Q2 2021 Expedia Group Inc Earnings Call
Okay.
Mike.
The weighted average.
[music].
Hello, and welcome to the Expedia Group Q2, 2021 earnings call My Name's Alan I'll be the operator for today's call. If you wish to ask the question at the end of the presentation. Please press star followed by 1 of your telephone keypad.
If you change your Mark Please press star followed by 2 to count for your request I'll now hand over to SVP and CFO retail Patrick Thompson. Please go ahead.
Welcome to the Expedia group's financial results conference call from the second quarter ended June 32021.
I'm pleased to be joined on the call today by our CEO Peter <unk>.
Eric Hart.
Following the discussion including responses to your questions reflects management's views as of today August 5.2021, only we do not undertake any obligation to update or revise this information.
As always some of the statements made on today's call are forward looking typically preceded by words such as the plan we expect.
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 of 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 in our earnings release, which is posted on the company's Investor Relations website at IR Dot Expedia group the column 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 excludes 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 the call over to Peter.
Thanks, Beth good afternoon, everybody and thank you for joining us today for our Q2 earnings call I'll be relatively brief.
And then Eric will.
Take over and will take some questions.
I'll open with the board, saying that in General Q2 was quite strong in a major improvement during Q1, and we were pleased with it.
With the progress we've made with particular strength.
North America and U S.
Before the market has been driven by a lot of the COVID-19 related changes in patterns domestic.
Domestic travel has been stronger VR of stronger.
The ethanol travel corporate travel even the big city travel has been relatively muted.
Comparatively the good news in that is that we find ourselves in.
Relatively stronger position in the U S, our largest market and the largest travel market, but income.
So with the like APAC, where we have a large international business.
That obviously has not responded as quickly.
So as we look across.
Our performance.
It was all of those moving parts in the mix and together what the delivered in the second quarter was generally improvement in the.
In the April may time period in another.
Step up in the significant step up from zero not unlike what we saw in the first quarter with the step up in the March July.
<unk> has.
Has been impacted somewhat by delta in the.
The Gulf of Maryland, and we've seen some.
The backwards movement in July, but in general still relatively stronger performance compared to earlier parts of Covid.
As it pertains to travel patterns I think it's important to keep in mind that obviously, we don't know where delta is going places like.
Australia have been have had shutdowns are aware.
The other parts of the world, including in parts of EMEA of things are opening up somewhat more.
There's a lot of unknowns, including in the U S and we're starting to see some of the percolate through of cancellation rates of more volatility.
And the numbers I think it's also important to keep in mind that as we move into the fourth quarter.
Where traditional trends sort of third of leisure coming off from corporate coming up et cetera. The remain a bunch of unknowns of across the globe in terms of back to school of back to work and how people will travel.
And this and this portion of our Covid times.
That being said as we focus our marketing Q2 was obviously a time of the relative strengths and we aggressively pushed into marketing we saw the.
The opportunity to get informed of the building momentum in travel.
And as we've talked about before we have of long term goal of building more brand recognition and pushing more into brand marketing and creating longer term relationships with customers.
The performance marketing on the other hand remained considerably volatile, especially as we've seen.
The cancellation rates more recently.
Growing slightly.
So we were relatively lean debt in Q2, we expect to be doing in been in Q3.
With a bias towards the brand building for the long term relationships with customers and we do believe.
Whenever COVID-19 subsides and the way that gives people real comfort.
There's so much pent up demand in the travel will outstrip anything we've really ever seen before around the globe.
And as of renewables and building I just wanted to emphasize debt. This is an area, where we thought there was opportunity to be stronger.
Several of these women joined us in the middle of the quarter. John is of great talent coming to us from Apple is a terrific brand builder and the brand and performance marketing work together, we have to really define and build our brand and I've talked extensively in the past about rationalizing the brands, making them work together and allocating capital.
Capital appropriately and we have great confidence in what John will bring and has already brought to the organization.
On the Tech side, we brought in and the CTO of the Mercury from Verizon Media.
