Expedia to Cut 1,500 Jobs Amidst Challenging Travel Industry Landscape

Expedia has announced plans to reduce its workforce by approximately 1,500 positions as part of its strategy to “recalibrate resources” in response to slower growth projections for 2024 within the travel industry.

In recent years, the online travel agent has undergone significant transformations, consolidating its various brands onto a single platform and integrating artificial intelligence tools to enhance efficiency. These changes aim to streamline operations and cut costs, particularly as the demand for travel appears to be normalizing. Expedia has also capitalized on hiring highly skilled tech workers amidst its technological advancements, paralleling actions seen in the tech sector.

The challenges for Expedia are compounded by tough comparisons to the robust performance of 2023 and geopolitical tensions, notably in the Middle East. Following a stellar 2023, the company faced a rocky start to the year with the unexpected departure of CEO Peter Kern and a less optimistic outlook for future growth shared during its fourth-quarter earnings call.

The workforce reduction constitutes approximately 9% of Expedia’s total employees, with the restructuring expected to incur pre-tax charges and costs ranging between $80 million and $100 million. While Expedia’s stock has experienced an 11% decline since the beginning of the year, it remains 26% higher compared to the past twelve months. Conversely, rival company Booking has seen a 1.3% decrease in 2024 but maintains a 38% increase over the past year.

Booking, like Expedia, also anticipates moderating demand and growth for 2024, as indicated during its recent earnings report. Similarly, Airbnb has signaled a slowdown in the growth rate of nights booked on its platform during the first quarter.

According to Melius Research analyst Conor Cunningham, the current earnings season has been challenging for the online travel agency (OTA) sector. While some deceleration can be attributed to factors such as the timing of Easter, there’s also a notable moderation in the core business. Looking ahead, the travel outlook remains promising, but OTAs require growth to regain momentum and instill confidence in their models.

As Expedia’s stock edges up by 0.7% ahead of market open, Booking remains flat, and Airbnb shows a modest increase of 0.3%.

Sources: AirGuide Business airguide.info, bing.com, barrons.com