Travel industry down on coronavirus fears
FOX Business’ Susan Li and Deirdre Bolton on the spread of the coronavirus and how it’s impacting the travel industry and markets.
Expedia plans to cut 3,000 jobs, or 12 percent of its workforce, to "streamline and focus" is efforts, the online travel shopping company told staff in an internal email.
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The decision comes amid plans by the company to save costs, with Expedia’s "Travel Leadership Team" saying in its letter on Monday that Expedia has been "pursuing growth in an unhealthy and undisciplined way," according to a report by tech news site GeekWire.
"Since our management change in December, we have re-focused the company on our core operations which had suffered for much of 2019," Expedia Chairman Barry Diller said in a Feb. 13 statement when the company's fourth-quarter earnings report was released.
Expedia's former CEO Mark Okerstrom and CFO Alan Pickerill both unexpectedly stepped down in December after the company's board grappled with a disagreement regarding business strategy.
FORMER EXPEDIA CEO MARK OKERSTROM'S PAYOUT COULD BE NEAR $12M
"We have rapidly moved to simplify how we operate and increase efficiency. These changes helped us exceed the high-end of our revised guidance range in 2019 and will contribute to accelerated profit growth in our underlying business in 2020," Diller said, adding that the company was planning to cut $300 million to $500 million in costs across the business.
"The actions we’re taking to simplify our business and drive cost efficiency will position Expedia Group for improved revenue growth and margin expansion for years to come," he added.
Expedia reported adjusted earnings of $185 million, or $1.24 per share in the fourth quarter. Revenue for the quarter rose 7.4 percent to $2.75 billion.
Large group of programmers working on PCs in the office. Focus is on mid adult businessman giving his colleague digital tablet. The view is through glass.
Diller slammed Expedia's work culture in a Feb. 14 earnings report phone call, saying the company was "sclerotic and bloated," and its employee culture had become "all life and no work" rather than "all work and no life."
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"Amazon was all work and no life … and at Expedia, it was all life and no work," Diller said during the call. "That is not damning our employees. But for several years, we really lost clarity and discipline. So we’re changing a great deal."
Diller also noted that Expedia had plans to "recognize … the full effect of coronavirus" in his Feb. 13 statement. The travel industry as a whole has since taken a few hits as the new virus appears in more countries.
Passengers arriving on a China Southern Airlines flight from Changsha in China are screened for the new type of coronavirus, whose symptoms are similar to the cold or flu and many other illnesses, upon their arrival at the Jomo Kenyatta international
Shares of American Airlines and Delta Airlines fell sharply on Monday, along with Wynn Resorts casino and MGM Resorts. Shares of Hilton, Hyatt and Marriott all took a tumble amid concerns over travel to both Asia and Europe after the new virus spread throughout Italy in less than a week.
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It's not uncommon for the travel industry to plummet during a health scare. MMGY Global, a travel and tourism marketing agency, and travel agency Travel Horizons surveyed 2,644 American travelers in 2009 following the swine flu outbreak and found that a little over a third said they would change their plans. Fifteen percent said they would postpone trip plans until the outbreak subsided; 11 percent said they would choose another destination and just 10 percent said they would cancel their trip altogether.
CLICK HERE TO READ MORE ON FOX BUSINESS FOX Business' Jeanette Settembre contributed to this report.
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