Q1 2021 Expedia Group Inc Earnings Call
Information.
As always some of the statements made on today's call are forward looking typically preceded by words such as we plan. We expect we believe we anticipate we are optimistic or confident that or similar statements.
Please refer to today's earnings release, and the company's filings with the SEC for information about factors, which could cause our actual results to differ materially from these forward looking statements.
You will find reconciliations of non-GAAP measures to the most comparable GAAP measures discussed today and our earnings release, which is posted on the company's Investor Relations website at IR Dot Expedia group Dot com.
And I encourage you to periodically visit our IR website for other important content.
Unless otherwise stated all references to cost of revenue selling and marketing expense general and administrative expense and technology and content expense exclude stock based compensation and all comparisons on this call will be against our results for the comparable period of 2019.
And with that let me turn over the call to Peter.
Thank you Pat and good afternoon, everybody and thank you for joining our call groups.
And some brief remarks.
Two questions.
Talking about the Egencia deal, which we are.
Announced a few days ago. The proposed deal is extremely exciting to us and and a few minutes Erich will share the details, but I will just say it.
It really.
Highlights three core things, we're trying to do there one is find the best opportunity for all of our businesses and in this case, we felt that putting <unk> together with Amex GBT and created a great new combined corporate enterprise that can focus entirely on the corporate customer and really provide a best in class.
Suite of services to serve those customers and our ownership and that company. We're very excited to have.
And secondly.
And we signed a long term lodging supply and check.
Agreement with the company and Youll recall, we have a big day to be business Expedia partner services. It is core to our strategy long term and driving and powering the industry broadly is an important move for us. So this deal enhance significantly and just gives us more throughput to continue to innovate both on the <unk>.
Hi, and technology side too.
To provide great services to the entire travel ecosystem and finally, as we've talked about and hopefully this past year, we're trying to simplify our company. So we can focus on the most important and largest opportunities and with Egencia and and great New home and should this deal proceed we will be and a great position to focus on our BTC and <unk> businesses.
And our core technology platform, and that's really for grid, great chance for us to get simpler and get agility and speed and the rest of our core business.
Moving on to recent trends.
I would say as I've said travel remains a study in contrast for us.
And for different geography, and some are still shut down some like for you.
And are quite open now and equally a study and differences between vacation rentals.
Mastic travel versus international travel.
Travel is more challenged conventional lodging, particularly in big cities is more challenged so it's really a <unk>.
Study and contrast, it depends where you are strongest we have benefited greatly and our vacation rental business and our domestic U S business, but other parts of the business still remain challenged I would say.
And many have reported already but for summer looks strong, particularly in the U S and and other markets where.
Vaccinations are well along the way.
We are already seeing booking trends well above 2019 levels for leisure destinations Beach mountains et cetera.
And that goes for not only vacation rentals, but also for conventional lodging.
Give a little more color.
On bookings themselves.
We said on our last call that we were down somewhere in the high 40 percents and.
Gross bookings net of cancellations and.
And the January period that has moderated to downs around 20% in March and has improved on that and April. So the trends remained strong again, driven largely by the strongest markets, but still the trends are very good and we're excited about that I would just keep in mind, while summer looks great and we are ambitious and.
And feeling good about the overall recovery that calendar is still a question Mark we don't know what seasonality will look like as long as COVID-19 is here and the usual trends that might come in the fall and winter are still unknown. So while we are extremely excited about summer, it's a little too early to predict how those trends with work from home whether.
Schools and session et cetera will change travel behavior.
Into the following quarters.
On the verb upfront and vacation rentals and general we continue to lean into that business, we have grown share.
And all of our strongest markets and invested heavily in marketing and and acquiring hosts and we feel like.
That continues to be a great opportunity for us not just in this moment, but and the future as we capitalize on.
Land and the brand and getting more people to experience.
Bravo and staying and vacation rentals.
We are seeing some compression and some are people asking about that frequently and I'll just say so far we have seen replacement as a pretty good solution and most people look for somebody if they can't find it they'll find something nearby and increasingly as more people are vaccinated, they are willing and happy to stay and resorts and and conventional lodging and I would say some portion of them will.
And I actually prefer it that way and we're seeing and those leisure destinations for the summer very strong convention and lodging numbers.
On the marketing side I've mentioned in past quarters that we've taken a relatively conservative bias on.
