Expedia CEO Ariane Gorin on 14% revenue growth, AI-powered travel search, and the Layla acquisition

Speaker 2: Great to see you, dude.

Speaker 1: Have a

Speaker 2: good one. Cheers.

Speaker 1: Let me tell you about CrowdStrike. Your business is AI. Their business is securing it. CrowdStrike secures AI and stops breaches. Up next, we have the CEO of Expedia coming in to the TBPN Ultra, though. Ariane, welcome to the show. How are you doing? You so much for taking

Speaker 4: Thank your

Speaker 9: you for having me. Thanks for having me.

Speaker 1: Since this is your first time on the show, I'd love to talk just to set the table a little bit about when you joined Expedia, a little bit of your background, what you were doing before at Microsoft, and then the journey in and that transition because I want to ultimately compare this year to some of the earlier years in your career and Expedia's history.

Speaker 9: Sure. So I joined Expedia Group in 2013.

Speaker 4: Yeah.

Speaker 9: I was living in Europe at the time. Mhmm. I'm originally from California, but had moved to Europe back in 2001. And before Expedia, I'd been at Microsoft. And I had the opportunity, you know, when Expedia contacted me, I thought, look, this is a company that is in a sector I love, which is travel, which has massive purpose, and a technology company. And it was one of the few US tech companies that had real decision making power outside of The US. Because at the time, you would have to, you know, if you were at Microsoft or elsewhere, move back to The US and I wanted to stay in Europe.

Speaker 1: Yeah.

Speaker 9: So I joined the company in 2013. I was in Paris at the time and then I moved to London in 2014.

Speaker 1: Very nice. So thinking about this year, is this year the craziest you've seen Oh, feel crazy? I don't know.

Speaker 9: I don't know. You know, having lived through COVID in the travel industry, I can't say that any year is more crazy than that.

Speaker 4: Got

Speaker 9: it. But, you know, it's certainly been a roller coaster. But and the good news is Yeah. People want to travel. They're always traveling. It's just a matter of keeping track of sort of what's the demand, how do we make sure we're able to respond to the demand that the travelers have out there.

Speaker 1: Yeah. So I feel like Kyle Scanlon has written about this concept of the vibe session. People say they are worried about the economy and yet when you dig in and you look at the the health of the consumer, the health of the economy, there's a lot of green shoots. There's a lot of good news. So what is the health of the the travel economy right now, traveling overall, maybe America or globally? Just what are you seeing? Because obviously, the business is growing and that feels like a good sign for the economy broadly.

Speaker 9: Yeah. Sure. So we actually we just reported earnings yesterday. Yeah. We had really strong revenue growth at 14%. Amazing. As you can see, people are traveling.

Speaker 4: Yeah.

Speaker 9: The US was very strong. Yeah. US consumer really strong. A lot domestic, but also US outbound. When you look around the world, people are traveling more domestically than cross border. Interesting. But even despite the fact that air ticket prices are up, hotel prices are up, people are still prioritizing travel. So more domestic. We see a lot of travel linked to events. Obviously, we had the World Cup this summer in The US, so that, you know, gave people the opportunity to travel, concerts and the like. But even, you know, phenomenon like weather, we have seen, I think, about a 200% uptick in searches for Edinburgh of people in Spain because they want to get out of the heat. So it's like all of these trends, the yen is down, people want to go travel to Japan, which is a great destination, and it's more affordable. It's like there are all these reasons that Interesting. You know, decide where they're going to go travel.

Speaker 1: I I have to ask about artificial intelligence. It's been something that every CEO needed to experiment with. You got to be AI native. You got to get everyone using AI. Then we went through the token maxing fiasco more or less of everyone, okay, maybe not that much. Let's make sure that we're have a positive ROI that we're doing things profitably, that we're actually driving revenue and growth. Where do you sit today? How confident are you that AI is driving actual business outcomes at Expedia?

