All right, I think we'll get started. Thanks, everyone, for being here. My name is Kevin Kopelman. I cover hotels and online travel for Cowen. We're very excited today to have Peter Kern with us, Chief Executive Officer of Expedia Group. Thank you so much for being here. Of course. Happy to be here. Thanks for having us. We'll kick it off with Expedia with Peter going through some new slides here. Appreciate it. Thanks. Just to set the stage, I don't normally like to do slides, but I thought since this was our first in-person conference since we've all gotten out of COVID, it would be maybe helpful to reset the table of what we've been going through for the last couple of years and why. I hope this answers a lot of core questions, and then we can have time to do some more. I know there are some breakouts, so. These are our usual disclosure issues. I just wanted to lay out the framework of the problem. I'm gonna go through these pretty quick, so we have time for questions. You know, as all of you probably know, Expedia grew to be the largest OTA in the world over time, including through a lot of acquisitions. One of the things that people didn't always know was that created a lot of complexity and a lot of inefficiencies. We had a lot of redundancies. It slowed down product innovation 'cause we had multiple stacks doing all the same things, created inefficient cost structure. Many of you have asked us about that over the years. Why are our margins different than other people's margins, et cetera? The war was all fought on this performance marketing, and that was the whole discussion. That's the only place we really had to compete, and we ended up with an over-reliance and an inefficient reliance on it. This is what that looks like in practice. Basically, every brand had its own technology, its own stack, its own approach to marketing. Again, not every brand. There were a few that were consolidated, but the big ones, including some of our smaller businesses, Egencia, our B2B business, had its own technology and its own stack. There were very little efficiencies we got out of the bottom and out of the scale we had. Imagine competing brands, multiple different loyalty programs on different loyalty stacks with different reward systems, tons of different checkout experiences. Whenever you innovated on one checkout, the benefit only went to a tiny subset of your customer base instead of to everybody. Multiple CRMs. Everything was multiples of everything. Ultimately, the thing which should be our superpower, which was the incredible ton of data we have on travel, we couldn't easily share between the brands, and we couldn't easily use. We committed, after we figured all this out and in the early days of COVID, that we had to transform the company in order to win. That involved four core ideas, which was to simplify the business, streamline our cost structure, build a single tech platform, which is the biggest part of this endeavor, and then unify branding and marketing across the whole group so that we had one uniform place where all the strategies of how to build brands, how to buy, you know, how to find customers and for what could all be done in one place. Taking the first one, what did this look like? Well, we sold off or shuttered a bunch of businesses that were, frankly, distracting to us. Even Egencia, which is a great business that is now part of Amex GBT, was a B2B business with a totally different set of customers, front-end needs, different issues, and it was distracting to the overall business. We needed to be able to move quickly, relatively, to re-platform the company, and this was an outlier. We wanted to put it where it could succeed the most with a partner who was 100% dedicated to that category. We also shifted from short-term transactional focus to long-term value. Anything that created a bad customer experience, either through a partner or through ourselves, we wanted to try to eliminate. We had some low-value partners who we thought were not giving great experience to customers. We cut them off. We had some unprofitable channels where we over-emailed or we over-couponed, and it was driving bad customer experience. We don't want to be in the business of buying every transaction, even if it's a bad transaction, give a bad customer experience, and never see them again. There's no lifetime value in it. It's not economically strong. Again, we eliminated those things, and we're still doing it. We're eliminating third-party packages that don't provide great service. You know, in the world of people who I know are concerned about what's the number of room nights and everything else, we have actively, eyes open, said there is business we don't want to have because it doesn't create long-term value with the customer, doesn't create sticky experiences, and it just creates problems for everybody. Then similarly, for a long time, there have been discussions about geography. I wanna be clear that in certain geographies where we were not doing very well, including some of the geographies that are most valuable to our biggest competitor, we have pulled back because basically, we were just burning money. We were competing. We were not being very successful. We did not have a strategy to win. We have pulled back to fewer markets and more focus with the clear objective that we will find a winning strategy with the benefit of some of the other things I'm gonna talk about today, including new products that do new things, and we will use that strategy to go on the offensive in these markets. Just to continue burning money to go sideways and lose money in a market and retain share and transactions just so we can tell you we did that is not a good business strategy. We did not believe in it, so we pulled out of that. Again, similarly, we've moved money out of our lesser brands to focus on our biggest brands so that we're not essentially diluting the impact of the money across 25 things. We can concentrate it in fewer things and be more impactful. Second piece, we've talked at length about this many quarters, but