This again is an emphasis I've spoken about the several times, but we have to be the technology first company and to do that we need greater technology leadership, roughly brings a wealth of experience to us and as we move from our multi stack multi domain enterprise that we've had historically into 1 platform that can service all of our <unk>.
<unk> done all of our business partners.
Really important pathway technical leadership across the organization. So I won't belabor every technical game, but we are making real progress.
Plenty of work still to do but we're feeling quite optimistic about rafi in.
And the changes that she is bringing.
So in general as well.
Watch Covid play out.
We're focusing really on investing in our technology and people organizing our brands and allocating capital appropriately among them simplifying our business and of course, maintaining the rigor we've had around driving margin improvement and more broadly we believe that as vaccines continue to rollout across the globe that will bring greater security.
The greater comfort and greater willingness to travel, but the road may still be bumpy for a while as we watch all of the various play out in various government responses to them I will just close by saying we launched today something very important to us but are are employees of passionate about which is our partnership with UNICEF of where and we will drive further.
Every.
Transaction, we have in.
And the company, we will donate the UNICEF to drive the vaccination into the developing world.
Clear of that.
Not everyone has the access of the Western World has to vaccines and it's our view of that until the world is.
More of a fully vaccinated, we really can't expect travel of Broadway to be back to normal. So we believe in the movement. We believe in the accrual the equitable distribution of vaccines, we want to drive that for all of the obvious societal benefits and ultimately because it's good for our long term business goals.
So with that I will turn it over to Eric.
Thank you Peter and the early.
The 2020, I outlined multiple areas of focus and I wanted to provide update all of them.
Around driving margin expansion through better unit economics, and since that time, we've made significant progress reshaping our cost structure 3 of the fixed and variable cost initiatives, we've outlined in detail on previous calls.
Another major focus has and will continue to be on simplifying our business to help enable the company to win.
And also ensure we're focusing on the most attractive opportunities for future growth and profitability.
This included selling of shutting down businesses, we viewed as noncore to the business going forward.
Put this in the perspective since the beginning of 2020, we have either shut down or sold 8 businesses and the simplification efforts have continued with the sale of the Alice last month, which I would point out will have an immaterial impact to our financials.
In addition in early May we announced the binding offer from Amex GBT to acquire origins of your business.
Since then we have been diligently working through different aspects of the offer and this week, we officially accepted <unk> offer.
Based on where things currently stand, including all relevant regulatory authorities have cleared the transaction and all the relevant employee consultations have been completed we now anticipate closing the transaction during this year of 2021.
As a reminder of the deal includes 2 major pieces, we outlined last quarter and remained very excited about first we will have a minority of physician ownership position of the combined business and second we will also enter into a 10 year Lockheed supply agreement between the Amex GBT and the EPS.
Finally, this deal further illustrates the continued progress on simplifying our business.
Now shifting to the P&L on revenue total revenue was down 30, approximately 33% versus Q2, 2019, which was the meaningful improvement from last quarter with revenue down approximately 52%. We saw continued strength from <unk> and improving trends within our hotel business. While ADR is we're effectively up across the board from last quarter.
<unk>.
From a geography perspective on a revenue basis. The U S showed a meaningful sequential improvement in Q2 EMEA.
EMEA revenue also improved and Latam and APAC revenue remained roughly flat versus Q1.
On costs on our cost basis in overhead.
Significantly improved our cost basis versus pre pandemic levels, which is reflective on the considerable progress we've made on the cost initiatives outlined in detail over the past 18 months or so.
While we won't see full benefit in the financials until we return to more normalized business levels. We remain confident in realizing largely all of the fixed and variable cost savings targets by the end of this year.
Overhead costs totaled approximately $544 million in Q2, an increase of approximately $40 million versus last quarter, which was in line with our expectations. The increase sequentially was largely the result of the shift in compensation structure from bonus of salary, which took effect April 1 and we outlined on previous calls.
As it relates to the sales and marketing we increased our spend in Q2 driven by size of other recovery, although total marketing spend was still well below pre pandemic levels.
