“The day there’s a vaccine announced, that people really believe in, will be our highest booking day in history.”
That was Peter Kern, the CEO of Expedia Group, the Seattle-based online travel giant, speaking this week at the GeekWire Summit.
On this episode of the GeekWire Podcast, we’re featuring highlights from our conversation with Kern about the future of travel and big cities, and his thoughts on virtual travel. Expedia Group includes major travel brands such as vrbo, Orbitz, Hotwire, Trivago, Hotels.com, and Egencia in addition to the flagship Expedia.com.
But we started with the big news of the day, the U.S. government’s antitrust complaint against Google. The case spotlights the difficult position Expedia and many other companies find themselves, competing with Google while simultaneously relying on and paying the search giant to direct customers to their services.
Listen below, and continue reading for edited highlights. Subscribe to the GeekWire Podcast in any podcast app. Our full conversation and other GeekWire Summit sessions are available on-demand exclusively to attendees of the virtual event, which runs on Tuesdays and Thursdays through Oct. 29. Register here.
Todd Bishop: Can you give us your reaction to the complaint that was filed by the Justice Department against Google?
Peter Kern: I would say in general, we favor the governments of the world looking at Google. We think many of their practices have not been good for us and have disadvantaged us and others like us, not even in our industry. So we think it’s a healthy thing. Our chairman has been very outspoken on the topic. And I think it is good that the government has finally taken it up, that the European Union has taken it up, that state AGs have taken it up, etc. So I think it’s all positive. I hope it changes behavior at Google.
But Google is what Google is, until it’s something different. And we’ve got to play by the rules of the game as they exist. So we always have to do what we have to do to optimize against the rules of the game. But I’m very pleased to see the government finally taking some action. And hopefully, it will create a fairer marketplace for us, which is all we want. We have no axe to grind against Google, except that we don’t think the marketplace is equitable. So that is all we want. Whether that’s hurt us, and whether we’ve been damaged by it over the past, however many years is a different discussion. But we want a fair playing field and we think we’ll win in a fair playing field. And that’s what we’re looking for.
TB: By the way, we should note for the record that Google in its statement this morning, called the action “deeply flawed” and “dubious” and said people use Google because they choose to not because they’re forced to or because they can’t find alternatives. It was notable in the recent House Judiciary Committee antitrust report, they laid this out very clearly in their allegations. They quoted anonymous market participants saying that Google “deceptively siphons internet traffic away from its vertical competitors in online travel, forcing them to pay more for search engine monetization and ads, and requires its vertical competitors to provide their inventory feed to populate the ads allowing Google to appropriate vertical service providers’ valuable inventory data.” Is that about right, from your perspective, based on what you see?
Peter Kern: I think there’s definitely truth in all of those statements. I think Google would say that they’re doing what the consumer wants, that’s what they always tell us. It makes a better auction, or it makes for better information. We take a different view, that they’re inevitably, through their practices, making it harder for the people who have paid to give them the right to keep making it harder for us. And it’s a prisoner’s dilemma, always of how much you participate or don’t, and what that does to your own business as you try to change the dynamics of their auctions and other things. So I won’t get into the details of it. That wasn’t my quote. But I think government’s onto a lot of the right problems and no doubt helped by lots of market participants giving them input. And again, our goal is only a fair fight. We have no axe to grind against anyone we’re in business with, or any of our competitors, we just want a fair fight.
TB: Well, let’s talk about travel, the essence of your business. At the very beginning of the pandemic, things basically shut down. We’re still seeing major restrictions in travel across borders. We have seen some rebound in air travel, and a little bit in hotels. And obviously, vacation rentals have been surprising silver lining, including vrbo, which is owned by Expedia Group. Can you give us a sense for your thumbnail sketch of where travel is today? And where you see it going over the next 12 to 18 months in the context of COVID-19?
Peter Kern: The good news is travel finds a way people really want to travel. I wrote in a note to our employees over the weekend that it’s easy to be pessimistic, but if you would ask me and said there was going to be a global pandemic, with this mortality rate, etc., and this level of transmission, etc. You know, what would travel be, I would have guessed, it would have been a lot worse than what we see and observe in the world. And I think that’s because people find a way, whether it’s driving an hour from their home, or flying domestically, or whatever it is, they’re finding ways to change venue and get a break from their everyday life.