On how we've approached marketing rather we have a little money on the table and then get too far out over our skis, but in the course of the first quarter, we have sort of changed that bias and moved more particularly in the back half of the quarter towards investing and getting in front of the wave of demand. We think is coming that's taken the form of a number of brand marketing rollouts, including.
A brand new Expedia brand marketing campaign that started at the Academy Awards, we've relaunched our Orbitz brand with a focus on LGBTQ AA plus.
And thats sort of again, a push as we tried to differentiate brands and really focus each brand on who their market is and later this month, we have a great new summer AD campaign coming for <unk> that we think will be.
Be really impactful so that investment and brand building is really important to us we've talked before about going up funnel and creating that brand love pushing for direct.
Direct interactions direct consumption, but keep in mind, it's not a quick twitch tool like performance marketing. So we have to invest over time to build that though we think it does have returns ultimately for performance marketing as the brands become more well.
<unk> and more highly thought of.
We are starting to see wins I've talked at some length and the past about combining our performance marketing teams.
<unk> been doing.
Humans work and a terrific job, we've actually put in a new leader who came from the outside and is a great. New addition to the team, but I just wanted to have said that before I wanted to give once that to give you a sense of the acceleration. We're finally, starting to get which is that 75% of our SCM spend is now on a new consolidated technical and data platform.
And just for a point of reference at the end of last year that was at 15%. So it is starting to accelerate we're starting to get the wins, we hope to get as we combine these Brian.
And as we invest more and get more aggressive and we're getting these wins, we're seeing our click share.
And go back to historic levels or higher and our main products and our key markets.
We continue to refine our marketing spend and general and we will continue to test and learn and there will be balancing as we learn but I will say, we mentioned last time on our last call that we went off to Google.
Net product for vacation rentals and actually over this last quarter. We have we have pulled back from other vacation rental amount of players and so far the results have been excellent.
And as good or better than we could have hoped for in terms of the returns we have seen and getting more direct traffic and traffic other ways more efficiently. So that has been a great move and we will continue to focus on that but again, we will be up funnel more we will be focused.
And leaning into the wave ahead.
But it could be bumpy and we may be a little early but we believe now is the time for lean in and we will be leaning and accordingly on the platform and technical side I made a promise that I am not going to get into the businesses.
Selling 100, great stories about our technical platform, we are making great strides every day and it is definitely where we're putting the most energy time and money.
But I just wanted to point out one area of wins because it really goes to how this is going to in fact affect not just to us as a business, but the customers and thats in our AI and data products.
And we recently launched a reinforcement learning algorithm, which allows us to power different shopping journeys on a given page for different customers and we are using it now not universally because again all of the tech is coming along and it will be launched as it can be and more places, but we're using it to adapt and improve the customer experience.
To the specific customer journey.
Opportunity for conversion and improving the business, but most of all it's a great opportunity to improve the experience for the customer and make it easier for them to find what they want and and a related point. We're also using AI and telemetry data to track customer experience to track friction points and again focus on taking that friction out of the customer experience and making it great. So these are.
First tier technologies that the best E Commerce companies and the World use and we are now using it to make our consumer experiences better and it's really exciting right for the business.
But in many ways, even more exciting that we can drive customer love and a better customer experience.
And so finally I would just say we are clearly benefiting from our relative strength and some of the best markets VR The U S et cetera.
But it's a bumpy ride and we're hoping for reopening I would say the announcement about New York City Youll remember, we're very strong and big cities and and international travel and neither of which have been doing well.
But the announcement about New York opens up hopefully some international and travel between EMEA and the U S for summer, we'll start to open even more as we go forward.
And I'd just like to say.
Nice to report.
And that we're making progress, but we are mindful of our friends and colleagues and everybody really and India. We have a big operation and India. We've got many colleagues and family members and our thoughts are with them every day and whatever the world can do to help we are doing everything we can to help but we all should do more.
And I would finally say that as a reminder, debt. This is and unpredictable time, we still don't know what's happening in many markets anything could happen and things could get worse before they get better but we are optimistic we are seeing a lot of improvement across the globe and and we are feeling good about the work we're doing at the company so with that.
And I'll, just say hopefully vaccines continue to rollout hopefully you all have your vaccines and cell everybody and not get a vaccine.
And we have little doubt that as that continues the world will open up and travel will come Roaring back so with that I will pass it off to Eric. Thank you.
Thanks, Peter I'd like to start by providing more details on the binding offer we received from Amex GBT to acquire <unk>.