For Q3, we are balancing of investing in each of the recovery of to build our brands with recent softening trends in bookings that we've observed in July of that Peter mentioned the net of all of this is we anticipate that we will further closed the gap versus pre pandemic spend although it will still be well below Q3 of 2009.
James.
And total adjusted EBITDA was $201 million and included a negative contribution from Egencia, which showed some improvement but continued to lag our retail business.
We attribute the approximately $260 million of sequential improvement in adjusted EBITA of the typical seasonality as well as the improving trends we have mentioned throughout the call.
On the free cash flow, which total approximately $2.3 billion of Q2 on a reported basis, excluding the change of restricted cash, which is primarily driven by the change of <unk> deferred merchant bookings free cash flow was approximately $1.8 million.
Moving onto the capital structure in terms of the balance sheet. We continue to be investment grade rated today and I would point out that Moody's recently changed our outlook to stable from negative.
There is also no change in our financial strategy going forward, we remain committed to delevering back to more historical levers levels as the recovery continues to progress well.
So continuing to look for ways to reduce our cost of capital with the underlying goals of being a strong net position to restart the capital return program to shareholders.
And Mike given the positive trends, we are witnessing combined with the confidence in our liquidity position, we paid down 50% of the preferred stock that we issued in 2020.
We have the right the pay off the remaining balance of the time and we're closely monitoring and intend to pay off when it's mark.
The prudent excuse me to do so.
So that's again something that we'll continue to watch over the course of the year and going forward.
That said I remain confident in our liquidity position, which includes approximately $5.5 billion of the unrestricted cash as well as of $2 billion of untapped revolver.
In closing we're pleased with the further stay.
Stabilization of our business in Q2 and remain optimistic about the future of travel and that it will come back as Peter mentioned earlier.
Mike something that we haven't quite seen before and with that we.
We're ready to take our first question.
And are you there.
Hi, there.
And what's the ask a question. Please press star followed by 1 on your telephone keypad. If you wish to retract. Your question. Please press star followed by Jay.
First question comes from Lovely Com from tourists Securities. Please go ahead. Your line is now open.
Yes, Greg.
A couple of questions, maybe just 1 for Eric if I could.
The deferred merchant bookings.
Net up 25% versus 2019.
Looking to down 26% versus 2019, Covid, just maybe help us.
I understand the GAAP there.
Driving the differences in the 2 numbers and then I have a quick follow up maybe just on the simplification of the business and then the other.
The opportunities.
Did you see on the horizon.
The central part of the business from the.
However, if I take the first 1 and Peter perhaps you can take the second 1 so on the first of all our deferred margin booking.
The balance of with approximately 8.2.
<unk> 4.1 billion as of the.
The end of June compared to June of the previous year. It was approximately $4.6 billion.
There was the increase in what we call it the quarter deferred merchant bookings, which is our more traditional or conventional lodging business and that reflects obviously the improvement on.
On our.
I guess that the comparison to 2020, so I think youll see on the core business that is largely in line with where the real differences is coming on the cargo side of the business.
And ultimately and remember that is restricted so theres approximately $4 billion to $6 billion assets.
The deferred Marcia bookings for <unk> and that just reflects the healthy growth that we've seen in <unk> that we've talked about a number of times before.
I would say that there is no increased risk if you will on the core D&B relative to I think where we were in 2019.
Yeah, Thanks, Eric in August.
But in terms of continuing to simplify I don't think.
We expect many more sales of mergers of those kinds of simplifications, but there continue to be.
Opportunities for us to simplify how we do business and I think what I referenced that some of our new leadership the opportunity to simplify how our brands work together what were doing on the technology side.
Believe we will continue to unlock opportunity for us, but it's not as.
The simplistically of perhaps is the sale of the business or something like that.
Many of those.
Thank you thank you Mike.
Thank you.
Our next question today comes from Kevin Kopelman from Cowen. Please go ahead, Kevin Your line is now open.
Oh, great. Thanks, so much.
Can you give us a sense of where.
<unk> booking ship.
Shook out relative to 2019.
From the second quarter, and then what Youre seeing in the Q3 quarter to date.
Yes.