I certainly take the view that it’s better than one might have expected if you had set out these parameters in the beginning. Definitely, we’ve seen, strength in the alternative market for vrbo. And I’m sure our friends at Airbnb are seeing similar strengths. Even our friends at [Booking Holdings] have seen strengthen their alternative business. So that’s been a relative silver lining or use case, let’s say, that’s very attractive right now.
The hotel business has kind of followed the trends of the world. When when places open up more, they grow, when places close down, they tend to contract a bit. But have held up. Air has been tougher, largely because international is gone, but I think people are getting more comfortable with air transport. It is quite safe. All the science suggests that being a modern airplane is very safe. If you’re following the protocols. And safer than a lot of things that people are out doing every day, whether it’s a bar, a gym, or a restaurant, or an office.
I think as far as where we’re going, I don’t think we’re going anywhere terrific until a vaccine comes. And hopefully people around the globe will trust it and take it and still abide probably by a bunch of the safety rules, etc.
I don’t know when it’s going to be announced. But the day there’s a vaccine announced that people really believe in, will be our highest booking day in history. In fact, many people have booked trips for next summer. The cruises have seen trips booked for summer voyages, next year, etc, etc. Because people want to make sure as soon as they can, they’ve got their their travel booked. So I think, again, it’s a testament to the spirit of humans in wanting to travel and get away and see things, and I think that’s the best predictor of our future, regardless of how long this pandemic stays with us.
TB: I know you’re a big fan of big cities as well, you grew up in New York, and obviously spent time in a lot of European cities in particular. What is the future of big cities in all of this? Does it return the status quo as well?
Peter Kern: I believe so. … Cities are hugely compelling. They’re compelling for their energy, for the job opportunities, for all kinds of things. I don’t think people really want to work from home 24-7, you know, five days a week, or whatever, I think people need offices, they need interaction, they need interaction to drive creativity and a bunch of things. So I think this is kind of a reactionary moment where people are afraid, maybe they have young children, maybe they’re in a situation where they just think it’s worse but do people really think cities are the problem, that’s why the pandemics a problem, that there are cities? I don’t think so.
I think people choose cities for what they give, and cities give a unique thing, the restaurants, the museums, the sites, the whole thing. And I just believe they’re coming back. If I were a betting man, I’d be selling real estate in Connecticut and buying apartments in New York. There’s a moment where everybody’s running, because they want space and they want to be able to get outside, and they want some freedom. And I get it. I’m in Wyoming. So I’m lucky right now. But I think it’s gonna look just like travel. I think cities will come roaring back.
TB: So just to push back a little bit. Amazon came out with a virtual tourism service, Amazon Explore. This is where you get to make fun of a geek. Because I experienced Quebec City, I’d never been there before, from a tour guide’s selfie stick. She was walking around showing me the place, live one-on-one. It was pretty cool. No, it was not the real thing. And I get what you’re saying. But it was better than nothing right now. And it made me wonder, why isn’t Expedia — one of the Expedia brands — doing this?
Peter Kern: Well, I think if you look around, you don’t need Amazon for it. There’s tons and tons of content out there from museums and tour guides and other things. I sent one to my team that I’ve been watching, which is the National Gallery in London has been been publishing their live art talks. And I watched one on Caravaggio, and Canaletto. And all it did for me, and I bet for you, is make me want to go there. It didn’t make me want to sit and watch more of them. It made me want to get on a plane and go to London. Quebec City’s lovely. I assume you saw that and said, ‘Boy, I should go to Quebec City sometime.’ Now, is that a nice way to promote travel? Sure. Is that a replacement for travel? I don’t think so.
Now, for some people, it may be better than nothing. And in pandemic land, it may be better than nothing. And the reason we haven’t gotten overexercised about it is, we’re focused on the things that are going to be important to travel long term, not a momentary blip, not a pandemic moment. I certainly do not believe that virtual travel, whatever form that takes, is going to take the place of travel. Now, will it be promotional for travel? Will be a way we sometimes share videos, or we do some things for our customers to motivate them? Sure, that may be a very sensible idea, but the notion that it will replace it, you have to come to a different view about what humanity is all about and what humans need and want. And I’m, at least, not prepared to do that after however many years we’ve been on the planet.
[The full interview with Kern, and other GeekWire Summit sessions, are available on-demand exclusively to attendees of the virtual event. Learn more and register here.]
Podcast produced by Curt Milton. Theme music is by Daniel L.K. Caldwell.