we cut a lot of costs, started to put things together, reorganize the company in the right way, and take costs out of the system. Some of this is in variable places, card processing, cloud, customer support, where we've had huge technological innovation to take money out of customer support. On the fixed cost side, across basically everything, including headcount, most notably, but real estate, cloud optimization, et cetera. There's more opportunity, and I'll get into it. As we build our technology platform out, that again, when you get into this, when you get this multi silo into one stack, you get immense efficiency in how you build things, how quickly you can innovate, everything. Which brings us to the platform. Again, we are bringing this all into something we call Open World. If you have an hour and nothing to do, you should watch our video from our partner conference in Las Vegas. It's an excellent sort of synthesis of all the strategies we are bringing to bear on the industry. The big thing here is we had to rebuild our stacks into one stack. We did it in a way, and are doing it in a way, where instead of being one monolithic stack that serves our business, we are building it into microservices, all API-based, so that each piece can be used by our partners, and I'll get to why this is important in a minute. It allows us to really expand our B2B footprint in a really exciting way. It's one of the most exciting things going on in the business, but also allows us to move quickly to innovate for our own business, so that each piece is innovating itself, and we don't have all these codependencies through a big monolithic stack, which is not uncommon to us, but is the way we should have been built and are now building. Last piece, brands. Sorry, I know I'm going fast, but I want to leave time for Kevin to ask a few questions. We've focused a lot more of our energy on being a house of brands instead of brands competing with itself. This is about how do we bring customers together. The majority of our customers don't shop multiple brands. They shop one and not another. There's huge opportunity. Imagine a Vrbo customer who needs to book a flight or an Expedia customer who needs to book a rental home. These are big opportunities for us, and we believe in concentrating our energy on fewer brands and concentrating it on making all the brands work together. We've combined our brand marketing into one in-house capability, and we've combined performance marketing so that our teams are not only building to bring in the right traffic at the right economics, but with a multi-brand view on that instead of just, "I'm going after Hotels.com people, and I'm going after Expedia people," et cetera. The last piece, which we'll roll out the beginning of next year, most likely, is One Key, and that is our single loyalty platform. Imagine we had five different loyalty platforms I mentioned before. Five. All of them were on their own stacks, and all of them worked differently. We will now have one loyalty program that spans much further to all our brands, essentially, and allows somebody who is, let's say, renting a Vrbo and earning rewards to use those on Expedia to book a car, a plane, an activity, and of course vice versa, and around the whole family of capabilities. It's a huge opportunity, we believe, to make the whole house of brands sticky and give customers the benefit of the fact that we do all these things instead of having them come into these silos. Which brings me to the point, and I hate circles and virtuous circles, but this one's important, so I let the team build it, which is as we build the platform in a new way with speed, with efficiency, with the capability to test across all our customer base instead of in these little silos, we will get much more velocity through our platform. We will drive more direct traffic with higher conversion. This, of course, has been the fight that's been going on for years. But even more importantly, we'll build stickiness, higher loyalty, and lifetime value. The game has been thought about short-term conversion, but really the game should be, and I'm sure you all look at lots of businesses like this, where it's all about lifetime value and how you're investing in the right customers with high LTV so that you can drive the long-term healthy growth of your business. That has not been how our industry has worked. It will be how we work. With that, you of course get improved unit economics, which you can then push back into buying better traffic more profitably. You add that to the efficient cost structure, where we continue to take out costs on the underlying business. You leverage that all to buy more better travelers, and you re-accelerate growth and buy back the travelers you want. I will say, 'cause I know this gets debated, travelers have been traded amongst all the OTAs and everybody for years and years. Travelers are fickle. They go wherever they want. There haven't been great products that are sticky, that keep people coming back, that keep people in your loyalty framework, et cetera. We mean to change that. We don't just want the business to be who's better at arbitraging Google traffic. That is a little piece of the bigger puzzle. It has been most of the puzzle for a long time. We wanna change that, and the only way you change that is better products that are stickier, that bring people back, that give customers real innovation. I'll just point out here, and again, watch our video, it's worth it. Here's a quick look at some of the things we introduced at our EXPLORE conference in Vegas. I'll just pick one to talk about here. If you look at the price tracking and prediction. This is a new capability that allows you not only to search a flight, you know, New York to LA, but then track it so that as the price changes over time, 'cause customers very often have fear of booking because they're afraid it's the wrong time, it's gonna get cheaper, or is it still gonna be there, is something else gonna come around? They wait. They don't know. They have a lot of