Thanks Barry.
Barry can add color.
Basically.
As I mentioned, a good step function improvement in the second quarter, particularly into June.
And.
And we're feeling quite good about debt.
July started out.
A little down.
And the relative to relative to June and the Delta has reared its head we are seeing some more volatility in July of sort of in line with the earlier part of the quarter of of the second quarter. So.
Hard to tell how the rest of the Q3 will shake out.
Ben.
Barry responsive to the new cycles, but.
But we're obviously optimistic that more openings talk of the us opening too.
International Vaccinate of travel et cetera will create more opportunities, particularly as I mentioned in the interim.
The national business, which has been of relative strength of ours. So.
June was the high point.
July is looking a lot like April day.
Yes.
Guards.
Bourbon in particular, and we're not going to go into the detail for you well on the on the trend from Q2, but as you think about it going forward the.
The business continues to perform well continue to be excited about it we're seeing.
Terrific consumer engagement and 1 of the things that we are seeing is that there continues to be longer booking windows associated with verb.
And as we project forward into Q3 and beyond with the longer booking windows.
Our hypothesis is that people have been exposed to the category of they've had a great experience.
Theyre looking to book again, they also saw compression that was occurring particularly during the summer. So people are going in and and reserving the house that they want for whether its the holiday season or even into next year as well.
Yes again.
<unk> in Q3, and Q4 going forward, what seasonality looks like in the.
8 of the world that we're in but we continue to see some really interesting trends from longer dated bookings over revenue.
Thanks, Eric Thanks very helpful.
Thank you Kevin.
Our next question today comes from Mark Mahaney from Evercore ISI. Please go ahead, Bob Your line is now Michael.
Okay, maybe I'll try to just wanted to ask just the numbers question sales and marketing as a percentage of revenue and I know this is the shortcut but.
It was higher in the June quarter than we've seen in quite some time I think it was the highest we've seen in the June quarter in several years and I know you've gone through a lot of efficiencies I think Peter I think the expression you use with volatility in performance marketing. So just talk about.
How unless you did the June quarter was in terms of the optimization that you want the beer.
The brand and performance marketing spend you look at that number and you say well that's the opportunity.
The dose the depth of that level of sales and marketing spend come in largely as you had expected.
Yes.
Okay.
Sorry go ahead of them.
Yes, Peter maybe I'll, just give a little bit of context, I think 1 of the things to keep in mind Mark is debt.
Remember that our revenue is on on the state basis, and oftentimes our marketing spend is generating bookings that were not going to get revenue for Intel of another period of if you will and as I just talked about on the FERC by the side, we're continuing to see very long booking windows at the <unk>.
Higher mix of our overall transactions. So it is quite different than we're seeing other shifts in booking windows across different products, as well and so being able to compare quarter over quarter 2.
Again, the historical quarters is quite difficult side of caution you that that's simplified form that <unk> admittedly that was simplify we have to be a little careful of that because of the booking windows looking around in the difference between marketing spend booking in the state.
Fair enough and then the second question.
Go ahead please.
Brian.
The second question has to do with brands and you still have the staple of brands can you talk about different strengths in different regions can you talk a little bit about per BOE, what about some of the other brands and would you would you call out ones that you think of we're doing in this environment are doing particularly well and those that seem most challenged from a just comment on the business just from a brand perspective and the brands.
Other than per Boe.
Sure.
Sure I think.
Broadly the bread.
<unk>.
Our acting within the range I would say of the performance, but we have seen as I mentioned I think before.
Opportunities for example.
In Australia, where our local brand what if.
<unk>.
And our local VR brand has performed very well because the head of domestic travel bias in the market.
Therefore in a world where there was much more domestic travel we leaned into those brands relative to the leaning into let's say of Expedia brand, which is 1 of international appeal.
The international travel appeal, so we've seen the regional moves like that.
I think broadly, though and you see some reaction we believe hotels dot com has a slightly higher per.
<unk> of unmanaged corporate travel within it and of course corporate travel has been greatly reduced during the COVID-19. So we've seen some movement like that but I would say broadly.
