Vrbo Performance and Recovery Plan
Q: How will you address Vrbo's performance issues?
A: Vrbo faced challenges due to a spend down and product migration that impacted traffic and conversion. We are now rebuilding awareness and investing in brand to get it back on a growth trajectory. The product is converting well and improving quickly, benefiting from our single tech stack. We see no flaws in the business, just a need to reinvest to drive improvement. We are confident in our progress and focused on regaining momentum.

Guidance and Share Gains
Q: Has your outlook for share gains changed due to a cautious full-year view?
A: Our guidance for share gains remains, except for Vrbo, which has impacted overall lodging share. In our core hotel business, we are seeing strong share gains across North America and major markets. We are making continuous product improvements, leading to better conversion and more efficient marketing. We feel good about our progress in the non-Vrbo business.

Pricing Investment Strategy
Q: Why are you pivoting towards price investment over marketing?
A: We view marketing, pricing, and loyalty as a unified investment to drive consumer behavior. We saw an opportunity to achieve better returns by investing in pricing, modifying prices by taking value out of our margins to drive more velocity and customer acquisition. This strategic rebalance allows us to invest where we see the best returns.

Hotels.com Performance
Q: Can you expand on Hotels.com's underperformance and plans for improvement?
A: Hotels.com is not where we want it to be due to impacts from product migration, changes in the loyalty program, and reduced international focus. The migration affected performance, and the shift to One Key resulted in less earn for Hotels.com users. As we reinvest in international markets, where Hotels.com is a lead brand, we expect to see growth. We are also seeing great conversion gains in lodging, which benefits Hotels.com.

One Key Loyalty Program Impact
Q: How is One Key performing, and does Vrbo's and Hotels.com's performance affect its rollout?
A: One Key is performing well, with new membership up 40% year-over-year and good repeat rates. We are seeing cross-shopping benefits, with 25% of Vrbo customers who redeemed One Key cash being new to Vrbo. We plan to roll it out internationally later this year, and we believe it will help attract customers across our brands.

International Expansion and P&L Impact
Q: When will international investments contribute to the P&L?
A: We are seeing good returns in international markets where we've invested, such as Brazil and Scandinavia, with double-digit growth on our brands. It's contributing, but North America is so large it's hard to see in the total numbers yet. We're investing now to drive long-term growth for years to come, and as these markets succeed, we'll continue to invest where we have the right to win.

Cost Reduction and Margin Outlook
Q: What are the mechanics around headcount reduction and margin expectations?
A: We are undergoing cost reduction initiatives, including a recent headcount reduction impacting about 1,500 associates. The savings impact cost of sales, overhead, and capitalized labor. While some savings will be reinvested into marketing, we expect substantial annualized savings. