Expedia Group is laying off 12 percent of its workforce, about 3,000 employees, in an effort to “streamline and focus” the Seattle-based online travel giant under chairman Barry Diller following the ouster of its CEO and CFO late last year.
In an email sent to staff Monday, unnamed executives from Expedia Group’s “Travel Leadership Team” said the company had been “pursuing growth in an unhealthy and undisciplined way,” echoing comments made by Diller earlier this month following its fourth quarter earnings report.
Expedia said at the time that it was targeting $300 to $500 million of annual cost savings, but hadn’t previously announced explicit plans for job cuts.
The layoffs come across the company and globe. About 500 people will be let go in Seattle, where Expedia recently moved to a new 40-acre waterfront campus and employs more than 4,000 people. Expedia said it will eliminate certain projects and activities, and reduce the use of vendors and contractors. It will provide impacted workers with severance packages that include extended healthcare.
“Moving forward, we will exert more discipline in setting priorities and allocating resources, simplify our business processes and inter-dependencies, raise the bar on performance standards, and demonstrate and demand accountability for results,” Expedia leaders wrote in the internal email, which you can read in full below.
Expedia employed 25,400 people as of Dec. 31, up from 24,500 employees at the end of 2018. The company posted $12 billion in revenue in 2019, up 8 percent, and profits of $565 million.
The cuts were not connected to the coronavirus outbreak, though Expedia said earlier it expects a $30 to $40 million loss in the current quarter due to the disease.
Diller and vice chairman Peter Kern took over day-to-day operations at Expedia after the abrupt resignation of former CEO Mark Okerstrom and CFO Alan Pickerill on Dec. 4.
At the time, Diller cited a strategy disagreement between the former top executives and the board over efforts to unify the company’s brands and technology. Expedia Group includes brands and sites such as Vrbo, Travelocity, Orbitz, HomeAway and many others, in addition to the flagship Expedia.com. The reorganization effort led by Okerstrom aimed to unify the company’s brands and technology, and help Expedia take better advantage of the larger company’s scale.
The executive shakeup came a little more than two years after Okerstrom was promoted to the CEO role, succeeding Dara Khosrowshahi after he left to become Uber’s top leader.
“My passion and outlook for the future of Expedia Group are as great today as they were two decades ago when we made our first investment in online Travel,” Diller said in a statement Monday. “I am confident that simplifying our business and clarifying our focus by making these difficult changes, our teams can get back to working on the projects and priorities that make the most sense for us, our customers, and our partners.”
Diller was more blunt on Expedia’s earnings call last month, describing the company as a “bloated organization.”
“We’d somewhat become a kind of consultant-led and wildly complex business,” he said.
Diller, the former Paramount Pictures chairman, started the Fox television network and USA Broadcasting. He oversees a wide range of online brands as chairman of the IAC media and internet company. Diller made his first investment in Expedia in 2001 and remains its chairman.
He’s spent the past two months “on the ground” with Expedia leadership, learning the ins and outs of the business, and figuring out what needs to change.
The 78-year-old said he recently heard that for employees at Amazon in Seattle the work-life balance mantra was “all work and no life,” whereas at Expedia it was “all life and no work.”
“Now that’s an enormous exaggeration. We’ve got wonderful people in the business and this is not damning our employees,” Diller said on the call. “But for several years we really lost clarity and discipline. So we’re changing a great deal. We’re stopping this too large complexity. We’re simplifying our strategy. We’re stopping doing dumb things and starting to do what we think are good things.”
Kern, who was also on the call, added that “we’ve seen a fair bit of wasted energy and calories going into things that may not have promise, and may not get us to the promised land.”
Some of the planned changes include getting all of the company’s data on one platform and aggressively growing its direct-to-consumer business.
“We have historically taken a brand-by-brand approach and now we are taking a market-by-market approach,” said Kern.
Diller said Expedia is not doing a CEO search but indicated that the current leadership structure is temporary. “It’s not going to last beyond 2020,” he said on the earnings call.
Expedia employees began moving into the company’s new $900 million headquarters this past October, relocating from its old office in Bellevue, Wash. The company will not sublease space at the sprawling new complex and the layoffs won’t affect remaining construction at the former home of biotech giant Amgen.
Expedia stock sank after the company missed earnings expectations in November. Shares have risen since the executive swap in December and rose again after the fourth quarter earnings report.
But shares were down nearly 7 percent Monday amid a stock market drop on coronavirus fears. Expedia expects that the disease will impact the company beyond the current quarter. United Airlines today withdrew its 2020 profit forecast due to uncertainty with coronavirus.
Read the full email sent to staff below.
Team Expedia Group –
Following our disappointing 2019 business performance and our change in senior-most management, the Travel Leadership Team has spent the last few months determining a better way forward. A major reason for our management change was the deep belief from Barry, Peter, and the Board that while travel remains rich with opportunity, our Company needed a fresh and forward look at clarifying our strategy and simplifying our operations.
After consulting with leaders around the globe, we recognize that we have been pursuing growth in an unhealthy and undisciplined way. The accountability for our results lies with the Travel Leadership Team, and we are committed to fundamental changes in our approach to improve success. Moving forward, we will exert more discipline in setting priorities and allocating resources, simplify our business processes and inter-dependencies, raise the bar on performance standards, and demonstrate and demand accountability for results.
Today, we are announcing our intent to reduce and eliminate certain projects, activities, teams, and roles to streamline and focus our organization. In geographies where we have clarity, we will start implementing these intended changes this week by notifying individuals. In others, we will be initiating consultations with employees and their representatives to discuss our proposals.
Transitions like this are difficult as the impact is felt by teammates, colleagues, and friends we have known and partnered with through ups and downs. For those who will be leaving, we thank you for your many contributions to Expedia Group and wish you safe travels as you find your next opportunity. For the many who are continuing forward, travel is intensely competitive and demands our very best leadership, innovation, collaboration, and execution to win. This is what we are asking of you and demanding of ourselves, along with the day-to-day discipline that will make us a more nimble and thriving company for years to come.
Great tech companies have walked this same path in order to come back stronger and more competitive than ever. We have restarted the journey and bringing the world within reach is in our hands. Let’s redouble our efforts for our customers, our partners, our investors, and ourselves to make Expedia Group the successful, growing, and winning company we can all be proud of.
The Travel Leadership Team