The branch of performed within a range of 1 other.
We are doing a lot of work to figure out of long term, how we want the.
Brands to work together as a family of brands rather than as competitors I've mentioned some of that within performance marketing, but I think youll see that broadly across the enterprise.
As John and the team get get to rationalizing how those how we can make those brands all additive to 1 another as opposed to competitive.
We are continuing to market again fairly aggressively behind.
Behind the brand spend and my comment about the volatility in the.
Performance marketing is just to say there.
It seems to be a lot of the risk and getting over your skis in performance marketing because of.
Volatility in cancellation rates shutdowns of other things. So on balance we are slightly more biased towards brand building and yes, because of time, where we feel for the reasons I said.
Travel is going to win it can rebound fully it is going to be extremely robust and this is the time, where we want to be quiet in the market. So we are doing lots of things, including our recent moves to support the UNICEF et cetera to get in line with our customer base get them investing in our brands and the relationship and drive the full.
When the.
While the future comes pouring in.
All of that is volatile and we don't exactly know when that will be.
We know what's coming so we want to make sure we're there.
Thank you Peter Thank you Aaron.
Hey, Brian.
Our next question today comes from Deepak Mark Mclaughlin from Wolfe. Please go ahead. Your line is now open.
Great Hey, guys. Thanks for taking the question just a couple of months. So first Eric can you help us think about take rates in the booking window dynamic for the second half with all of the moving pieces, it's a little bit of the challenge to kind of translate the bookings to revenues any additional color that you can provide there on the.
Take rates and booking windows based on what you're seeing in July would be great and then the second question can you talk about the our supply acquisition campaigns on the wall of both sides highlight of supply side galleon has been at level and how should we think about the benefit of this translating into bookings maybe in the back half of and also into next year.
Thank you so much.
Thanks for the question.
Listen I understand your question on the first part of when it comes to take rate of booking windows and there's something that we have.
Causes a lot of work.
The volatility if you will on our assessment on our side as well and I would love to be able to give you more granular of responses on that projection would look like at the end of Q3 and beyond.
The truth be told the things are just moving around quite a bit when it comes to those booking windows.
And then from a take rate standpoint, it's really kind of depend on those mix and as Peter mentioned of ARVO continues to be strong we think conventional hotels kind of come back.
Sequentially, we see that in here.
We continue to see that in car, which has been quite strong as well. It has nice day brief associated with it and again, we'll kind of stop there, but you get the point through the various products and so you have between a combination.
Okay.
Total what happened all of this.
I think Eric cut out on us.
You can still hear me.
Finished by saying were he was growing as the the combination of mix.
Has been really different during the COVID-19. So it's a hard thing the tie back to historic levels.
And other things of down more considerably then.
The lodging car et cetera. So.
A little hard to give you much guidance there except to say we expect to see continued mixed shift during this somewhat COVID-19 period, we are.
But we also believe that overtime and broadly everything will revert to the mean in terms of in terms of mix and we should see more predictable take rates.
In that period.
Okay. Thanks, Peter and then the second 1 on supply acquisition campaigns related to the Wellbore.
Can you talk a little bit about that.
Yes, sorry about that.
Yes, we have been focused I think we've set of last quarter, but our principal focus has been on compression markets and we've seen good growth there and good good additions and when we can add.
The inventory there we see.
Very good return on that effort, we have not gone to sort of a broad global returned to everywhere acquisition strategy. Because we just don't think it's a prudent use of resources of so many places are still closed down but we are taking a much more targeted approach and then of the world opens up I think youll see us expand those targets but.
In general when we have been able to add inventory again focused on compressed areas.
It has been quite productive for us.
Got it thanks, Peter Thanks, Aaron.
Thank you will find there.
Sure.
Our next question today comes from Justin Post from Bank of America.
Please go ahead your line is now.
Great. Thank you I think we're all trying to figure out what your earnings could look like on the other side of this and so market share is important people are going to compare your down 26% bookings versus 19 to booking which was which is in the.
Low double digits. So just wondering if you can help us understand how you think of that market share in the core U S and Europe markets right now and second maybe you can explain some of the differences.