Peter's earlier comments, we are very excited about the deal and I'm optimistic about the success, we would see from the combined company.
Now and now.
Alf which includes two major pieces first we have approximately 14% ownership and the combined business presenting close which we currently estimate is valued at approximately $750 million.
Second we will also enter into a 10 year lodging supply agreement between Amex, GBT and eat and EPS.
And as Peter mentioned earlier and.
And then to put this commercial deal and the perspective, the supply agreement would have generated in excess of $60 million.
And EBITDA in 2019 volumes, we anticipate that proposed deal that closed and nine to 12 months.
Next I wanted to provide and update on our cost savings initiatives and.
And 2020, and we made considerable progress on right sizing our cost base and these efforts continued in Q1.
We still expect to be towards the higher end of our $700 million to $750 million range for fixed cost savings relative to our 2019 exit rate and we have now achieved approximately $700 million on a run rate basis, we remain confident and we will realized largely all of those targets cost savings by the end of 2020 one.
As we've spoken about previously when looking forward, we will have annual increases and our remaining cost basis for items like annual comp increases and we expect to invest and areas of the business, where we see attractive opportunities.
On variable cost of revenue and we remain on track for over $200 million and annual savings based on 2019 volume levels.
And as a reminder, the three key drivers are improved economics for our payments platform expansion of our conversations platform to reduce customer service cost and lower variable cloud costs.
Similar to the initiatives, we still expect to realize largely all of these variable cost savings by the end of 2021, although given the cost per volume base. The savings will not be fully evident until we reach more normalized business levels.
We've also spoken in the past about driving market and marketing efficiencies and we've continued to make improvements in Q1, but I want to be very clear we are spending into the recovery as Peter mentioned.
As it relates to Q1, and we increased our investments, particularly in the back half for the quarter and that continued.
And we also expect a further increase in Q2 as we look to further capitalize on the pace of travel recovery, particularly within the U S.
As a reminder, we incur the marketing expense and a quarter and.
<unk>, but we don't realize any associated lodging revenue until the stay actually happens.
In terms of the balance sheet, we are investment grade rated today and as the recovery continues to unfold, we remain committed to delevering back to more historical leverage levels, while also continuing to reduce our cost of capital.
Our ultimate goal of being and a strong position.
B and a strong position to restart our capital return program to shareholders as we talked about the early part of last year.
To that and we recently took advantage of compelling market conditions and raised $1 billion and 10 year unsecured notes, which have a coupon of 295% and $1 billion and zero coupon five year convertible debt with a 72, 5% conversion premium.
And we used the proceeds of the new debt issuances to redeem $1 7 billion and debt due in 2025.
Coupons are 7% and six 5% this will yield approximately $80 million and annual interest rate savings.
From a liquidity standpoint, we have $4 $3 billion and unrestricted cash and short term investments, which is about $1 billion higher than we ended Q4 with the increase primarily due to positive free cash flow.
We also have essentially $2 billion and untapped revolver capacity.
As it relates to deferred merchant bookings it has improved and each quarter since the height of the pandemic.
And with a total of $6 billion at the end of Q1.
We have witnessed positive recent trends and are cautiously optimistic about the pace and shape of the recovery. We are also confident and our liquidity position and therefore, we have elected to pay down 50% of the preferred stock issued in 2020.
Later this month.
And as a reminder, regarding the preferred stock. We also have the ability to pay off that balance at anytime when we built to do so and it's something that we'll be watching over the coming months.
Now shifting to the P&L.
Total revenue was down 52% versus first quarter, and <unk>, which was a notable improvement from last quarter with revenue down approximately 62% year on year.
And thats normalized for the insurance Contra revenue impact that occurred in Q4 of 2020 that we spoke about last quarter.
Overhead expenses totaled approximately $500 million and Q1 and came in slightly better than anticipated due to some timing benefits. As a reminder, we define overhead as G&A tech and content and direct sales and marketing, while excluding stock based compensation.
Moving on and we made a change during Q1 and managing our software licensing and maintenance costs, which led to a modest reclassification to prior results. We have moved from a decentralized approach, which we've talked about previously where each individual team manages their own spend which resulted in increased costs and duplicative tools to a much more centralized approach across.
C G.
And 2020, the change resulted in approximately $60 million and costs being reallocated to tech and content with the majority coming from cost of sales and the remainder from sales and marketing and G&A. There was no change to total costs or EBITDA from this reclassification.
