The FINANCIAL – Travel giant Expedia Group is cutting 12% of its workforce, or about 3,000 jobs, after a “disappointing” 2019. The company’s stock hit its low, $95.67, over the past 12 months on November 11. Expedia chairman Barry Diller said he was aiming for savings of $300-500 million in 2020.
Company executives sent an email announcing the changes on Monday afternoon, writing “we recognize that we have been pursuing growth in an unhealthy and undisciplined way” and calling the company’s performance in 2019 “disappointing.” In addition to eliminating 12% of its workforce, the company will also cut costs by ending unspecified projects and reducing its use of contractors and vendors, CNBC reported.
The firm, which operates its flagship travel site as well as Hotels.com, Hotwire, Travelocity, Cheaptickets, Egencia and CarRentals.com by the end of December, had 25,400 employees around the globe. Over the course of 2019, sales increased by eight per cent, net income by four per cent and earnings per share by six per cent. But company leadership revealed that in the last quarter, net profit had gone down four percent and earnings per share had gone down one percent, according to Business Times.
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, Australia, and the Netherlands, for example. The company may have more employees outside the U.S. than domestically. 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, Yahoo Finance wrote.
The staff reductions will affect about 3,000 employees, including 500 people in Expedia’s Seattle-based headquarters, said Josh deBerge, a company spokesman. The workers will begin to be notified this week. Expedia didn’t tie the job cuts to effects of the coronavirus, which executives earlier this month said added “uncertainty” to the company’s profit outlook. “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,” the email read, according to Seattle Times.
During a February 13 earnings call, Expedia chairman Barry Diller called the organization “bloated” and said many employees didn’t know what “they were supposed to do during the day.” Diller also said he was aiming for savings of $300-500 million in 2020. In early December, Expedia announced the immediate departures of chief executive Mark Okserstrom and chief financial officer Alan Pickerill, as reported by The Economic Times.
The company is offering employees severance packages, including extended health-care coverage, according to a person familiar with the issue who asked not to be identified discussing private information. In the email to its staff, Expedia leadership acknowledged this transition would be difficult. “Great tech companies have walked this same path in order to come back stronger and more competitive than ever. We have restarted the journey,” the email said, The Straits Times wrote.