Maybe youre pushed out of the air bookings or how much of your bookings are international versus domestic.
Yes.
Yes.
Thanks for the question Jeff.
I'll just say.
So things to think about there first of all as I mentioned broadly when you look at conventional margin plus.
Plus we are we believe our position is stronger in the U S than pre pre COVID-19.
But again, that's not the same for all markets and if you look at a market like EMEA, which came back strong over the summer and came back principally in domestic.
Debt, obviously favors some of the other players.
And our business in places like EMEA and APAC as I mentioned are more international focus now that gross debt air lift as well because we're very good of delivering long haul air.
<unk> has been virtually nonexistent.
During the Covid period. So you have seen again, a bunch of these principles play where we benefited from.
Some of it's benefited from others.
And.
We generally believe that international will be the next major thing to open up.
That favors our channel.
Parts of it.
Mission.
Barry our position in many of those markets.
And we will see that rebound through that side of our business and through the air and all of the pieces that are attached to that but that's really what's going on in market share more than anything is this domestic versus.
Versus international.
The bookings whereas of per cent in 2019.
No.
It's Derek in my back.
Yeah.
Yeah.
Not broken down in to the job is fine.
Alright, great. Thank you.
Okay.
[noise] Oh next cool today comes from Brian from Morgan Stanley Fun. Please go ahead of the line is now a 10.
Thank you for taking my questions I've I have to to go back a little bit to kind of drill into the U. S. Can you just help us better understand where your your U S. Lodging business. Excluding verbal is now versus versus 2019, and then secondly, it kind of again focusing on the U S.
S X verbal and lodging what can you sort of tell us about the the customer of dynamics are you is it mostly existing customer is talking about contribution from new people you ring of the platform what is sort of driven the the growth of the core of lodging business in the U S and the U S acts of verbal so far.
Perhaps I'll take the front of it up here do you want to take the the back end of it.
I understand that part of the tried of heart.
The convention of logging it we're not gonna go in cause he fell on it at this time gone out of her.
I mean, all of the new and now I will say a big part of our focus at the enterprise is to create longer term relationships and greater lifetime value and stickiness and love for our brands with our customers that involves many things obviously on the marketing side on the product side on the service side of all claims were focused on improving.
So.
That's the sort of.
360 kind of enterprise.
Effort.
We do intend and we do plan to build those customer relationships in a different way, we hope the historically, where we've all had to go fishing in the Google bond or whatever and that was that was the only place to find the business. So we're hoping to change those dynamics over time, but.
We have been we have seen in general during COVID-19, the greater performance from existing customers.
Got it and just to go back to Ericsson as well, but it seemed like the Eric's answer the <unk>.
Bit of a softening in July.
That more pronounced on the traditional lodging side that is the verbal side or is it sort of evenly spread between the between the product sets.
Yes, I think we're seeing that largely across all.
<unk> been expanded beyond the.
The logged in across all of the product types, whether that persists or not.
Okay. Thanks.
Thank you.
Our next question today comes from Steven Ju from Credit Suisse. Please go ahead your line of night.
Okay. Thank you so much so Peter I think you wanted to kind of talk about potential permanent changes to consumer behavior, I think vacation rentals versus hotel, it's fairly well understood but.
Are you noticing any change in terms of folks favoring the agency versus merchant because I'm sure. The probably learned last year that paying the head of private and trying to get the funds later on it's probably something that they probably don't want to do again. So are there kind of hence sort of a meaningful differences in the conversion of.
Right.
Between the 2 types of transactions you can call out.
What does that positively or negatively influence your customer acquisition strategy is going forward.
Yes.
Moving.
Go ahead of shorter.
I'll take I'll take the front end of that as well I would think about it less about merchant and the agency that we have seen the kidney.
I think we've talked about this a couple of quarters ago weighting to the agency side of the business as consumers want more flexibility, but ultimately what they're looking for is that flexibility. So it's more of a nonrefundable.
Sorry consumables.
Theyre looking for given the uncertainty of the environment and.
