Good day everyone and welcome to the Expedia Group Q4 2023 Financial Result teleconference. My name is Lauren and I'll be the operator for today's call. If you wish to ask a question at the end of the presentation, please press star mode by one on your telephone keypad. If you change your mind, please press star mode by two to cancel your request. For opening remarks, I will turn the call over to SVP, Corporate Development Strategy and investor relations, Harshit Bash. Please go ahead.

Good afternoon, and welcome to Expedia Group's fourth quarter 2023 earnings call. I'm pleased to be joined on today's call by our CEO, Peter Kern, and our CFO, Julie Whelan. As a reminder, our commentary today will include references to certain non-GAAP measures. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are included in our earnings release. And unless otherwise stated, any reference to expenses excludes stock-based compensation. We will also be making forward-looking statements during the call, which are predictions, projections, or other statements about future events. These statements are based on current expectations and assumptions, which are subject to risks and uncertainties that are difficult to predict. Actual results could materially differ due to factors discussed during this call and in our most recent forms 10K, 10Q, and other filings with the SEC. Except as required by law, we do not undertake any responsibility to update these forward-looking statements. Our earnings release, SEC filings, and the replay of today's call can be found on our industrial relations website at IR.expediagroup.com. And with that, let me turn the call over to Peter.

Thank you, Harshit, and good afternoon, and thank you all for joining us today. First of all, I just want to acknowledge the news that I will be stepping down in May as CEO after my contract ends and will be passing the baton to Aryan Gorin, who currently heads our Expedia for business. As many of you know, when I started this unexpected journey during COVID, travel was at a standstill. Money was flowing out of the company faster than we could replace it. And our people, our shareholders, and most of the world were unsure how and when we would ever come back. Strangely, those days never really worried me. Maybe I'm an optimist, but I always believed we'd get back to life and travel would follow. While you might assume that COVID was the defining part of my tenure, in reality, we quickly saw an opportunity to use our COVID time to embark on one of the most audacious and ambitious transformations I think a company of our size has ever attempted. It was always my hope that we would finish this massive task by now, but I'd be lying if I didn't say that was sometimes in doubt. We had many fits and starts as we took on this massive overhaul, but when you do something as bold as we were attempting, you have to be prepared to deal with some mess. And as much as anything, I'm proud that we were not afraid of the mess and we pushed And as the work began to accelerate in the back half of last year, I could finally see that we would in fact meet my timetable. Over the last four years, we built a tremendous team who in turn accomplished amazing things. I have to say that what started in an unlikely and difficult way opportunities of my career I'm not going anywhere yet, and I intend to sprint through the finish line on the way out. Among my important tasks, we've seen this transition to Arianne and making sure none of our team misses a beat. I just want to say that I've had the pleasure of working with Arianne closely for the last four years, and I believe she has a terrific choice to take the company forward and build on what we have created. I'm the leader with a very, including most recently as head of our market-leading B2B business. I look forward to working with Arianne over the next few months, and I will not be going far as I return to my perch as vice chairman. address that let's move on to our results i was generally very pleased with our we met our guidance despite it is really difficult to fully appreciate the breadth of change and the volatility that such change can create we've discussed this many times but when you have to willingly take steps back you create a lot of inherent unpredictability and yet despite that you'd see some softness in gross bookings driven primarily by air which in turn was largely driven oh air does not impact revenue or profit but it does have an outsized impact on our overall some signs of macro softening we continue to improve ours and pricing capabilities and like many areas of our business we see significant opportunity to grow regardless of any macro head our lodging business held up very well and had the 13% year-over-year verbo finished its planned front-end migration in q4 and suffered expected conversion degradation but it now has more tests running than ever in its history and we are clawing back conversion at a breakneck pace we also cut back last year on verbal marketing in concert with the expected are now really excited to find to punch our main competitor squarely there's a bit of lag effect as we ramp back up but we're in every day the impact from improved and increased marketing and of course our secret weapon in one key whose effect will only continue to build we did an awful lot in 23 from the launch of one key to the completion of the verbal migration from the plumbing of machine learning and AI into more and more of our customer chat GPT assisted trip planning. But more important than any win in 23 is the sheer magnitude of change we have driven since we embarked on our transformation journey at the beginning of 2020. Over 20 brands to three or fewer beyond 76 different agencies around the globe and instead built an entire full-service marketing, creative, and media buying team internally. We consolidated all performance marketing into one group with unified data and tools allowing us to optimize across brands and bring programmatic approaches to everything we do in metasearch social SEO and everywhere else and we fundamentally shifted the business from transactional web arbitrage to app first focused on acquiring and retaining the customers with the highest LTV on the tech side we decommissioned 17 CRM systems and build one universal messaging platform linking all brands we went from seven different loyalty stacks to one key we consolidated from 13 machine learning platforms and four experimentation platforms to one. We converged 300 million customer data profiles into one common identity platform. We have meaningfully reduced the number of developer tools and optimized our IT footprint. And most importantly, all our platform that gives us the ability to rapidly learn. It is hard to fully conceptualize. Perhaps one simple way is to double click on how all