And total adjusted EBITDA was negative $58 million for the quarter, which was slightly better than our expectations on an absolute basis. Adjusted EBITDA was down approximately $235 million versus Q1 2019, while revenue was down approximately $1 4 billion over the same time period.
On the free cash flow, which totaled $2 billion and Q1 on a reported basis.
If you exclude the change and restricted cash, which is primarily driven by verbose deferred merchant bookings free.
Free cash flow was approximately $800 million.
Looking forward and we mentioned it last quarter.
And we do expect our overhead cost to step up by approximately $50 million sequentially from.
And from Q1 for Q2 of this year relative to the Beaumont the bonus payments and other issues, we talked about last quarter.
In closing continue to be very encouraged by the recent trends within the business.
<unk>.
Increasingly confidence and our liquidity position given the change and we just made it especially and paying down the preferred.
But we remain cautiously optimistic about further improvements and travel recovery as we head throughout the rest of the year.
Operator, we are ready for our first question.
One for Apple pharma worldwide for Mike.
Welcome to answer questions for myself.
Barb and one on the telephone.
A warm debt barb and Huang and will telephone.
For Wawa composites.
Okay.
And from the line of Mark Mahaney.
Your line is open.
Thanks, Mike two questions one just a clarification Peter on your comments about down 40, and January down and <unk> March and prudent on that and April I think you're just referring to domestic bookings if debt. So could you just give those same sort of trends on a global bookings basis, and maybe I misunderstood that and then secondly kind of a high level question.
If you think about what youre doing with the business to help.
You've done a lot of things to improve the cost structure as you.
Selling into and in and out of COVID-19, what about well how would you describe what you've done to try to improve that bookings growth and our revenue growth pre versus post COVID-19.
So what have you done and what do you think are the best ways to get the growth to Reaccelerate from where the business was prior to COVID-19. Thank you.
Thank you Mark.
Sure I'm happy to answer those first of all the answer to your first question is those numbers are global and that is our entire business collectively not just the U S.
The U S is stronger for sure and helping that number up but.
Those are global numbers.
As for beyond the cost structure I would say, we're doing tons of work and I'll start by Unfortunately, reiterating all the work we're doing on the marketing side.
And the work we're doing to.
Simplify and combine performance marketing team tools capabilities and data analytics.
That's a huge benefit for us as we go into the post into.
And to the future into the post COVID-19 time, and our ability to compete and the performance channels and.
The most effective ways.
We believe we can do better and do more on the brand building side and to create that direct customer relationship and then that leads all the way down through of course, the importance of doing the product right.
And getting the engagement rate improving the apps and proving the technology, you're using AI to improve the customer experience. So all of those things are the classic sort of a virtuous cycle of can you get them and the door can you make them viewed as the experienced grade does it help them find what they want so there's a ton of work and all that work I would talk about on the platform.
One side is not about efficiencies, although it does create efficiencies what it really creates as agility and and.
And the ability to serve the customer better and create a stronger tied to that customer and repeat and loyalty and lifetime value.
So, it's really and exercise and all the pieces, but we are getting sharper on all elements, whether it's the brand proposition for every brand whether it's the geographic proposition for every Geo and brand and then what that customer experience is like all the way to the and through service and it's all those pieces so investing.
Across the board in terms of our energy and time and I think those pieces will start to multiply on themselves as we get more and more of them sort of across the road is it works so well.
And what's a good work going on some things are a lot further along and others, but I think youll continue to see improvement across all those categories.
Okay. Thank you Peter.
Thank you.
Your next question comes from the line of welcome Paul.
Okay.
Great. Thanks, a couple questions first on verbal obviously high valuations and that sector wondering if you can help us understand the percentage of bookings and maybe the growth rates and the quarter.
Bookings and revenue and then secondly.
Actually very interesting disclosure about the Expedia marketing spend and I believe you said it could be the biggest and.
And the last five years, so can you help us understand.
First of all how you think about that affecting EBITDA and the second quarter and.
And are you seeing very positive marketing returns and that that gives you kind of income.
And are encouraging.
Thank you.
Yes, Thanks, Jeff and I'll, maybe take the second one first.
Yes.
We've spent a fair amount of time getting to a new brand proposition and a bunch of new capabilities and things. We wanted to talk to the consumers about and adjusted the early stages of rolling out our Expedia brand campaign.
That is.