Peter feel free to add but that hasnt necessarily changed our customer acquisition strategy, our storage strategy or whatever else and the yen where are the marketplace running.
A travel company and our job here is to.
Meet with customers and what they're looking for other meets the needs and the and the use cases that they have and I will continue to do that but as I said on the front end and there is continued waiting to the clinical side of the agency side.
Yes.
Steven the we're not trying to drive their sales were not trying to drive the customer of any particular outcome, we provide choice by and large and what.
What the customers do what they want there has been a.
Relative buyers during the Covid for pay later as you say, perhaps a greater sense of security around the idea but.
I R. A D r's as well and then we're theme for core Adr's increase that some products more than other so get more color of their is on the the borough and car side I would say in particular have seen meaningful increases.
Their avr's, whereas air has has started to recover of it clearly not to the extent of those other 2 and would say the same for conventional launching is sort of somewhere between the has a higher than the air but not to the first of all the car side projecting the board.
We are as I mentioned earlier in the verbose side for instance continue to seep looking with this long booking windows and a few end up with any kind of supply of compression an Android that that's what the customers are comfortable traveling with and again as I mentioned earlier I think people of really enjoyed that product experience you can continue to expect.
Possible to expect that you would see that underdog going forward on the card side of listen they got of supply issue I think that's been discussed in various.
Force before and that's gonna take some time to work through but.
But how much demand remains for car as we get out of the summer season as of the T V D.
Generally presuming that July is a bit of of monopoly of things start to recover again I think you of contingency.
ADR.
Increases are healthy level of if you will going forward, so again not going to get into specific of trying to predict what exactly those are going to land, but that gives you a sense of the the trends that were standard of off the different products.
[noise]. Thank you.
Thank you.
Our next question today comes from the <unk> from Austin.
Perhaps in light of my life.
Okay, great. Thanks for taking my question of questions too. If I may just can you give us an update on the verbal integration with brand Expedia How's that trend gang. How are you trying to think about that ahead of the winter.
And then you kind of look out in terms of like the international travel recovery I mean, as you and your thoughts changes you even see countries like Iceland in Israel that are really highly vaccinated dealing with the K higher spice higher case counts.
How how is like the change of the interim how do you view of the international.
Covering if it looks like we're going to have changing.
A multitude of different governor of government policies towards Covid. Thank you.
Yeah.
I think some of the second 1 first it's frustrating and confusing and complicated countries of taken different approaches even within the U.
The all the time was in your condition is about China since the sauce.
Walls and make the inconsistent with those people travelling within the you have issues with what the protocols are so.
The remains a big unknown I would say, we know that vaccines are.
Definitely the biggest part of the answer at least that we can see so far and of course, there's lots of work going on on the other treatment protocols et cetera.
For Covid, So I think we'll continue to see it.
Improvements and ultimately Covid will be something the world warms deliver us.
And.
People will be traveling again.
We're starting to see international travel, it's 9 zero.
4 of starting to see of conversations today.
The us government.
Was it was quoted the button is considering opening up the us to foreign travelers who were vaccinated. So I think we will continue to see that push as countries want to get their tourism businesses back in there and their business travel business was back.
So the countervailing issues and I think they will continue the pressure from people find ways to make it happen.
Clearly not done seeing pockets of issues with Covid and reactions from all the all of.
Or national governments to the issue. So I think that's what I would say, there's a variety of unknowns out there.
And we are Joseph playing it out and trying not to end of upside down all of our marketing to a market demands of where the problem. So.
The 1 part of of.
And then on the verbal integration I would say.
It's worth the continues its not where we want it to be we'd have more content on backs and actually on hotel bar tone, but at the end and profit.
Customer experience is not what we want it to be so we're iterating on that as we continue to make progress towards unifying our tech stacks of 4.
Doing business with the core part of the process.
But I would say it's not the most importantly any of that the other is a good opportunity for us on something we believe in but there's a series of steps as as we bring those the X together.
And it continues unabated, but it is.
But it's nowhere once the yet.
Thank you.
Yeah.
