Online travel agency Expedia Group is raising approximately US$3.2 billion of new capital, which consists of a US$1.2 billion investment from private equity companies Apollo Global Management and Silver Lake Partners. The fund-raising transaction is expected to close on 5 May, with David Sambur, co-lead partner of Apollo's private equity business, and Greg Mondre, co-CEO and managing partner of Silver Lake Partners joining Expedia Group's board of directors.
Peter Kern, vice-chairman and CEO, Expedia Group, said the new funding, along with continuous steps it is taking to simplify the business, the company will be "in a better position to rise to the current challenge and come out stronger than before". Kern added that the company understands the financial challenges ahead and will continue to address those needs.
Reed Rayman, a partner in private equity at Apollo said the investment will help ensure the company has the resources to sustain market leadership. Jason Scheir, Apollo partner and head of US Hybrid Value, also said the investment will help Expedia strengthen its financial position to continue to serve travellers worldwide. Barry Diller, chairman and senior executive of Expedia Group said: "We have one mandate – to conserve cash, survive, and use this time to reconstruct a stronger enterprise to serve the future of travel."
Meanwhile, as part of its cost-cutting measures, Expedia will be implementing furloughs and reduced work-week programs for selected volume-based teams with limited work right now. According to a press release, its intention is to allow impacted employees to retain Expedia healthcare benefits coverage while on furlough or reduced hours, and it will cover the employee premiums in the case of furloughs. Expedia also said it will support employees by participating in government aid where feasible in different countries. These measures will be active until 31 August. Expedia's chairman, CEO, and members of the board will also forgo cash compensation for the remainder of the year, while senior executives will be taking a reduction in salary of 25% for the balance of the year.
Expedia said when the crisis began, it had limited online tools to support widespread cancellations and its call volume spiked 500%. Since then, its tech teams have built new tools, and managed to bring its call center capacity to acceptable levels. Expedia also had a shift in management in last year, appointing Peter Kern as CEO and Eric Hart as CFO. Kern has been a key member of the board since 2005 and became its vice chairman in 2018. Meanwhile, Hart has been with Expedia for 11 years, and during that time he's held responsibility for group strategy, business development, global M&A, investments, and the CarRentals.com business.
In February, Expedia Group was reportedly cutting approximately 12% of its workforce, according to a CNN media report. An internal memo seen by The Financial Times and CNN, the travel agency said projects, activities, teams and roles will be reduced and streamlined to put focus on the overall organisation's growth. Expedia embarked on a reorganisation plan in 2019, with the goal of bringing its brands and technology together in a more efficient way. In its last financial report published in December 2019 , the company said it aims to simplify operations and increase efficiency.