Speaker 9: So one, I would say AI is an accelerator for us as a business. And I think of it in three ways. There's number one, how are we using AI in our products to make them better so travelers have better experiences? And I'll talk in a minute about sort of how we are seeing real results on that. The second is how are we finding net new growth opportunities from the way people are planning their trips or the way people are getting inspiration. So whether it's in ChatGPT or Claude or Gemini, those are net new growth opportunities for us. And then the third is sort of as you said, how are we using it internally to get more throughput? And on that one, you know, it's really across the board that the teams are adopting AI, but in our tech team alone, we're getting up to 40% more cycling and better cycle time. So we're seeing results there. But back to the first one, which I think is probably the most interesting is how are we using AI in the product to help travelers get better experiences? Some, we see immediate benefits, so AI in the ranking and recommendation algorithms.

Speaker 4: Sure.

Speaker 9: Can we help people go faster from search to find? So, if we can more easily tell you, here are sort of the three or five properties that are most likely going to of suit your needs, you're going to be happy about that. AI helps us do that. We're also using AI in natural language conversations. So, if you go to Vrbo's homepage now instead of just typing in a destination, you can use natural language to say, hey, I want to go to Tahoe with eight people the last week of August, and I want something that's got a hot tub. And we're doing that sort of across the board, putting in these natural language experiences. What we found is they don't convert as well as our sort of normal path, but that's normal. Whenever you introduce something new, one, you need time to optimize it, but two, people are still adapting the way they interact. We Why? Are finding sorry. Finding we're getting over 60 more information from travelers.

Speaker 1: So, Oh,

Speaker 9: we're getting more intent.

Speaker 4: Yeah.

Speaker 9: Then it's up to us to figure out, okay, how do you translate that into the trip? We're getting more engagement. They're coming back more often. So it just may be that it's like less linear trip planning.

Speaker 1: Yeah.

Speaker 2: So why what what are your theories around why this sort of natural language searching is not converting as well? Is do you think it's because people like to just see all of their options and then feel like, okay, I have a good sense of what my options are and now I'm gonna narrow in? And the natural language kind of narrows it down maybe too much? Because like sometimes if you're looking like the Tahoe example, it's nice to look at 10 listings and then and then it becomes pretty clear like, okay, you can narrow it down. Whereas natural language, maybe you're missing the one that doesn't have a hot tub but it has access to some, I don't know, like a bunch of other amenities The lake. That work. The lake.

Speaker 9: Yeah. No, I think you're exactly right. I would distinguish between two things. There's one which is if you're using natural language and then responding in a chat interface and you're trying to narrow it down too much

Speaker 4: Yep.

Speaker 9: I think that's exactly you're right. What we're trying to do on Vrbo is actually you have natural language and then it gets you into the core path where you have a list of properties. But you're right. One of the things we found is we may be over filtering there. So, there might be something else that they'd be interested in, but we've over filtered. So, this is why I think some of it is understanding the traveler behavior, but some of it is just you know, we have such optimized paths in the existing product and so how do you take a lot of that learning and put it into this natural language? So, again, the way I talk to the team about it is we have to be testing, we have to be experimenting. It's almost like you have an experimentation budget where you accept that something's going to have some lower conversion so that you can get learnings and give yourself the opportunity to perfect it.

Speaker 2: Yeah. How are you how are you thinking about like long term relationships with various chat apps and assistants? There's there's a case going on, lawsuit between Amazon and Perplexity. Amazon has an incredible ads business. Perplexity users were sending their basically Perplexity agent to Amazon to find listings. Amazon's not very excited about that for obvious reasons. And we don't have a full sense yet for what the outcome of that will be, but it feels like there's a very natural partnership between agents and and marketplaces, but at the same time, the sort of like business tension and sort of lack of clarity around how these relationships and partnerships are going evolve so that both companies and both players Yeah. Can can thrive?

Speaker 9: Yeah. I'll start by saying, you know, obviously, like any ecommerce company, we love it when people just come directly to us. If you look at our big consumer brands, Expedia, hotels.com, and Vrbo, about two thirds of our bookings are people who just come directly to

Speaker 4: us. Yeah.