On the question today comes from Kansas Day from Missoula. Please go ahead to the line is not like.
Particularly my question on to talk about with the new Shaquille coming in maybe top of some of the top priorities that you'll be undertaking and also secondly, I think lack of order you guys talk about the success of integrating the marketing platform something like 75 per cent on that platform can't give us an upper.
Day, and maybe a little the implication on the efficiency of of the marketing in the back half. Thanks.
Yes, so thanks James.
On the in terms of the top priorities, it's really.
The very common tools common datasets.
Comment algorithms, but it isn't what's exciting now has the opportunity to begin to test the new algorithms test the opportunities across brands.
Test the opportunity to gain efficiencies and how we how we market multiple brands and performance Mark entering et cetera, where in the early days of that but that is what these achievements of getting to the state of have given us and I would say we're in of funding time, where.
Traffic patterns are unusual because of COVID-19. So.
Testing of the new algorithms and doing a lot of new performance marketing against the backdrop, that's a little bit unusual and confusing. So we don't always have the volumes of the test everything, but there's a lot of exciting work going on there and as I've said all of and we believe that will generate.
Meaningful efficiencies and better operation in terms of performance marketing, but it is hard to benchmark because we don't have the normal traffic levels are normal patterns. So it's hard to say, it's going to give us X percent more efficiency of why we have to see it in action against the more typical backdrop. So.
More to come on that but we're making steady and strong progress anywhere along the way down the consolidation of tools and data and all of the things that those percentages reference.
Okay. Thanks Peter.
Thank you.
Our next question is from Andrew theme from Jmp's. The Cherokee had your line of my life.
Hi, guys. Thanks for taking the question.
On marketing on brands and specific.
Can you talk about what the plans.
Where you are investing is disappointing brands that are of science for you guys building brand anywhere else and also should we think of this as more of a part of change to your marketing strategy wise cancellation rates normalize are you guys kind of shipped the spend back tomorrow.
For all types of walls. Thank you.
Yeah, Thanks, Andrew pilot.
I would say a couple of things 1 yes, we're investing in relative strength. So for example of Bravo has been an area of considerably increased investment during.
During the past several quarters.
Other opportunities regionally, where we've we've put money whether that's in the traditional brand spend or social or other things.
So regional brands in some cases of shame increases as well.
I'd say, while we are leaning into that and we are leaning into our biggest brands obviously in strong markets like the U S.
We believe we can do a lot better in terms of.
Brian messaging.
Cleaner on the band propositions and as I mentioned getting all of the brands to work together of the family of friends as opposed to as sort of traditional almost competitors.
So we think there is a lot of opportunity to.
Not just spend into brand with the bias towards the end building, but spend that money more efficiently against even stronger creative and more efficient ways to to build Brian. So I think there's a lot of opportunity there.
And yes, we intend to also grow in new Go's as we refine our capabilities there and.
Markets, where we are going to go on the offensive.
And then I think.
As far as performance goes I think what we're talking about when I say, we have of bias towards brand building and so we want to build the long term relationships, but brand.
Spend the end performance work together of stronger brands are the better performing your performance marketing is and as long as performance marketing can return the kind of returns and bring up the kinds of customers that are sticky and build the long term value, we will spend into that and we will spend as much as that makes economic sense to.
So I don't think it's in either of our question gets the question of right now having a bias again towards that brand building, while we see how performance Margaret shakes out but.
But as we get better we believe we will be able to continue to invest in performance marketing more efficiently than we ever have and bring the right kind of the customers with the backdrop of brand building that really create sticky customers from the future. So I think you'll see of do both don't exactly know where the ratios will will bear out.
We think of the company was over bias towards performance marketing because it just didn't have all the tools, we needed across the brand enterprise, but but we can't Maryland of much different place. So that's where we're going to go.
And I think with that.
Thank you Andrew I think we're at the end.
So I just want to say thank you everybody. Thanks for the time.
And I hope, we got all of your questions answered from will speak to you in the quarter.
Take care.
That concludes today's cool disconnect of your lines and have a nice day.
Thank you operator.
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