Expedia plans 3000 job cuts to “bloated” organisation

US: Global online travel agency Expedia is planning to lay off up to 3000 employees in job cuts, following December’s boardroom restructuring which saw its CEO and CFO depart.

With long-serving chairman and major shareholder Barry Diller calling the organisation “bloated and sclerotic”, the company has told staff in an internal email that it will “reduce and eliminate certain projects, activities, teams, and roles to streamline and focus our organisation”.

The job restructuring will trim Expedia’s workforce by 12 per cent, with 500 being lost at its headquarters in Seattle. The company also opened new headquarters in greater King County, which came in at a reported cost of $900 million.

The announcements mark the continuation of a turbulent time for the OTA after former CEO Mark Okerstrom and CFO Alan Pickerill resigned from their posts in December due to disagreements at a boardroom level over the company’s direction and strategy.

Speaking at the time, Diller said: “We are stopping doing dumb things and starting doing what we think are good things.”

Expedia’s “Travel Leadership Team”, made up of nine senior executives, said it recognised that the job decisions it had taken were “difficult” but that “travel is intensely competitive and demands our very best leadership”.

The Financial Times outlined how Expedia had been facing threats to its business from multiple directions, most notably Google’s impending venture into the short-term rental booking space and the recent outbreak of coronavirus around the world. According to the newspaper, the OTA expects the virus to cost its business between $30 million and $40 million in lost earnings.

As Expedia grapples to reorganise its brands, such as Vrbo, hotels.com and Trivago, Diller accused Okerstrom of losing focus on the “day-to-day execution” of the business, which may have played a part in the company posting an adjusted net income decrease of four per cent to $174 million in the fourth quarter of last year. That was despite increasing revenues by eight per cent to $2.63 million in that time.

Redburn analyst Alex Brignall told The Financial Times that Expedia’s problems were being exacerbated by the number of brands it was setting out to market across the travel sector.

He said: “Expedia has fundamental shortcomings when compared to Booking, not least the multitude of brands that it is attempting to rationalise. This brand dis-synergy problem has led to difficulties with marketing which enabled Booking to dominate particularly in the Google channel.”

In the meantime, Diller and vice chairman and Expedia director, Peter Kern, have the job of overseeing the company’s executive leadership team for the foreseeable future. They are managing day-to-day operations while the board determines the long-term leadership of the company.

Chief strategy officer Eric Hart serving as acting CFO and Ariane Gorin, president of Expedia Partner Solutions, is being promoted to have an expanded role as president of Expedia Business Services.