stress over this. We've introduced price tracking, and where we have sufficient data, we have predictions. We can show you historically, this is what the price has done on that flight from here to the day of flight. That might mean you wanna pull the trigger today, it might mean you wanna wait a little and track it, but we give you confidence to track it. Now, this is a real innovation, not about conversion, right? Not about, did we get somebody in with the fewest clicks through to buy something, but actually giving the customer something really powerful to help them engage in discovery and make good choices for them and take stress out of the system. That is a lot of what we are moving towards. The most important thing to take away is, as these things get introduced, these capabilities and features, they're getting introduced on the Expedia platform, which everything is moving on to. All of these capabilities can be available to any of our customers across any of our brands, across any of our devices, so that we don't have this issue of, oh, Expedia invented something cool, but Hotels invented something else cool, and Vrbo did something. Like again, Flights is pretty unique to only a few of our brands, but the idea is that with one stack, you get the velocity of being able to introduce effective features and capabilities to everybody, and you can test it across the entire universe instead of testing it through these narrow pockets of travelers. Finally, this was the thing. This was the big reveal at our EXPLORE conference as much as anything, which was, you know, I don't know if people realize it, you can go do the math, which is why we're sharing it today, but we had about $16 billion of gross bookings in our B2B business in 2019. It is a big business, the biggest in the category. We've been very successful powering rewards programs, bank rewards programs, third parties that do all kinds of things, offline travel agents, a big pool of partners. It's been a great business, and it's grown very well through the years. It was all done on top of this stack I've been talking about and these multiple stacks. As a result, it was really hard to iterate on. Only really worked at scale with big enterprise partners because you had to do a lot of bespoke integration work, et cetera. As we build to the new and we build it into microservices with APIs, again, we massively expand the number of people we can touch with these capabilities. Imagine any hotel who wants to rent a car, any airline who wants to sell a hotel room, or anybody new coming into the ecosystem, an influencer, anybody who has a following, you know, Kevin's favorite beach vacations with 100 followers. If he wants to try to monetize that and can say, "Hey, this is my favorite trip to Miami. Stay at these two hotels and do this," and someone wants to book that, we can get to the point where no code, he can be in that business and be going. We want to expand that universe to include anybody. We have a huge universe of existing partners, hotels, airlines, Vrbo owners, et cetera, that we can already help. Beyond just selling more things, we can give them access to capabilities. If you can use our payment stack, or you can use our service stack, or you can use our fraud stack, and you can save money and be more efficient in your own business, which goes for the biggest airlines to the smallest hotel chains, then you can put more money back into the system, back into your customer experience, and we all can share the benefit. It really changes the addressable market for our B2B business in new ways. Frankly, don't try to model it because some of it's gonna turn into like SaaS business where it's X per transaction, et cetera. Don't try to model it. A bunch of it's going to turn into classic B2B volume like GBV, where it's, you know, we're sharing in the profit of that GBV. That's gonna be a lot of it. There's a lot of ways we'll express that, but it's a really big change, and it's all on the back of rebuilding our tech platform for ourselves first, and then making it available in this way to the, to the market. Which brings us finally to just a recap of our progression. You know, we started with deciding we had to do it, deciding we had to simplify the company, take costs out, reorganize significantly, hire new talent, you know, focus on being a tech-first company, which we've been able to hire terrific talent. We had great talent inside that we've unleashed as part of this, and all of that's been to our betterment. 2022 and 2023 are really about the delivery. You know, it takes time, sadly. I used to get asked the question, "What's your biggest fear of COVID?" I think people thought like, "Oh, it'll last forever. We'll never get out of it." I always said that we wouldn't get the work done we're trying to do before COVID was over. In fact, depending on how you feel about COVID, we're all here. If COVID's over, we're not as far along as I wish we were. That's the nature of big technical transformations. They don't go fast. They take time. COVID, we can't control, and we certainly don't want it to go longer. You know, we've done a lot, but this year into next year is a big time for technical delivery across many things. As you saw from the feature rollout, many things are happening. In fact, we've moved a bunch of our Hotels.com traffic onto our Expedia stack now, front-end stack. We've moved a lot of the back-end together. We've created a single checkout that we are moving everything to, but migrations take time, and we will get there over the course of this year and into next year. Of course, it's a progression that never ends. You keep getting better. The big work is here for the next, you know, 6-12 months and probably beyond. It will start to deliver in a meaningful way in 2023 and beyond, and that's what we're excited about. We'll start to get the scale benefits we've been looking for. We'll get that more direct traffic, higher conversion we've been looking for. We believe the loyalty rollout, along with better product, will drive better engagement