these elements are. Our unified front end now allows us to deploy features around the globe and on any brand at a pace we could not contemplate just a couple of take months even something that never made the cut list because of the massive engineering left but post unifying the front end stacks unified front end allows us to massively increase the breadth and impact of our test and learns for our single test environment along with ML and AI woven throughout the custom run many multiples of the tests we used to and the combination of which will allow us to effectively 8x our testing cannot be straight stated strongly enough we are just at a completely different place technologically and the effects we have seen so far are only just scratching the surface of what is possible and while there are endless achievements to be proud of in our transformation it is equally remarkable that even while swapping out our engine mid-flight we were able to deliver consistently solid financial performance we grew our business throughout our transformation notably reaching record levels of lodging gross bookings and revenue despite having sold off and shuttered a number of businesses along the way our continued operating discipline has driven EBITDA margins to the highest levels in over a decade we have used our strong free cash flow to aggressively buy back our stock at attractive prices and as a result our share count today is down to 2015 levels we have closed over a hundred office locations and we have 30% fewer heads than our 2019 peak and meaningfully we have gone from approximately 30% of people working in product and tech in 2019 to 50% today. Again, we are at a truly different place as a company as we launch into 24, which does not mean that it's all just linear improvement from here. That learn and test and learn is a big part of our journey and we will still get things wrong in our tireless effort to improve the company. We can afford to get a lot more wrong. Technologically, we expect travel demand to remain relatively healthy. Rental ADRs grew while lodging ADRs declining year over year. And as I mentioned earlier, air ticket prices have declined, particularly in the U.S., and we are seeing some continued pressure on car rental rates. Against this backdrop, though, we are well positioned to go back on offense, gain share against competition, and ultimately grow our top and bottom line meaningfully this year. Our strategy will remain largely unchanged, but we can finally stop doing surgery on ourselves and instead execute without the numerous distractions we have faced in recent years. will be laser focused on five strategic priorities which broadly translate to all parts of our we will continue our focus on acquiring and retaining high or sharper about measuring customer lifetime value and targeting who to go after in which channels with a greatly improved product driven by the latest ML and AI capabilities and one key which now has over a hundred million members we will continue to drive greater retention repeat and direct business all all of which underpins our shift towards more loyalty and app members in fact we ended the year with our highest ever percentage of business coming from the app up nearly 600 basis points year-over-year we will be scaling one key internationally this year and expect to see our mix of app members continue to increase in those markets with better customer targeting constantly improving a stickier AI driven products and one key we feel really good about continuing to build momentum and value in our member role second priority will be to increase our share of wallet with our travelers and partners. Again, with a product that uses AI and ML to predict a consumer's best next action in order to sell complementary items, be it in the booking flow, post-booking, and in CRM communications, our core experience will continue to drive more items and more dollars into the... We will also drive more cross-brand and cross-product engagement through OneKey, which enables cross-earn and redemption across all... And encourages consumers. We're already seeing early signs of this with an increasing number of customers our third priority will be to accelerate our global market expansion we've talked before about how we retrench back to the u.s during the pandemic while we were over we pulled back in certain countries where we did not have the right product market fit after changing virtually everything from how we market to how we retain customers in the back half of 23 we were able to hold and now we have the opportunity to be more aggressive in 24 you will see us spend up in a number of markets to reclaim real share where we believe we have the right Our fourth priority will be to continue cementing our leadership in the B2B segment. Revenue in this segment grew a stellar 33% in 2023 versus 2022. While it benefited from the APAC reopening, and we expect those geo tailwinds to moderate somewhat this year, we are still expecting very strong growth given our differentiated capabilities and a huge TAM to still penetrate. As I have explained before, our B2B business benefits from all the work we have done in product and technology to win in b2c along with all the b2b specific innovations we have rolled out over the last few being a strong pipeline of new customers globally and we continue to find ways to gain wallet share in our in our accounts and beyond just offering supply we have achieved good early results and externalizing components overall I'm bringing our leadership empowering the travel industry our fifth strategic strategic priority will be to drive efficiency and effectiveness across our business as I mentioned we have grown our EBITDA margins to their highest levels in a decade growing over 300 basis points since 2019 all of our transformation work was not only to enhance our consumer experience but also to allow us to do significant opportunity to run more efficiently across the company to eliminate redundant systems to keep optimizing in the cloud and utilize the latest productivity productivity capabilities from AI in addition we will keep leveraging our technology leadership to find opportunities for decreasing costs while increasing customer experience. The work we have done in improving our customer service operations is a great case study. By building better technology and self-service tools, we have both improved our NPS. So in closing, I'm incredibly pleased and proud. Thanks to our massive transformation, we are now a very different company than we were four years ago. We are set up to out-innovate our competition for the next decade and efficiently deliver the best experience. And if we do that, the business and shareholder returns we'll take care of them. Thanks, Peter, and hello, everyone. Before I get into our financials,