The brand campaign across multiple markets and.
And we think it has great opportunity, but to be clear brand marketing is somewhat are not just all science and it does take time to pay its rewards, we do believe though that by being more a funnel by being more efficient and performance and allowing us to put more money upfront and we can drive greater long term.
Returns now it's not a quick twitch muscle as I said brand marketing, it's not like you run a great AD and tomorrow everybody books. It takes repeat it takes thinking and that brand proposition and getting everybody focused on your name and then it starts to pay rewards and performance. It starts to pay rewards and direct it starts to pay rewards across a lot of things so.
And we believe and that opportunity, we will invest and that opportunity and it will take some time to pay out. It is not it's not like performance, it's not like Dubai and the transaction every time you do it.
On the verbal front.
And just looking for some of the bookings and growth rates. So I think we don't break those numbers out separately I would say <unk> is doing great.
And the U S, particularly strong, but as I said and all of our strongest markets.
Showing share gains.
And <unk> is clearly and vacation rentals and general clearly and very positive territory and that is helping bring up all our numbers no doubt.
But we don't break them out separately and.
And so I think it's just we view it as part of the business and as I've said before for the long term plan for verbal or vacation rentals more generally is to have them available through all our brands and the most optimal way for the customer so.
So thats, where we are and.
Two quick things that the generic also on distributing that inventory from a vacation rental standpoint, ultimately through EPS or ex.
Expedia partner services, while we think that's a meaningful opportunity for us as well and then on the on the marketing side. If you look at.
Year over year going into 2018, 2019, and the 2021, our marketing spend as a percent of revenue has come down quite a bit when you compare against those and yes. We are spending heavily into brand and we're continuing to spend and performance channels as well and we're also seeing and given all the work that the teams have done.
And we're getting good share of voice share of wallet. If you will at ROE assets that are higher than we've traditionally seen and so.
A lot to learn how thats going to flow through the P&L over time as Peter mentioned, but we feel pretty good about the investments that we're making.
Great. Thank you.
Your next question comes from the law.
Lineup.
And one from Bernstein your.
Your line is open.
Thanks.
If we start on that.
The cost side, we've taken the business kind of down and Thats done during the pandemic.
And invest and absolutely do we want to bring in and retain the best talent at our company absolutely. We are making those moves we've brought and lots of great New talent, we have changed and as Eric alluded to are our equity and bonus structure.
To reward our people for growth.
So we will continue to invest and the things that will drive our business much of which is people and their ability to build great tech and tools and products and services and then people to help.
And ROE leaning into both of that from a technical standpoint, and yes, we are spending up more and now that the market is coming back. So both of those things are true, but we believe we can do it more efficiently as Eric said maintain higher ROE is in that and then redeploy some of that capital back to the front and to drive that brand awareness.
Where we think we can also do better than we have historically and spend that money more efficiently. So.
It's sort of again, a virtuous cycle, we got we got to do all of those parts. It's a lot, but it's not a hope and a prayer and just moving money around.
Want to be as efficient as we can and by good growth and performance marketing work and.
And we want to use brand to its greatest effect.
Alright, thank you.
Thanks.
Well, Mike from the line of Marvel Guang.
Your line is open.
Yeah, Thanks, a lot.
A couple of questions. So maybe.
Hey, Barry.
Talking about gross as you miss covering where the opt in them.
And can be hard for me to think about that plagued mccain.
Sydney, and Melbourne between performance and brand advertising and.
And we look forward, maybe how do you think it compares to.
And it has been in the past and then secondarily.
You are making a big push towards and loyalty and <unk>.
Recent announcements on the Mark.
And gaining on 25 million and Meanwhile.
And loyalty numbers, how does that affect the P&L and comes up how you accrued for the moment and awards.
Yes so.
Maybe I'll take those in reverse again.
Which is on the royalty side.
We felt like there's a big opportunity, particularly and brand Expedia to drive loyalty and.
Learnings, we'll no doubt and help other brands for us, but we were we felt like we were leaving a lot of customers on the side because of how we made them sign up for what they had to go through et cetera, and the truth is for a customer it's a much better experience if they become a loyalty member they get to see royalty rates they got to.
And they get a lot of benefits and in general they consume more and the returns on those loyal customers are higher than the returns unmet and people who are not members. So while there may be accounting that has to get accrued for overtime. The return on that customer's performance is much greater its been proven over and over again and our brands. So.
