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Despite tallying its highest first-quarter revenue ever, Vrbo parent company Expedia Group posted losses of $145 million over the first three months of 2023, according to the travel fare aggregator’s earnings call Thursday.
The company’s losses rose 18 percent compared to a year earlier despite what Expedia executives characterized as strong demand for travel and a 20 percent increase in revenue from bookings, even as the nation navigated rough economic terrain over yet another quarter.
Considered one of Airbnb’s biggest competitors, Vrbo is owned by the travel company Expedia Group, which on Thursday said revenue growth was driven by a return to international travel and relaxed restrictions in Asia.
The company has been focused on rolling all of its travel companies together onto one platform so that it can offer better incentives that earn loyalty with customers, work that Expedia leaders said drove up losses.
“We give up some short-term payback and it means we stack up these customers over time,” CEO Peter Kern told investors on Thursday. “It takes a while for this to stack up.”
While Expedia doesn’t provide in-depth details on Vrbo’s performance, executives suggested the vacation rental platform struggled in the quarter as vacationers shifted away from COVID-era hotspots like beach towns and mountain areas. Likewise, the company reported seeing a shift away from the month-long stays travelers were making in the early years of the pandemic.
“We have seen a little bit of flattening in demand” for Vrbo, Kern said. “Length of stays have shortened.”
Vrbo is also being impacted by companies that are moving away from full-time, remote work and again requiring employees to return to the office at least part time, Kern said.
“Hybrid work has changed. All those things are impacting macro demand slightly,” Kern said.
Executives also said Vrbo’s performance might struggle in the short term as the company completes ongoing work incorporating all of its brands into its single platform One Key, which will be finished in July.
That work will get “customers from Vrbo into the mix, and allow more of our customers to spend [money] across our products,” Kern said.
One Key will allow customers who book through Expedia brands to earn rewards. Once Vrbo is integrated into the platform, Expedia customers will earn discounts on stays at Vrbo, Hotels.com and other travel companies Expedia owns.
The company has been slowly phasing in the new technology and said performance might drag through summer before picking up in the second half of the year.
“We’re going through the Vrbo migration, but when we come out the other side, Vrbo will be on that same platform that’s driving double-digit growth,” said Julie Whalen, Expedia’s chief financial officer.
The company said it was integrating artificial intelligence into its platform to help guide travelers’ searches.
It also announced it bought back $600 million worth of stock and that it would continue to do so throughout the year.
Shares in the company see-sawed in after-hours trading, initially falling sharply before quickly rising 5 percent as the company provided details on its earnings call with investors.