I do want to take a moment to thank Peter and to express my confidence in Arianne as our new CEO come May. I've had the pleasure of knowing Peter since I joined Expedia Group's board in 2019, and of course, in a more detailed manner since assuming my role as CFO in 2022. Throughout this journey, Peter has done an amazing job navigating us through the pandemic, driving our massive business transformation and setting us up for a very successful future I am so thankful to have had the opportunity to work for Peter he will be missed but I am glad he'll continue to support Expedia group through his ongoing role on our board as vice chairman at the same time I look forward to working alongside Ariane as she assumes her new role as CEO this May Ariane and I have partnered closely together since I first came to Expedia group she's an accomplished operator who has been in our leadership team for many years and it will be great to have someone so familiar with our business and our ecosystem lead us into this next exciting phase for our company and now let's turn to the financials our fourth quarter results once again reflect another quarter of accelerating performance on the top and bottom line with revenue and EBITDA growing double digits to record levels this continued strong quarterly performance resulted in full year results at the highest levels we have ever seen across lodging bookings and overall revenue in EBITDA. For full year 2023, we delivered over $104 billion in total gross bookings, growing 10% versus last year, including almost $74 billion in lodging bookings, growing 11%, with the hotel business growing even faster at 18%. We drove $12.8 billion of revenue, growing 10%, and we also generated $2.7 billion of EBITDA, with an EBITDA margin of 21%, which grew faster than revenue at 14%, and resulted in year-over-year margin expansion of almost 75 basis points. In addition, our B2C business saw meaningful sequential acceleration in year-over-year revenue growth in the back half of the year, and generated marketing leverage for the full And our B2B business went from strength to strength, having its most successful year in our history with both top and bottom line growth of over 33 percent and this overall strong financial performance resulted in us meeting our full year guidance of double digit top line growth with margin expansion now i will discuss more of the details regarding our fourth quarter results total gross bookings of 21.7 billion were up six percent versus last year gross bookings were impacted by some pressure in our air bookings in the quarter, primarily driven by lower average ticket prices as more capacity came online, as well as overall gross bookings pressure at the beginning of the quarter from the crisis in the Middle East, as we called out on our last quarter's earnings call. Gross bookings for lodging, our largest business, had another record quarter growing 8%, relatively in line with our third quarter growth rate, and we saw even faster growth in our hotel business at 13 percent we also continued to gain or maintain share in our hotel business across our key markets around the world consistent with last quarter moving to the key financial metrics in the p l starting with total revenue revenue of 2.9 billion was the highest on record and grew 10 percent versus last year this was an approximate 160 basis point acceleration from the third quarter, driven by both our B2C and B2B segments. Revenue growth is primarily driven by the continued performance of lodging, which grew 14%. Total revenue margin also increased by approximately 55 basis points versus last year, primarily driven by the continued mix to lodging, which has higher margins. Cost of sales was $336 million for the quarter and 72 million or 17% lower than last year, which combined with our strong top-line growth drove approximately 390 basis points of leverage as a percentage of revenue versus last year. We were pleased to see that our ongoing initiatives to deliver an improved customer experience and increased automation are resulting in continued operating efficiencies, resulting in lower costs year-over-year despite higher top-line growth. Direct sales and marketing expense in the fourth quarter was $1.4 billion, which was up 14% versus last year, largely due to an increase in commissions in our B2B business to support its ongoing strong revenue growth of 28% year-over-year. As we have stated previously, commissions paid to our B2B partners are in our direct sales and marketing line and are more expensive as a percentage of revenue than our B2C business. However, because they are generally paid on a state basis to contractually agreed upon percentages, the returns are more guaranteed and immediate. In our B2C business, our marketing spend as a percentage of gross bookings was flat. Overhead expenses were $654 million, an increase of $64 million versus last year or 11%. As we have stated previously, this increase is a result of our investment in talent across our product and technology teams to support our strategic initiatives. With our strong revenue performance and expense discipline with expenses overall growing slower than revenue we delivered record EBITDA of 532 million which was up 19 percent year over year with an EBITDA margin of 18.5 percent expanding over 130 basis points year over year both EBITDA growth and