So this is really just opening up a window, making it easier and better for the customer helping them see the benefits.
And <unk> them to see the benefits earlier, if you will and and I think there's nothing but upside and good stuff. There. So both for the company and for the customer.
As far as the rollout goes we talked about this a lot and we don't really know where it's going to balance out we are trying to take as scientific and approaches we can.
Two driving returns through our marketing area. So it will be a bunch of them as we go.
We are testing and learning even as we speak a bunch of things across.
On and off different brands and different geographies and seeing what happens for.
From a performance marketing standpoint, we will be testing and to brand spend as well by geography and by brand. So.
We're going to learn and it's going to take some time, but we believe with the benefit of a really strong team on the brand side and a really strong team on the performance marketing side for the first time once we get all of these things consolidated and the technology work and the right way, we are going to have it's going to be a fair fight and we're going to be in a position to.
Perform outperform the competition and a way we just haven't been for a long time.
Thank you for this is Eric.
Debt inevitable.
On the loyalty side.
We are working through ultimately how to account for those going forward. We have robust teams. We actually have three different teams that look at and quantify it separately and we have and internal team a third a third party provider and and our auditors go through and as well and so we're going to be going through that math, effectively say theres going be a lot more points, perhaps with the respective <unk>.
Our probability of redemption at least for those that don't get actively engage which again the point is getting them actively engaged and that journey, but we will provide updates as we go through it but it is something that were market share.
Okay. Thank you.
Well, Mike Congrats on coming from the line of Brian will now walk from Morgan Stanley. Your line is open.
Yes.
Thanks for taking my questions I have two first of all and Peter sort of high level, one and when you. When you came in the year roll you outline a number of strategic priority and the brand re org and the cost reductions and improved product merchandising et cetera, just sort of help us understand what she may approach of your priorities you think you've made the most.
Progress on and then as you sort of look into 'twenty, one 'twenty, two where are there still sort of the most low hanging fruit to continue to improve the execution of the company both top line and within Opex and then the second one just a little bit on marketing and talk to us about whats youre seeing on performance marketing Rois and your mix of overall.
Direct traffic and just sort of heading into the spring and summer.
Yes, Thanks, Brian.
So on the strategic priority standpoint, I think we've made a lot of headway and many fronts I think the hardest biggest lift is really on the on the platform and the technology and the product.
And a lot of that's been organizational and getting the right pieces of the company together and the right way and organized under the right leaders so that we could drive.
And drive this journey, we have to drive from getting to this complicated Siloed technology, we had before to a much more clean.
High efficiency agile construct.
So thats, where the most I would say the most energy is going in and frankly, it's a tale and 1000 and story is different different parts of that journey are in different states of completeness.
But.
That creates to your second question I would say the most opportunity going forward because every time, we get a win there and I have talked in the past, whether it's about multiple checkouts, becoming one checkout or multiple identity features becoming one identity. It gives you both speed and better consumer experience and better ability to improve.
On that as.
As well as efficiency and the ability to redeploy that debt resource to other higher return opportunities. So.
And that's both in both and efficiency opportunity, but I would think of it more as the opportunity to invest that talent into new growth as we go forward. So we are still in the middle of many of those things still being fully equipped as if they were run as six or eight or 10 separate things.
We will get to a place where we have one strong robust thing and those resources.
And some of those resources can get to higher value returns.
And then.
As far as marketing and the other and cutting costs again, the cost side will come from what I. Just described I don't think we continue to see opportunities. Many of the things Eric has talked about that debt have already borne fruit in terms of cost savings like our voice platform et cetera have much more opportunity to go and more running room. So we see that kantar.
<unk> going to happen, we're creating great new tools on the service side, which are creating the opportunity to serve our customers much more efficiently and not just through through technology, but also through technology assisting humans. So theres all kinds of places that I think there is more opportunity to get more efficient, but we really do and I think Eric and I think about it.
It's really the opportunity to reinvest back in the business when we have those efficiencies as opposed to do.
And do we just keep cutting for for more margin and so there's plenty of opportunity on the margin side I would say as we re and fleet with with travel.
And on the flip side.
We believe we've made good progress.
But.
There's still a long way to go and a lot of opportunity.
And what did I Miss <unk> and.
Sorry on the Rois for.
Direct traffic for mix and direct traffic I would say.
Sort of a warning here I think during COVID-19.
Can be very misleading most of us and the travel space have seen really good numbers on direct traffic on.