Speaker 9: But we know that people will start their search elsewhere, and we want to make sure that our brands are showing up well there, Whether it's through, you know, agentic browsers, whether it's through, you know, connector apps into Claude or ChatGPT or whether it's, you know, organic or paid advertising. So, the way we think about all of those channels is just how do our brands show up? What is the incrementality? And you look at incrementality not only on the customers, but also, of course, if you've got an ad business, you're thinking about how am I monetizing those people who are coming in? So, I think what you'll see us do is experiment a lot. Make sure that it's a good deal and we have a way of turning the people who are coming in into repeat customers. But, I would actually say a lot of the agentic traffic, funny the example you're giving of Amazon in Perplexity. It feels like almost so long ago that we were talking about that. And at least when I look at some of those third parties, they're actually looking to be compensated in ads and sending us traffic because they've seen other companies build really big profitable businesses that way.

Speaker 2: Yeah. I mean, I've been using ChatGPT more for product research, you know, way more this year than last year. I found it's just a lot better. There's more rich images, things like that. And I know that there's like, I think on almost all of the purchasing activity that I've had that starts there, there's actually no there's no revenue share associated with it. So it's like amazing for the the sellers of goods right now but eventually there's there there will

Speaker 9: be some I mean, at some point, everyone's going to want to monetize things. I mean Yeah. Just on what we've also found is that we've got a connector app with Claude and when we can actually control to a certain extent the interface you talked about richer pictures and content and the like And then it links off to Book on Expedia. We're able to convert that a lot better. And I think all these platforms are thinking, how can I be most useful to the user? And part of the way you'd measure how useful I am is the work I did in the chatbot then taking me somewhere where I'm completing my booking? And of course, know, we'd be willing to pay for that. I think any business, if it's incremental, is willing pay for it.

Speaker 2: Yeah. Yeah. It's it's and it's probably searches that historically would have started on Google and you would have been paying for it another way. Right?

Speaker 9: Well, yes. And, you know, to the extent we can diversify the sources of traffic at the top of the funnel to us, that's a good thing as well.

Speaker 2: Mhmm. Yeah.

Speaker 1: Can you talk about the long term vision for Expedia? I'm I'm I'm interested in the the acquisition of Layla, but also just this idea that you have the portfolio for someone to basically come to Expedia Group and say, have a $2,000 budget for a weekend and I want to go somewhere warm. And you could bend an entire itinerary that takes care of not just flights and hotels, but car transfers and dinner reservations and everything from start to finish and it could learn preferences. And it feels like we're with AI and other tools and how big the platform is, we're very close to just at least democratizing like a very bespoke experience.

Speaker 9: You know, we used to always talk about OTAs or we want to put the A back in OTA and everybody online travel agent. And if you could have a personalized travel agent for you, we will have done our job. And I think AI really allows people to have their personal travel agents. Brand Expedia, we think of as a one stop travel shop You can go into Expedia, you can get your flights, your car, your hotel, and in fact, if you put multiple of those elements together, you're going to get discounts and deals

Speaker 4: Yeah.

Speaker 9: Which is a killer value proposition. And then, of course, we have the loyalty program and you know that if something does go wrong and you can't take care of it in the app, we're going to have someone to answer the phone because, again, you can't forget that travel tends to be high value purchases and you want to make sure that someone's there to help you if something goes wrong. Yeah. So, I think AI really does allow us to do that. That's the vision personalize more.

Speaker 4: Yep.

Speaker 9: But, you know, something many people don't realize is Expedia Group as a whole, about two thirds of our business is our consumer apps, expediahotels.com and Vrbo, and a third is B2B partners. And that is whether you're using your credit card, loyalty points, or you're booking with an airline and then you're using your airline's points to book a hotel. What that may be Expedia technology and supply behind it. And what's really cool about the B2B area is that you've got startups and others who are innovating, maybe finding new ways, new interfaces. You know, companies like Leila, who we did just acquire, that can basically build their interfaces using our technology and supply. So it's not just the innovation of our big three brands, it's also what we can bring to the overall ecosystem in helping getting more innovation for travelers.

Speaker 1: I have one last question.

Speaker 2: And then I have a marketing idea. Okay.

Speaker 9: Oh, please.

Speaker 1: Do you have a couple more minutes? I don't want to keep you too late if you have time.

Speaker 9: I have all the time in the morning. I want a marketing idea because I listen to I've listened to some of your your shows and there's always great marketing ideas. So please

Speaker 2: they get out of hand.

Speaker 9: But Blimp or something? I don't know.