margin expansion accelerated sequentially from the third quarter this strong earnings growth enabled us to generate another year of robust free cash flow at 1.8 billion free cash flow year over year would have been even higher but was impacted by timing changes within working capital last year as the business emerged from the pandemic we saw meaningful year-over-year increases in our deferred merchant bookings balance which has since normalized this year these strong free cash flow levels enabled us to complete our largest ever level of sherry purchases at 2 billion or over 19 million shares moving on to our balance sheet we ended the quarter with strong liquidity of 6.8 billion driven by our unrestricted cash balance of 4.2 billion and our undrawn revolving line of credit of 2.5 billion which provides us with plenty of cash to operate the business our debt level remains at approximately 6.3 billion with an average cost at only 3.7 percent our gross leverage ratio at a further reduced 2.3 times continues to make progress towards our target gross leverage ratio of two times driven by our ongoing strong EBITDA growth as we look ahead towards 2024 we anticipate that market growth rates will moderate in 24 given the absence of COVID driven tailwinds that were prominent last year but despite this backdrop given the operational changes we have made to our business over the last couple of years we expect to have another strong year with top line year over year growth relatively in line with what we saw in 2023. On the bottom line we believe we have further room to optimize our cost structure and therefore improve margins. We expect to continue to drive operating efficiencies and cost of sales across our customer support and other operations and with overhead expenses as we have said we expect to drive savings this year as we deprecate systems and redeploy resources now that the bulk of our re-platforming is in the rear view mirror. These efficiencies and overhead will also translate over to reduced capex levels. Overall, we are taking a very close look at streamlining our cost structure to align with the next phase of our journey. And based on our initial estimates, these actions are expected to result in approximately 80 to 100 million in one-time GAAP expenses on the year, heavily weighted towards the first quarter. We are still finalizing the details, but we expect to have more to share this quarter as far as marketing we are investing behind our global expansion efforts to reignite our international growth and drive further market share gains this will naturally drive some shorter term pressure on marketing efficiency for our b2c business but despite this incremental investment we expect to still drive overall b2c marketing leverage on the year as a percentage of gross bookings as we continue to improve direct transactions retention and conversion with more scale. Putting this all together, we expect to deliver another record year of EBITDA with EBITDA margin expansion at levels relatively similar to what we saw in 2023. This EBITDA growth and some possible early repayment of debt should enable us to hit our target leverage ratio of approximately two times this year. We also expect this EBITDA growth combined with the benefit we expect to see from the CapEx efficiencies I mentioned earlier to drive strong free cash flow growth, and we aim to leverage the strong free cash flow to further maximize shareholder returns. While our stock prices increased in recent months, we continue to believe that it remains undervalued and does not reflect our expected long-term performance of the business. As such, we will utilize the strong cash-generating power of our business and our new $5 billion share repurchase authorization announced last quarter to continue buying back our stock opportunistically as it pertains to our first quarter outlook last year our first quarter was very strong and we therefore are facing some tough comps in the first quarter of 2024 additionally to start the year we have seen continued pressure in air due to reduced pricing levels from increased capacity and the grounding of the Boeing fleet as well as some pressure in our verbal brand as Peter alluded to earlier as a result we expect our gross bookings growth in the first quarter to be in the low to mid single digits and our revenue growth to be in the mid single digits in addition we expect some EBITDA margin compression consistent with the levels we saw in Q1 last year as we move throughout the year we expect our growth rates will increase due to conversion gains from product improvements the continued stacking of high ROI customers accelerated further by momentum building in our one key loyalty program and higher traction in our faster growing global markets so in closing I am really proud of what our team has been able to accomplish to the successful execution of our multi-year initiatives which enabled us to deliver one of the strongest financial years on record here at Expedia group yet it feels that we're just getting started with most of the heavy lifting behind us we are now better positioned than ever to go on the offense and this combined with our strong financial position should enable us to continue to deliver long-term profitable growth and shareholder returns. And with that, I would now like to open the call for questions. Thank you.