And mobile use and all of that because our most loyal customers when we werent marketing as much for a bigger part of our mix than they might otherwise be I think as we start to re inflate again in terms of a more natural travel market.
Those dynamics may shift somewhat.
But definitely we continue to push all in an app usage on direct relationships and getting out of the auctions as much as we can so the mix has definitely shifted in our favor in terms of direct traffic in terms of.
App and mobile use et cetera, but I don't want to put too much on it because I'm not sure where it's going to normalize out when the market returns globally.
Okay. That's helpful. Peter Thanks.
You bet. Thanks.
Youre welcome Kevin.
From the lineup.
And Barnum from Wolfe.
Your line is open.
Hey, guys. Thanks for taking the question couple ones. So first on mobile can you talk about your thoughts on the supply side, you've talked about for taking into traditional lodging a little bit how are you optimizing for on the supply side. During this period led demand and spiking and then the second one I wanted to ask about the booking window trends is there any no.
To monetize their assets, we think it's better than any other similarly, situated one and and we think owners of properties are increasingly becoming aware of that as our brand becomes more ubiquitous and as people become more product. So.
All our stats make for a great sales story, we just have to get it out there and we're spending more to get that story out there.
Yeah, and I'll just add to that this is Eric as well.
Is also.
And is there a compression or when there's.
Supply selling out if you will there are alternatives that were then provided and that's part of the product experience on whether it's a nearby alternative or appear or whatever else. So it's something that.
We're working from a product standpoint in regards to your question on the booking trends, we continue to see elevated and.
Next 30 days and.
Conventional lodging.
But it has come down from what we saw the <unk>.
During the call at the depth of the pandemic.
We're continuing to see obviously very strong demand for the summer and.
And even.
Off a very small base, we're seeing and healthy demand for the holiday period as well so we're starting to see it extend into.
Away from the 027 days or very near term and two more healthy time periods as well and more distributed to what we've seen historically and I would say that the similar story on the verbose side as well, but typically it has longer booking cycles, and we continue to see that as well.
Okay. Thanks for you does thanks.
Thank you.
Well not for me.
For one Cocomo, one call and will allow me.
Great. Thanks, a lot.
And.
And a follow up on the April and trends that you mentioned, so and so pretty dramatic improvement between January and March can you give us any.
Any additional color on to what extent.
April improved versus Mark March because you did note that it was better and then.
Within that can you talk about the U S. A little bit more and did you have you seen the total U S market return to growth yet.
Versus 2019 thanks.
Yeah, sorry.
Kevin.
As far as April goes I would say that we.
And that's where we need more and to open up.
Thanks, that's really helpful and then just.
On Amex did you mention.
Expected timing on the close there.
Nine to 12 months.
Okay perfect. Thanks, so much.
Kevin.
Your next question comes from the line of Brian Fitzgerald from Wells Fargo. Your line is open.
Thanks, guys a couple of clarifications on Egencia.
And ask about the enterprise value for either James here all of the combined entity on the deal and then clarification.
And our organization and be relying on EPS going forward.
First one non Egencia and and then the second one was just a follow ups and bids question and verbal if youre seeing any indications of other long term shifts and travel behavior, maybe have you seen.
Repeat usage and what we rented last summer and we're doing again, this summer or tailwind with the inventory and making inroads and urban centers and resort areas, where the competition has been tougher like California.
Yes.
Alright. This is Eric I'll take the first part of that question just around Egencia, and we did mentioned or I mentioned and the call that we have for approximately 14%.
Ownership and the combined entity and we estimate that to be worth $750 million. So I think you can essentially do the backwards math again for the overall estimated enterprise value and and equity value for them for the business.
On the commercial agreement itself.
Debt and excess of $60 million based on 2019 volume that is for the entire supply relationship that we will have with the combined business and.
And there are components of that that's obviously egencia and condition that we're putting in and obviously, we want to have a much larger relationship with them as well so.
This represents a combined.
And before the full estimate of that agreement.
And I'll jump in on the last one which is we.
We haven't seen a ton to suggest that things are changing and as you've heard me say many times.
Road to extrapolate too much from this COVID-19 period, but for sure. There are a lot of new users of the robo experience and in general I think they are.
Data suggests they are they are going back to it more frequently but again, we are in COVID-19 and as long as you're comfortable with that use case you are still comfortable with it now is that sustainable where people go back to resorts and other things I have said publicly.