It is more than a little embarrassing when the departure of a company's chief executive and chief financial officer causes shares to leap 6 per cent.
Expedia's price move reflects optimism that a new management team can help the online travel agency compete more effectively with big tech. That optimism is overblown.
A beefed up buyback scheme helps shares in the near term. The 29 million shares are equal to one-fifth of the available stock. Chairman Barry Diller is promising to buy some too.
But the real cause for celebration is hope that Expedia will slow down an internal overhaul and improve profits per room. The company's last set of quarterly results were about as popular as a roach-infested motel. Costs rose, profits fell and the company forecast for full year ebitda growth was cut. Expedia's shares then lost a quarter of their value hitting three-year lows.
It is true that a lot of Expedia's problems are self-made. The company's disparate bundle of brands include Hotels.com, Egencia, Trivago and Hotwire. That means multiple marketing campaigns and teams. Former boss Mark Okerstrom was trying to reorganise the company to better share resources across brands.
It is a good idea, but Expedia is simultaneously facing a more existential threat. Just as online travel sites ruined things for physical travel agents, Google is doing the same to online agents. Adverts are pushing down search results and the internet group has created its own travel search tools. Traffic from Google searches is slowing.
Expedia is focusing on loyalty schemes and wants to create a platform for travellers to book everything from transport to accommodation to days out. But so does everyone else.
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Tui and Airbnb are both chasing similar goals.
Diller thinks Expedia can address industry and company-specific threats without sacrificing growth. That will require significant cost cuts. His success pulling together the various internet ventures at IAC inspires confidence but it is not enough to counter the threat posed by Google.
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