Thank you. As a reminder, if you would like to ask a question, please press star close by 1 on your telephone keypad. If you would like to retract your question, please press star close by 2. Our first question comes from Navid Khan from V. Riley. Navid, please go ahead.

Yeah, thanks a lot. And Peter will miss you on these calls after the Q1 call. But I have a few questions. One on Verbo, you know, with the migration complete, I think you talked about sort of, you know, the app update kind of taking some time and a little surprised that it's still been seeing some weakness in January. just give us some color on what exactly is the reason for that and and and you talked about some some sort of green shoots so give us some some commentary there and then maybe on the on one key can you talk about maybe where maybe the the learnings are are you satisfied with the retention and the convergence so far and and how much room do you see for improvement from here on and also in terms of international rollout? I think previously you talked about first half for that. Is that

still on the card? Yeah, so three good questions, lots of material there. Thanks, Navid, and you can call me anytime if you miss my voice. The first on Vrbo, I would say, you know, if you think about what we were doing at the tail end of last year, we were pushing to 100% migration, the app, everything moved over. And I think as we told you, everybody, you know, these steps come with expected conversion degradation because you can't get everything to par. It takes forever. You have to move everything and start working on a new product. So we did that. I'd say that degradation was broadly in line or slightly better than what we hoped, but it was still there. And when you're doing that, you obviously are not investing as heavily in terms of marketing because you're you're marketing people into a less converting product so you kind of tend to back off on that spend because the spend becomes less efficient as you now get to a place where the product is ramping back up very quickly and we've clawed back much of the conversion which is i think the green shoots you're referring to so we're we're actually gaining much faster than at least in my tenure i've ever seen us gain back in terms of one of these transfer transitions basically virtually back to the same levels of conversion. Now we can push back in and spend again. There is a little bit of a lag there because you've been underspending, if you will, for a bit, waiting for the product to get to where it's converting as strongly. Now we are spending back up. So, you know, it will take a little time to get the engines fully operational, if you will, but it's more or less a sequence we expected to happen. It's just you're seeing it on our numbers now um as far as one key goes uh you know i think you said am i satisfying i'd say i'm satisfied it's still early days i mean we're seeing a lot of the indicators we want to see as i alluded to cross shopping is good we're seeing uh you know one of the things we hope to achieve was getting hcom custom hotels.com customers who had fewer than 10 stamps you know people who hadn't gotten to earn anything yet to um be more engaged with the product and we're seeing their repeat rates improve and their business improve. We're starting to see Vrbo customers, but again, those cycle one key cash on Vrbo who didn't used to seeing good signs of cross shopping and people starting to use more brands. So that's all consistent with what we hoped, but this isn't, you know, it's not a switch you flip when you talk about travel timing. You know, many people only travel once or twice a year, so it takes a little time and we're building that in. So all good so far, but looking forward to it being even, you know, much more impactful over time. And then international expansion. We're not detailing which countries we're doing exactly when for competitive reasons, but one key will roll out. We will push back into a number of markets that were historically pretty strong for us and have stayed reasonably strong, but we just think we have a lot of opportunity. And then we will have some tests into some markets that we haven't been as invested in historically where we think there's opportunity with the new product new marketing approaches etc so a lot of exciting opportunity on the international front it doesn't it's not all dependent on one key we think there's opportunity regardless but in the markets where it's relevant where we have multiple brands that have seen you know we will be launching one key there and we think it will only enhance that great thank you Peter thank you thank you our next

question comes from Kevin Kopelman from Cowan. Kevin, please go ahead. Oh, thank you very much.

