The Way Forward for Expedia May Include Selling Off Businesses

Off with their heads isn't a long-term strategy.

Now that the bloodletting — among senior leadership, at least — at Expedia Group apparently is over, and the CEO and chief financial officer searches are under way, what is the blueprint for getting the company back on track?

Skift spoke with insiders and outsiders about a potential future strategy for Expedia Group, and present the main themes below.

Cost-Cutting Is Coming

In its third quarter earnings announcement in November, the company lowered its full-year adjusted earnings guidance to 5-8 percent (down from 12-15 percent). However, chairman Barry Diller, on the day of the resignations announcement, said he thinks the company can accelerate growth in 2020, and sees a "significant opportunity for Expedia to grow revenue and margins in what is still a very dynamic online travel industry."

Consider that in the third quarter, Expedia's EBITDA (earnings before interest, taxes, depreciation, and amortization) margin was 11.8 percent compared with rival Booking Holdings' 39.8 percent.

One way to widen margins in the short term is to reduce costs, and several people we spoke with said they expect that cost-cutting, including layoffs, would be on the agenda. Some $500-$600 million in "responsible belt-tightening" is feasible to accelerate earnings, one source said. Booking Holdings has a reputation of operating as a relatively lean machine; Expedia, with its new and aspirational headquarters on Elliott Bay in Seattle, Washington, doesn't.