and ultimately higher lifetime value. We'll be able to invest that all in redriving accelerated growth of the customer base. Underneath all of that, our B2B business will continue to accelerate as we deliver these new products to the marketplace. That's really what we've been doing. I'll just end with, I know there's been a lot of thinking, you know, a lot of debate, et cetera, about room nights, about whether we're getting, marketing leverage. Let me just say two things or three things. One, we're working on new disclosure so that we can get some more metrics out in the future that will help you understand how we're trying to run the business, because we understand that our old disclosure may not cover everything. I'm not gonna do it at the Cowen conference. Apologies, but we're gonna wait till next quarter. Hopefully, have a few additional things to help you understand what we're doing. I will say our unit economics have already improved, partly by eliminating bad business, and partly because we're focused on profitability per transaction, and our profitability per transaction is up significantly. Equally, the way we look at it, we have gotten the marketing leverage, which is our spend versus the profit we have bought out of the market. We have gotten real marketing leverage. It is there. You know, how much of it we wanna keep and take to the bottom line versus reinvest in high lifetime value going forward, yet to be determined. Just for the avoidance of doubt, we have gotten significant marketing leverage. So far, we've brought it to the bottom line. In the future, we hope to have many reasons to go spend it on higher long-term growth. I just wanted to be clear about those, and we will endeavor to do better in the second quarter. Great. All right, Peter, thanks for that. I think that's a great overview of the strategy and a lot of the stuff you've been working on. Did I get it in our schedule? I think I did. Yeah. From there, I wanna just zoom in for a moment on kind of current trends. Sure. To kick off the Q&A. Can you address some of the concerns we're hearing about market share, just given if you look, I think really if you focus on room nights, it's probably trailing the hotel industry, depending on exactly where you're looking at. Could you address, you know, what are the key drivers there? How do you see market share playing out? Sure. I think you touched on it. Yeah. With the strategy. I mean, much of it's incorporated there, right? There's a few things. First of all, mix plays a huge role, right? Depending on where business is coming back, different companies in the game benefit differently. Early in COVID, when the U.S. came back faster than anything, we were a big beneficiary. More recently, EMEA has been coming back. We are less strong in EMEA, so somebody else will have the core benefit of that bump. You know, when Asia comes back, that'll be different. When business comes back, that will be different. All of those things are coming back, but at different paces. You get anomalies in the process. There's also much less long-haul international travel. Even though international has come back, and some people have talked about intra-EMEA, you know, country to country, going from France to Germany is not the same as going from France to the U.S. or to Singapore. We have historically been strong in long-haul international, particularly in Europe, where we are notably, you know, less strong than we are in North America. So when that mix of business changes, it's different. We've talked about it before, and I'll just say it for a fact, you know, all room nights are not created the same. You know, two- and three-star room nights were considerably accelerated during COVID because many people were driving to places more often than they were flying to places. Cities, as you know, were further down. We happen to be really strong in cities, not so strong in two and three-star hotels, stronger at the higher. If I could have 3.5 stars and above all to myself, and we gave two and three-star to everybody else, they might have more room nights, but we'd make way more money. I'm not saying that's what we're doing, I'm just saying all room nights are not created equal. That's a big part of it. As I said, you know, we walked away from business in Europe in bad places, and particularly in Southern Europe, where we just weren't making money, and we were just burning money. We did not have a winning strategy there. From my perspective, you don't keep banging your face against the wall in the same place, doing the same things. You regroup, you figure out how to win, and then you go back into the market. Have we given up some business there, some transactions? For sure, we have. We did it with our eyes open, and we're comfortable with it. A bunch of things we are doing for the long-term good, you know, may marginally impact transactions along the way. The biggest part of the differences people are seeing have way more to do with mix and, of course, to do with, you know, noise in the numbers. Some of our competitors don't always mention that they bought things that impact their numbers. We didn't pro forma our April numbers for some of the things we did. Right. That's why I say we're trying to do a little better on the disclosure front. Certainly, in our strongest markets, while there has been some modest change in the share point, it's principally for the reasons I described, which is we're just walking away from some bad business that we're happy to give up right now. Again, super important, none of this is structural. We have traded customers for years. In fact, we used to be pretty dominant in Europe long ago. You know, the other guys came up with a sharper way to win in Google, and we gave up business slowly. There's nothing structural about that. There's nothing sticky about their product. Frankly, there's not enough sticky about our product, even though we have all these loyalty capabilities. We are building towards a sticky repeat business where we keep more customers, and so we can buy more customers