Yeah, first of all, Peter, congrats on your tenure. We'll definitely miss you on working with you on the calls. I did want to ask a question on that. Could you let us into your thought process a little bit or any color on your decision to step away in the timing?

Yeah, sure. I mean, I think I tried to capture it in my comments, but, you know, when this started, the idea was for me to come in for a period of time and sort of right the ship, put us where we wanted to be, and then, you know, build the team and make sure we had the people to take it forward for, you know, the next generation, as it were. And, you know, the transformation turned into a bigger, you know, I bit off more than I thought I was going to, and it was a bigger job than I thought it was. And, you know, I had my doubts, you know, a year ago. But, you know, we've made so much progress, and I stared at, you know, should I go further, et cetera. You know, I love this company. I love the category. I love my team. We've built an amazing group here. But I built it so that they could take it forward. And, you know, there's never a right time, but hopefully this is a good time to transition. We're fortunate to have Ari on. We're fortunate to have, you know, all the people around her that we've brought in or have been here many years, and I just think the company is ready. And, you know, I'll be here until May. I'll be, you know, busting my butt until then. I don't know how to do it a different way. And, look, we still – transformations are never done. The work is never done. You know, there isn't like an end date, and it's like, good, we did, you know, number 100 on our list of 100 things to do. But we've just made so much progress that I think the company is in a good place for it, and it fell.

Understood, and thanks for that. And if I could just ask a quick follow-up on Neved's question about Vrbo. Sure. Could you walk us through what that looks like as you pass through Q2? Is it fair to think about that as an easier comp once you anniversary the initial platform upgrade and what the time frame could be to get that back to flat and then growth.

Yeah, I think basically you can assume we anticipate growing out of this consistent fourth quarter score. So we expect to continue growing. I think as I alluded to, conversion is now basically back to where it was before we did all this, but we didn't do it to get to even. we did it to get to materially better and now verbo can benefit and the reason it's going as quickly as it is is we have lots of winning uh tests if you will that we used on our bro on the broader ota platform that are also winners for verbo so we're able to take a lot of our winning experiments move them over to verbo and you know get that humming again and but we can we continue to go further and as i alluded to you know our ability to multiply our test and learn capacity in a material way both in speed and in breadth is really changing how we do things so now when we have tests many of our tests we launch across all our brands and we just couldn't do that before so the speed of improvement we expect to continue to accelerate that will enhance all the brands but verbo is the one that has a hole to dig out of uh there were the most recent hole to dig out of and um so we expect that to continue to grow we expect the investment back into the brand to, you know, continue to have impact. We expect a cross-shopping effect of having the HSCOM and Expedia customers being able to use their one key cash number to have an effect. So all of that, you know, we expect to continue to build throughout the year. But, you know, we shot our own foot off on purpose and pulled back on spend because we thought that was the rational thing to do given the conversion situation. And now we're leaning back in, and we have the best in craft when we go back on it.

Great. Thanks, Peter.

Thank you. Our next question comes from Eric Sheridan from Golden Sacks. Eric, please go ahead.

Thanks so much for taking the question. I'd love to ask more of a big picture one. Now with one key in the market and elements of the replatforming behind you, how do we think about some of the things you talked about in the prepared marks about unified product offerings and being more innovative in the way you go to market and retain customers and drive direct traffic, and how we should be thinking about some of the product roadmap that you're most excited about and the mixture of both growth that could come from those initiatives versus investments that still need to be made? Thanks. Yeah, I mean, I'd say broadly working

