Peter Kern designs a new direction for Expedia

On Halloween 2020, Expedia CEO Peter Kern wore deer antlers and read bedtime stories at Zoom to the children of his employees.
“I’m famous for making my kids sleep because of my voice,” says the president of the Seattle-based travel company, as we begin talking on a Zoom phone call to discuss his driving strategies around 18 months later. “I have been very good at getting my kids to sleep that way.”
Kern needed a measure of calm during his two years as CEO of Expedia. He has been a member of Expedia’s board of directors since 2005 when he split from the IAC media conglomerate. But he was suddenly pushed to run the company after his predecessor, Mark Okerstrom, then CFO at Expedia, resigned in December 2019 following a board dispute.
In a quarterly trading update in November 2019, travel group net profit fell 22 percent from last year, despite an increase in marketing expenses. As a result, its shares fell more than 27 percent. Booking.com, Expedia’s competitor, had profits of more than half the fixed cost base.
At the time, Expedia’s management blamed Google for violating travel bookings, but its chairman, media mogul Barry Diller, said the company had become “playing and not working.” Kern, who had known Diller for nearly 20 years, was tasked with treating the company that Diller described as “bloated and sclerotic.” Kern’s strategy was, less people organized around clearer goals.
He explains, “I think sometimes it is possible that leadership does not adequately define what success looks like and how the group should be organized to achieve success. Most people do not just want to go to work, turn the wheel and go home and They want to feel they make a difference. “
“Organizing for success” has a cost. In February 2020, Kern oversaw the layoffs of 3,000 employees – about 12 percent of Expedia’s employees – and organized the proliferation group, which has amassed a host of brands, including trivago and hotels.com. Most had their own marketing teams, for example, which meant repeating work across the company. Now, there is a central marketing center that works on all Expedia brands.
It was not about “getting rid of costs because costs hurt and we want to make more money,” Kern says, but about organizing the group to be more efficient. “If we do that, he will take care of the business itself.” says Kern.
In February this year, Expedia said it had posted record earnings adjusted for the fourth quarter, despite continued uncertainty in the travel industry. The group is also taking a new direction. Kern was in Las Vegas about two weeks ago to publicly launch a new strategy, focusing more on demonstrating its technological and marketing importance to other travel companies than being a travel booking website with many brands.
But February 2020 was not a good time to start a major overhaul at a global travel company. A month later, Covid spread to the US and Europe and the travel industry came to a halt. Unable to find someone else to take the top job, Kern was persuaded to take full-time responsibility.
“It certainly was not my idea or Diller’s idea for me to be the boss,” he said.
With the spread of Covid and the rise of travel restrictions, Kern has had to motivate his already angry employees with layoffs, who feel threatened by what some saw as an existential threat to the travel industry. Some have questioned not only whether Expedia will survive, but whether it is worth staying in the industry for a long time. Staff were facing a flurry of phone calls from annoyed customers trying to cancel flights and get their money back.
In the 10 weeks since travel to Europe and the US was banned in March 2020, Expedia received 22 million phone calls and text messages, more than double its normal rate. Kern says his employees needed “endless love.” One of his ways was to send videos almost regularly from his wooded house in Seattle. In some, he read bedtime stories about the children of his exhausted employees. In another, think of a mountain trip in memory of the 9/11 attacks. The first bedtime stories were his wife’s idea, he said during our phone call.
He says he is not “interested in giving advice”, but has found that the best way to keep employees on his side is “to be honest with your employees about how you feel” and not to imitate what you think the CEO should look like, speak and speak. write.
Part of his effort to make Expedia competitive was to push decision-making into different ranks and allow people to make their own choices. One of the values ​​of the new company is “Select Brave”. Kern translates this into the words of Lionel Richie, his favorite referee from the American Idol TV show, “There is no such thing as loss. There is only to win or learn.”
Kern has never seen himself in the travel industry, other than enjoying it as a personal hobby and investing in a few small tech travel groups in the past. He started on the financial side of the business, where he first met Diller when he headed the finance department at the Home Shopping Network. He then moved into private equity for more than 20 years, where he says he has learned the importance of hiring and creating space for good people.
“No matter how smart you are, you can not escalate your IQ,” he says. “You have to create an environment in which the team can deliver results.”
Prior to Expedia, he ran Tribune Media, one of the largest broadcast companies in the US until its merger with Nextar Media Group in 2018, and while his previous knowledge of consumer brands and technology has undoubtedly helped, Kern says the most important asset is the employment of people “Much better than me in every respect”.
The area in which previous experience has yielded is the collection of emergency funds needed by Expedia to survive the pandemic. By May 2020, the travel company had amassed more than $ 3.2 billion in funding, including $ 1.2 billion from private equity groups, Apollo Global Management and Silver Lake, who were given temporary board seats.
“I knew how to deal with all the investors,” says Kern. “I knew what we had to do and I negotiated more than my share of those deals.”
Now the company is emerging from the pandemic in an equally uncertain world. Inflation is rising, the war in Ukraine has caused fuel prices to skyrocket, and consumers are beginning to show signs of spending restraint. Expensive activities like vacations seem like a risky bet. Moreover, environmental concerns and distance work have led companies to cut travel budgets.
But Kern is optimistic about people’s tendency to travel. He argues that in Western countries, Covid has led to a “savings boom” and a wave of spending on material goods while restaurants, hotels and airlines are closed. “There has been a significant reduction in travel expenses and we and many people think this will reflect on ourselves, everyone has bought enough goods.”
This is largely confirmed by evidence from airlines like United, which said in April it expected record quarterly revenue in the three months to the end of June.
In the end, says Kern, “people do not put the vacuum cleaner in the fridge, but put pictures of their favorite trips to Italy, Singapore or Thailand.”

Three questions for Peter Kern

Who is your role model in leadership?
It is difficult to choose a person. I like to get the features and characteristics that suit me from the different leaders I respect. Right now, I admire Satya Nadella, CEO of Microsoft, and his work to revive Microsoft from a sleepy giant to a cloud-focused company, reimagining the company. It’s closer to how I see my challenge on Expedia.
What was the first lesson you learned in driving?
It’s okay to make mistakes. You get into a job, assume you have to be perfect and then make a mistake or things do not go the way you want, but you survive and learn from it. This ability to fail and then realize that it is not life threatening is an important lesson.
What would you do if you were not CEO?
I used to think, for example, of being a college basketball coach or a football coach.

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