Expedia execs sacrifice salary as firm raises $3.2bn during crisis
In addition to raising $3.2bn, Expedia has appointed two company veterans to the roles of CEO and CFO and has said that these executives will not take a salary this year.
On Thursday (23 April), it emerged that online travel booking firm Expedia had secured $3.2bn in fresh capital to strengthen the company’s balance sheet as it weathers the shutdown of the travel industry caused by Covid-19 restrictions.
The company has also appointed a new CEO and CFO, who will not take a salary this year, according to Expedia. Other senior executives will take a 25pc pay cut. The company’s board members will also work for free for the rest of the year to keep Expedia above water.
Former vice-chairman of Expedia, Peter Kern has been named as CEO, while Eric Hart has been named as CFO. The company’s former CEO and CFO were ousted in December after disagreements about Expedia’s strategy.
Barry Diller, chair of Expedia said: “We have one mandate – to conserve cash, survive and use this time to reconstruct a stronger enterprise.”
Of the funding that Expedia has raised, $1.2bn comes from private equity firms Apollo Global Management and Silver Lake. The company has raised a further $2bn through new debt financing.
Apollo partner Reed Rayman said: “This investment helps ensure the company has the resources to sustain market leadership and emerge from the current economic environment stronger than ever.”
Additionally, the company has cut back on the cost of labour, with furloughs and reduced work weeks in place for many employees until at least 31 August. The company has suspended 401(k) matching for the remainder of the year and is asking staff to voluntarily reduce their working weeks.
Diller said: “Since the crisis began, the company has encountered an extraordinary number of challenges and just as governments around the world were unprepared, so too were we. We had limited online tools to support widespread cancellations and our call volume spiked 500pc.
“Under extraordinary pressure, our tech teams built new tools and managed to bring our call centre capacity to acceptable levels.”
Diller said that with the latest round of funding, the company has “a very clear focus for whatever the future brings.”
The wider travel industry
Expedia is not the first travel business to raise funding at this particularly difficult time for the industry.
Cruise operator Carnival raised $6.3bn in debt and equity earlier this month, as the cruise industry suffers from travel restrictions and news stories about Covid-19 spreading on ships.
Since the pandemic began, cruise ships have been labelled “inherently high-risk” for the spread of viruses, which is causing doubts over whether or not the industry will recover from this pandemic.
In April, Airbnb raised a total of $2bn. Of this funding, $1bn came from key investors, Sixth Street Partners and Silver Lake – a firm that has also invested in Expedia. In addition to that funding, Airbnb raised $1bn in a syndicated term loan to help the company to invest in itself and its community.