backwards. I don't think there are, you know, there are investments of time, calories to be made, but in terms of investments of money and capital, I think, you know, we're on the other side of that hill and we expect to be able to do things more efficiently going forward. But if you talk about one key and the product itself you know as i say like one key is a great way to create stickiness within our environment but uh you might have heard me mention that we've we finally migrated all our crm virtually 100 of our crm and the brands um to our new unified messaging platform that platform allows us to do things much faster to communicate with customers so whether we have one key benefits whether we have new capable you know new offerings in one key whether there are one key bonuses you know all the things we can use to merchandise and keep people and use one key to be the glue that keeps members sticky and remember member members get more than just one key they get member discounts in the product and uh in many of the products we're expanding that every day we now have deeper discounts for silver and gold to keep them in but it's important to be able obviously to communicate with them in the most and then you add on to the more we can connect and now that we have a signal that we can use that data or what you see in what order or what filters are applied like those kinds of things that we can now do at scale to cool features we have all kinds of things going on to improve the air shopping experience the package shopping experience you know you name it but but really at its core I think having plumbed in the AI and ML we can now do so much more so much more quickly and it will feel to the consumer like a much more customized experience that's relevant to them. And I think that's inherently sticky in a way that, frankly, travel products have not historically been in our space.

Thank you, Peter.

Thank you. Our next question comes from Lee Horowitz from Deutsche Bank. Lee, please go ahead.

Great. Thanks for the question. First, Peter, congrats on your tenure. Thanks again. It's been a crazy couple of years, and congratulations on all that you've accomplished over that time period. Maybe just sticking with Vrbo, as we think about it in 2021, I guess, one, how do you feel about the overall health of the alternative accommodations industry? Do you think there may be some continued pricing headwinds in, say, core vacation rental destinations as travel patterns continue to normalize and perhaps some macro weakness plays through? And then secondly, can you provide any thoughts on how the competitive set for Verbo has evolved over the past couple of years, maybe as you've taken your foot off the gas and how maybe this shifting competitive landscape, if it is happening, is informing your strategies to get this business back to humming again? Thanks.

Yeah, sure, Lee. Thanks for your thoughts. It has been a couple of crazy years. the working backwards I think you know obviously we've seen VR continue to be healthy even as even post pandemic however there's like VR within VR so urban has done better we are not heavily weighted to urban as you know some of our competitors are I think that's what you mean by the evolving landscape you know obviously Airbnb has always been there booking has been doing more with that product, again, largely, as best we can tell, focused and benefiting from the urban side of VR or alternative accommodations. You know, we're still square markets. You know, we haven't made a big decision to pivot to, but one of the things that's enabled by all the migrations we're doing that will come this year, we have a bunch of multi-unit VR inventory on our OTA brands that is not on verbo and we still have some verbo content that is not on our ota brand so there's still opportunity to do more in sharing the inventory we already possess we've had no shortage of finding inventory and i think you know housing market issues and other things probably make that uh you know macro easier now um it's really just changing habits now our hedge against you know renting a mountain house or a beach house is of course renting a hotel you know or resort room as the alternative, and we feel good about our position there. But I think we feel very good about Burble. We needed to get the product to a new place. We are now firmly on that journey. I don't think we gave space to anybody. I think over time we should have the stickiest product because our product comes with loyalty, and our loyalty is usable across any travel product. In combination, we've just got to keep counting at home now, and now that we have the product.

Helpful. Thank you.

Thank you. Our next question comes from Anthony Post from Bank of America. Anthony, please go ahead.

Great. Thank you. I guess a couple for Julie. You gave us the 11% growth for lodging and 18% for hotels. So we can kind of solve for Vrbo, but can you give us any range of what percent your alternative accommodation nights are or bookings just so we can not have too big of a range there? And then second, you know, last year you were very clear double-digit top and bottom line. I think you said similar growth on the top line and then margin improvement. I mean, is that kind of saying double-digit for both, or do you want to clarify kind of the growth rates at all?

Now, the first one, and I think recently we haven't given out what percent is our, you know, Vrbo piece of the business, but I think, you know, once we bought the company, there was some, you know, obviously numbers that were provided at that time. You can do some extrapolation on the growth rate and get pretty close probably. So I don't think there's anything else that we would, you know, give out today from a disclosure perspective on that front. On the guidance perspective, you know, we basically have said, as you alluded to, that we are planning to grow relatively in line with our growth rates from this year, which is about, you know called nine and a half ten percent in GBV and ten percent on revenue and then we said with margin expansion relatively in line which you know we're calling about 75 basis points for expansion this year so that's how I would take it I mean relatively in line to us you know plus or minus 100 or so you know basis points but that's how I think I think about it that it's both

for GBV and revenue great thank you thank you our next question comes from Jed Kelly from Oppenheimer. Jed, please go ahead.