and be more efficient in the market. You know, what I would say is, yes, we've eyes wide open. We've given up a little business. The market has more often driven it by share and other things, and we are building to a winning strategy post all this noise of COVID and everything else, where we can win everywhere. That's what we're going for. Okay. I wanna touch on the macro travel environment. Mm-hmm. How would you characterize it? What are you seeing in May? Are you seeing any impact on your customers from inflation and economic concerns? Yeah. You know, I've been asked it a lot. I'm not gonna give many numbers, but so far, we've been looking. We have not seen any real reaction from the market to, you know, inflation. I think, you know, look, inflation has been happening for a while. It didn't just happen two weeks ago. It's been happening for a while, particularly in travel, right? We've seen ADRs go way up. We've seen the airlines, you know, constrain how many flights they have. If any of you flew here, you saw how full the planes are. They don't have as much airlift in international, long-haul international yet. So prices have been pushed everywhere. Car rental prices are through the roof. Through all that, consumers have been fine with it. That remains, as far as we can tell, true. Now, those of you who are macroeconomists, you know, people overspent massively on hard goods during COVID, underspent travel and experiences. Massively during COVID, and we all expected that there'd be a reversion and that travel would claw back and over earn its share. There was tons of savings, as we know, during COVID. Right now, it certainly appears that the demand for travel is strong. I said, you know, quarters ago that summer, we expected summer would be gangbusters. Nothing to indicate otherwise yet. Now, I don't know if the Fed's got a hold of inflation or not yet. I've heard both sides of that argument. Hard to say long term, but based on all those background conditions and, you know, we have not seen the customer really react to, you know, quote, the CNBC noise of inflation. You know, we all look at it a lot more than most consumers see it. Now gas is up, home prices are up. We'll see. Do you have any visibility to past summer? What- Yeah. It's not like again, from our view, there's nothing to indicate summer or beyond summer is worse. There's no like, summer's great, and then it falls off a cliff or something. You know, everything up until now in large swaths of the world. Again, there are geographic differences. There's line of business differences. You know, business travel is still different, et cetera. You know, again, everyone's been counting out business travel. Business travel has been coming back, and historically, business travel fills up, you know, the post-summer travel, and we'll see where business travel is. We'll see what consumers do with back to work and hybrid work and all of those questions remain. there is nothing in the numbers, again, that we've seen that suggests there is like this looming, "Ooh, it changed in, you know, November. Right. There's nothing there to suggest that. Now, again, we're not fully booked for Christmas yet. Right. Right? Like, there's a lot of bookings yet to come and things can change, but there's nothing yet in the numbers that we've seen. Yeah. Let's talk about Vrbo. How do you get to the next leg of growth in Vrbo? It's done well during the pandemic. Where do you go from here? How should we be thinking about that? I think there's several prongs to it, and it's not as simple as just how do we out-compete Airbnb for, you know, a customer. First of all, we're not gonna do a lot of things they do, right? We're not gonna be as big in cities as they are. We're not gonna rent small rooms. We're not gonna rent a shared apartment. You know, we're not going to do that. That we focus on what we're good at, which is whole home and that experience. If you've seen our marketing, like that's. We're all in on that whole thing, spending time with your people and all that. Secondly, we have our B2B business, and frankly, Vrbo is piped through to a tiny fraction of it in a very inefficient way. We have that huge opportunity. I mean, think of all the rewards programs we help power, like Amex and Chase and others, that we can push through. Even places like big hotel chains that are starting to rent homes to their rewards members. We have the opportunity to pipe through, again, through our B2B business, all of this capability. We have a way to drive our business that is quite, I think, unique in the industry. Thirdly, we're gonna go get more homes. We're gonna keep marketing. You know, we've had a huge step function change in awareness around Vrbo during COVID, and we're gonna lean into that strength, and we're gonna keep pushing. Now, again, mix is important, right? The world is mixing back to cities. Good for our hotel business, not so good for our Vrbo business because Airbnb is better in cities. I said all through COVID, like when cities come back, it's gonna look like they got a win and a big inflection, but it's just because they are mixed towards cities 'cause that's their historical business. Good for them. We don't compete very much in those places. Business is still strong in the properties we have in those places and growing, but it's a different business mix. In vacation places, in beach resorts, in mountain towns, et cetera, the places we're strong, we continue to do very well and we're focused on being good at that. Over time, we may migrate to some more cities and do some things, but we're not gonna come right at them. It's going to be a different business model, and we believe we can continue to add lots of supply, that there's plenty of demand, even beyond our capabilities in some places, as we've talked about. We keep pushing to get as much of that as we can. That's the right kind of supply for our marketplace. Okay, great. With that, we're out of time, so we'll wrap it up. Thank you so much, Peter, for being here. My pleasure. Thank you. Thanks, everybody.