Speaker 1: Okay. But very granular. I'm interested in in AEOs particularly. Yes. But you probably, you know, at least if you haven't worked on these teams, you've seen this firsthand of what good execution on, you know, SEO looks like and digital advertising buying and obviously the social media boom. And I'm wondering how you think as a CEO of a group, how do you think about AEO? Is it something that needs to be embedded in every organization, in sub teams? Is there a technologist? Are you working with agencies and in house people? Do you have a wizard of AEO that evangelizes

Speaker 9: We do have a wizard. I think that's going to be new titles as So I would say I think we were quite early in looking into AEO and trying to understand the visibility of each of our brands and then what were the things that we could do on AEO. We actually last year put together the AEO and SEO team and said, you know what, think of this as organic and how are we showing up? And you know, there's a lot of, obviously, the technology and the content and we're doing a ton of experiments there. But it's also really, it's like the reputation. It's the value of your brands. Are people understanding your brand value proposition? You can't get away from, you know. Do people understand that on Brand Expedia, it's a one stop travel shop where I'm going get a great deal, I can bundle all things together and I'm going to be well taken care of. They understand that on Vrbo, you know, it's a trusted vacation rental marketplace with So, I would say it's a combination of, you know, yes, we were early in figuring out understanding our visibility, what do we need to do from a tech perspective. And AEO is our one growing channels, which is awesome. Have a great team working on it. But like everything I tell the team, we do need to go back to the basics of making sure we're providing great travel experiences, we're taking care of our travelers And then you layer on top of that obviously all of the technology and

Speaker 1: content Yeah. There is a little bit of like the score takes care of itself. The company has and a great the AI companies are doing their jobs at all and they're representing reality, that great reputation will come through in the answers.

Speaker 9: Exactly. And I would say it did help us identify where were there some places that the models were getting information we might not have been paying attention to what was our reputation there. So it just would say it almost made us raise the bar you know, on things not even related to AEU.

Speaker 1: Yeah. Yeah. That makes a lot sense. Jordan. Okay.

Speaker 2: So this is somewhat half baked, we can we can Awesome. You can you can take it and run with it or or shoot it down. But there's this The meme of Euro summer has just been building and building and building for so long. In some ways, you've been a part of it since you've been in been You had been living in Europe when you took the job. But John always likes to joke and say like, why would I go to Europe? Like we have everything here. And I think that there's this like Americans romanticize everything in Europe. Right? They'll pull over at a gas station and they'll be like, look, you can get this little, you know, you can get a fresh orange juice or you can get an espresso and all this stuff. And it's really like basic stuff. It's nice.

Speaker 1: But I mean,

Speaker 2: I just think that if Expedia made a a massive, you know, campaign around romanticizing Idaho Oh. Romanticizing, you know, Florida, all all these places that we have around The US and really pushing this like you talked about Domestic You talked about domestic travel, that kind of picking up. And I think we need to I think Americans need to learn to romanticize Oregon. Yeah. Romanticize Utah and all these beautiful places around our country. And so I think there's something around this like America summer. I could see 2027 being

Speaker 1: Instead of Euro summer. Summer.

Speaker 2: Euro summer is over. It's it's it's America summer.

Speaker 9: I think it's a great idea, but you know, I would almost say we did that in '26 because if you think it was the two hundred and fiftieth anniversary

Speaker 1: That's right.

Speaker 9: There was a lot about sort of falling back in love with all the great places in The US, all the national parks. We just announced a couple months ago an Expedia Trails Fund that's about, you know, protecting the wonder of trails and outdoors focused on The US. Yeah. But it's a it's a good, provocation to Yeah. Do it

Speaker 1: I loved all those social media Yeah. Want to want over and were delighted by like how big our Costcos were. Exactly.

Speaker 9: Exactly. The Europeans came over and fell in love with America. It was crazy.

Speaker 1: Yeah. It was very funny seeing as an American the reflection of what stands out to a European in America like a Costco, like a Buc ee's, these funny things that we we don't see as these special things, air conditioning and whatnot. But Yeah. In fact, they are. Maybe we need to enjoy those every once in while.

Speaker 2: Anyways, well, great great to meet you.

Speaker 1: Thank you so much for taking the