Yeah, hey, thanks for taking my question. Just going on to your overall marketing strategy, you know, just by watching TV, I still see you're still marketing to a lot of the brands, Hotels.com, Expedia. And do you start to pivot those brands more into one key? Can you talk about that? And then can you just talk about your comments on streamlining expenses, sort of what's the strategy behind that move? Thank you.

Yeah, sure. Thanks, Jed. So, on the marketing front, yes, in the U.S., you will see used to be far more brands. You know, we're down to those core three, and we believe in those three. I think, you know, we're still trying to find the balance between, you know, can they be advertised as one, or do they need to be advertised as three, and what is the best way to penetrate? So, I would think of that as sort of a, we're on our own learning journey about what we can do, how we can, you know, help people see them as a family of products that work together, and we continue to try to optimize, be it on television, which is what you're seeing, or in programmatic, or frankly, even in meta-search and so forth. So we're constantly working to see what the optimum way to drive those are, but I will say in the rest of the world, we have made very conscious decisions of where we will maintain one brand or if if we think it's worth it two or three brands and and what we will do there and we will lean heavily into you know it's a high bar for there to be more than one there has to be real brand affinity and other things that are driving that continuation of the second brand so especially now that conceivably any of our brands could have all or any lines of business and that's not that hard for us to do so the opportunity to take for example a market that is a predominant hotel dot-com market and potentially add car and air and other packages and other things is within our gift now and so we can make quite different decisions about do we need to be in with Expedia just to have air or something else so so that's really a big opportunity for us and allows us to simplify how we think about those decisions and in some ways not replicate some of the complexity we've made for ourselves over the years so that's the work in progress but you know all those things are effective and we're working to you know a way to communicate that maybe Julie can say something about

the yeah and so on the streamlining of expenses I think we've been saying you know all last year that you know obviously during the transformation phase we've ramped up in expenses, we've had duplicate systems, you know, legacy systems where we're still building out the new system and all the costs that are associated with that across the board from cloud and licensing and maintenance and things like that and so we have said as we come out of this, you know, transformation phase that we think there's opportunity to deprecate systems and redeploy resources and find cost savings throughout P&L and so this is our first you know sort of stab if you will at that and you know so you'll see things across the board coming out as we move throughout the year in cost of sales in overhead and to the extent that obviously crosses over into capital expenditures you'll see some of the pressure coming off at least the growth rates there and if not and also in absolute dollars but that's simply what that represents we're obviously not going to go into a lot of details today but we did purposely say that we will give you more information sort of later this quarter and as we move throughout the year on that as we give you more of

the details associated with it and I would just add thank you that's always been the plot that we wanted this wasn't just to build cool new things this was also to build them the right way and be efficient and how we did it and and that's the opportunity that has also provided not just from a you know experience standpoint but from thank you thank you our final question comes from

Mark Mahaney from Evercore ISI Mark please go ahead okay thanks I'm sure

these questions have been covered but if I could ask again please of these two initiatives the replatform the replatforming of the the brands particularly the verbal brand and then the one key strategy it is it I assume these are more like snowball events have you already seen an impact on the business or on demand cross-selling retention acquisition from these so far or would you lay if not could you add expectations of when we would thank you very much yeah mark i'll give you a

quick answer i think we sort of addressed some of it already but basically uh the verbal trends uh transition to the to the uh unified stack is uh more of just a uh an execution thing i think what it gives us is the opportunity now to accelerate verbo in terms of feature and test and learn and grow faster as I mentioned to the to the rest of the group we dug a hole we knew we would when we moved it to the new stack the conversion would go down we have been digging out of that hole we're about there we did it to excel we're excited about that as far as one key goes very good about the early indicators yes benefit now they have benefit and they're coming back more. And that's what we want to see. But cash on Vrbo, a small percentage of them have respented. And that just has to do with the cycles of the booking windows for Vrbo and that people rarely book more than once or twice a year. So we've got to get those, you know, we expect to see those people back in. That's why I've said we want to keep cash across shopping, which we've also seen. But, you know, again, those cycles, you know, again, we'll keep more and more people as more of them and all of our products and share from them that's you know thank you peter and thank you everybody i think that was the last question operator is that right that's correct okay thank you everybody appreciate your questions and we'll see you in may take care

that concludes today's call you may now disconnect your lines and have a nice day