financing and $1.2 billion in equity investment injected by Apollo Global Management and Silver Lake Partners. The latter recently participated in a $1 billion investment round for Airbnb, which was made up of debt and equity securities and supported by San Francisco-based Sixth Street Partners, while Apollo participated in a second $1 billion round loan of senior debt to Airbnb a week later.
Kern has served as vice chairman of the board since 2018 and has been assisting Diller on the matter of overseas operations since December. He has been a board member of Expedia since 2005 and has also served as chief executive of Tribune Media.
Hart had been the acting CFO since Pickerill’s resignation four months ago.
Due to the severe financial implications of the pandemic, senior executives including Kern, otherwise known as the Travel Leadership Team, have approved a 25 per cent reduction in pay for the rest of the calendar year.
Furloughs across different departments have already been implemented, as well as reductions in weekly working days to some employee schedules, and the changes are likely to remain in place until at least 31 August, according to Diller.
Back in February, Diller revealed plans for a major restructuring project at the company that would see 3000 employees be made redundant, trimming its workforce by 12 per cent; something which he had previously described as “bloated and sclerotic”. The company’s opening of a new headquarters in greater King County, costing a reported $900 million, was to have an even greater price for employees who had been let go.
Speaking to Phocuswire, he said: “Since the first of the year, this company has gone through multiple challenging stages.
“First, the reorganisation that resulted from the management change, which has now been mostly completed – we were fortunate we got to this prior to the crisis. Second, and ongoing, dealing with the crisis itself, cutting our costs everywhere, and today announcing additional financing, which, while the usual strain, was led flawlessly by Messrs. Kern and Hart.
“And, to come in the next months, an intensified process to recalibrate our organisation for the future. We’ve learned such an enormous amount over these almost five months – we’re going to put that to great and definitive use as we come out of this period.
“I believe we’ll have a far finer operation coming out of this crisis than going into it,” he added.
According to Dave Sebastian in Private Equity News, one of the reasons for the struggles at online travel agencies such as Expedia and Booking.com is that they have struggled to compete with Google’s search engine in travel booking. While Google has looked set to make a play for the vacation rental sector, the traditional players have been left somewhat behind and in a position of needing to be bailed out to weather the Covid-19 storm, as seen by Booking’s own injection of a $4 billion loan.
For more information, visit the Expedia Group website here.