Expedia Begins Layoffs Targeting 12 Percent of Its Workforce

After less than three months of focusing on the day to day operations of Expedia Group, chairman Barry Diller and vice chairman Peter Kern took their first overt steps in reshaping the company with plans to lay off 12 percent of its workforce.

Expedia Group’s leadership sent an email Monday to employees globally saying it intends “to reduce and eliminate certain projects, activities, teams and roles to streamline and focus our organization.” (The email is embedded below.)

The company will begin notifying employees this week in geographies “where we have clarity” and in others the company will begin consultations with employees and their representative to discuss certain plans, the email said. In some countries, such consultations may be legally required.

The company told Skift that 12 percent of its “direct workforce” would be laid off, pending consultations in certain countries. Expedia Group counted a total of 25,400 employees, including part-timers, at the end of 2019. If you assume that Expedia might have around 24,000 full-time employees, then 12 percent would be around 2,880 staff.

Some 500 jobs out of a workforce of roughly 4,500 people in headquarters city Seattle are expected to be eliminated.

“Today, Expedia Group announced our intent to simplify how we do business. This includes stopping certain projects and activities, reducing use of vendors and contractors and eliminating approximately 12 percent of our direct workforce,” an Expedia Group spokesperson said. “Of course, this estimate is subject to consultation in countries where that would apply.”

The email from “The Travel Leadership Team” said the company “recognizes that we have been pursuing growth in an unhealthy and undisciplined way.”

Despite the email to employees, the State of Washington, where Expedia is headquartered, has yet to post any Worker Adjustment and Retraining Notification, known as WARN. Expedia Group, of course, has offices around the United States, including Seattle, Chicago, Dallas, Austin, New Orleans, Miami, and San Francisco. It also has large facilities in the UK, India, Australia, Spain, Sweden, and the Netherlands, for example. The company may have more employees outside the U.S. than domestically.

Diller and Kern are following through on their pledge made earlier this month to lop off up to $500 million from the company’s annual operating costs in 2020. In a financial filing Tuesday, Expedia Group stated it would incur $135 million to $185 million in pre-tax charges in 2020 for employee severance and benefits costs.

With Monday’s news about the layoffs taking place after markets closed in New York, Diller was likely looking for a bump in the stock’s share price in coming days, one similar to the way the stock price soared a couple of weeks ago from the earnings announcement that big cuts were in the works. On Monday Expedia Group’s shares fell 6.5 percent to $112.31 as the market absorbed pessimistic news about coronavirus.

In its fourth quarter earnings announcement, Expedia Group targeted $300 million to $500 million in run rate cost cuts across its businesses by the end of 2020.

Expedia Group at a Crossroads

The layoffs came as Expedia Group was seemingly at an inflection point. The company’s stock hit its low, $95.67, over the past 12 months on November 11, a few days after reporting disappointing third quarter earnings. The share price was up to $121.34 Friday afternoon, a week after senior executive Barry Diller issued a sort of call to arms for the fiscally prudent-minded during Expedia’s fourth quarter earnings call February 13.

Diller argued that Expedia Group was bloated, that employees’ roles were too cushy, and that the company would need to reorient strategy market by market, and wean itself away from dependence on marketing through Google.

For example, Expedia’s Seattle neighbor, Amazon, has taken the heat over the years as a company that is “all work and no life,” as Diller put it, but he added that Expedia is “all life and no work.” He admitted that’s an “enormous exaggeration” and that there are wonderful employees at Expedia, but added “for several years, we really lost clarity and discipline.”

Of course, if Expedia is overstaffed and inefficient, then its senior executive, namely Diller, has to share in the blame.

“So simplifying that has a great by-product of cutting our costs,” Diller said during the fourth quarter earnings call. “Our costs were too high. And our costs are going to come down beyond this first level of $300 million to $500 million over the future. Because we are going to simplify. Simplifying lets us pay attention. If we pay attention, given the opportunity, I ain’t worried about two or three years.”

CEO Ouster Meant This Day Was Coming

In early December, the board pushed out CEO Mark Okerstrom and Chief Financial Officer Alan Pickerill in a clash over performance, and strategy.

When Diller and vice chairman Peter Kern assumed responsibility for day to day operations of Expedia Group, analysts and people close to the company surmised that a period of cost-cutting and possibly asset disposals would be in the offing.

In addition to the layoffs, another sign of Expedia’s emerging realignment is that the company has brought together under one umbrella its corporate travel business, Egencia, with EPS (Expedia Partner Services), the company’s white label business that powers travel services for numerous third-party websites.

“We recently also brought Egencia together with EPS,” Kern told analyst during the company earnings call a couple of weeks ago. “We — under a business we’re calling Expedia Business Services. It’s simply an effort on our part to further simplify, get advantages between businesses. These businesses are not the same. They don’t (have the) same end users, but they have a number of common practices from which they can learn and help one another, including sales and customer management, and a variety of other business-to-business techniques.”

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Update: This story has been updated to reflect that Expedia Group stated in a financial filing Tuesday that it would incur $135 million to $185 million in pre-tax charges in 2020 for employee severance and benefits costs.