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Holiday travel: ‘Everything is booked up,’ Expedia CEO says

Expedia CEO Peter Kern joins Yahoo Finance Live to discuss holiday travel as consumers face rising costs, company earnings, top trending destinations, consumer spending, and the outlook for growth.

Video Transcript

[MUSIC PLAYING]

BRIAN SOZZI: Holiday travel patterns may be looking a little different this year as consumers adjust to rising costs, higher fuel prices, and economic instability. But a new report from Expedia says travelers remain undeterred. Joining us now to discuss is Expedia CEO Peter Kern. Peter, good to see you again here live in the flesh. How do you think this holiday season will play out for travel?

PETER KERN: It's going to be busy. Everything's booked up. Travel's going to be crazy, I think. And now with the weather coming in on the East Coast, it's going to create a little bit of mess. But I think it's going to be a very good travel season. People are going to be flying around. Europe's gotten cheaper with the dollar improving, so we'll see people maybe do a little more international, but it's going to be a good one.

BRAD SMITH: Admittedly faithful Expedia user. Should have already booked my travel, though, for the holidays.

PETER KERN: Totally should have already done that. But there's still opportunities. I mean, there's places. There's a lot of talk about high airfare around. But if you look, like, Miami, San Diego, there are still spots that are relatively cheaper. And in Europe, Southern Europe, Spain and Italy are cheaper. So you can find the spots, and then, of course, you can package with hotels and do other things. There's opportunities, particularly in Europe now, so it's getting better.

JULIE HYMAN: We've been talking a lot about customers pulling back in certain areas, a lot of the times, because they want to travel. But are you seeing anything at the margins, any change in consumer behavior in terms of the choices that they're making, or even, are lower income travelers just not traveling right now? Are they making other choices?

PETER KERN: Yeah, so far, we haven't really seen anything in the data. I know it's hard to believe. You sit here all day talking about the economic woes or future woes or potential woes. But in travel, we haven't really seen it. And that's why you've heard it from company after company. I think, as you've said, people have bought enough stuff, bought enough pots and pans maybe.

BRIAN SOZZI: Not Julie. Never enough pots and pans.

PETER KERN: I like pots and pans, too. But and, you know, and they've saved up for travel. And I think there's also sort of an existential thing. It wasn't just like I didn't get my two trips. It was, wow, life is terrible when I'm stuck at home, and I can't do anything. And I'm going to go live a little bit. So I think that's continuing to play out. And I think we'll continue to see it for a while. Who knows if the economies of the world get really bad? But so far, no real cracks.

BRIAN SOZZI: How about forward bookings? Any insights in there?

PETER KERN: Forward bookings into next year continue to be better than they were. We said that earnings better than they were last year. And you guys may be booking already for next year. You should book for next year.

BRIAN SOZZI: [INAUDIBLE]

PETER KERN: Get ahead of that one. But yeah, they've been strong. There are some changing trends, but, like, events are coming back, festivals are back. So the things-- some of the things that didn't happen during COVID, still haven't happened, are happening next year. World Pride Day in Sydney, Sydney is going to be really huge then, and all kinds of things. So it's still looking really good.

JULIE HYMAN: And you guys also released some tips for travelers, things like travel on a Sunday or a Wednesday, right? Why do those things change over time, right? Why isn't that sort of consistent?

PETER KERN: Well, there are some consistencies. I can go back 10 years and say, like, oh, it's better to travel on Christmas Day than on the day before. Like, those things don't change. But I think it depends really on supply and demand. And the airplanes aren't always finding the same routes at the same capacity. Demand isn't always the same. Trends change as to what people are into.

But broadly, they're pretty similar. And I think what you see now is you have high demand. You don't quite have all the supply back, particularly the international supply. And all of that's continuing to drive price. But there's plenty of opportunity. As an experienced Expedia user, you can package hotels. We have member discounts. There's lots of ways to still get savings. So I think there's a lot of opportunity for customers to still find a good deal out there with the right trip.

JULIE HYMAN: And I imagine you probably travel a lot. Like, what's your personal top travel tip?

PETER KERN: Personal top travel trip-- sleep on the plane, I think.

BRAD SMITH: Yes.

PETER KERN: If I could always sleep on the plane, I'd be much more successful.

JULIE HYMAN: I like that.

BRAD SMITH: When you think about what you've seen in terms of the bookings and especially on the hotel side, where people are booking accommodations, even, where have you seen those stays or those accommodations bookings start to kind of differentiate a little bit?

We were just talking with the Airbnb CEO just yesterday about their winter release. They're trying to get more hosts online. Hotels are trying to bring more rooms online at the same time. So clearly, the demand is there, but it's just the type of stay that customers might be up in the air about.

PETER KERN: Yeah, I think Brian and I, longstanding during COVID, I was saying cities would be back. Everything would sort of come back to normal. And I think that's broadly what we've seen. Now there's definitely a few trend changes.

People discovered the Mountain West in the US, and there's definitely an increase for Vrbo for our homestay business is going great in the West. And it's up, like, 30% over 2019. So there's a few breaks in where people are finding, or opportunities they're finding. And it's not just Yellowstone. It's all across the mountain states. So that's kind of cool.

But by and large, you're seeing it come back. And yeah, hotels aren't necessarily open to full capacity, and they're working on that. Labor is expensive. Things have changed. The supply chain costs are up. So there's been some changes in that. But by and large, everything's open again. Cities are back in a big way. And I don't think that's going to change.

BRAD SMITH: Within the Vrbo side of the business, we had also talked about fee transparency, too, and how much people have to clean before they even leave one of the homestay experiences, even. Is that going to be updated any time soon? Do you see any material changes?

PETER KERN: I think we're all working towards a clear-- we're all about not even for Vrbo, but for all our brands, creating greater transparency, greater understanding of value for money for our customers. So we've introduced a bunch of capabilities even in the hotel side, even in Expedia, where you have smart shopping so it's easier to compare what you get in a hotel.

Sometimes hotel names have, like, queen superior or king something, and you don't know what the differences are. So we've broken that all down so customers can see the differences. We've given-- we're using machine learning and AI to help them get to the right thing.

So that whole line of work, it's not just about transparency to make it nice for everybody. It's really about so customers get what they expect and get value for money, whatever that is. If it's six stars or two stars, we want them to know what they're getting.

JULIE HYMAN: Transparency, that's always a good thing. Peter, thank you so much. Peter Kern, Expedia CEO. Thanks for coming in. Appreciate it.

PETER KERN: Happy to be here. Good to see you.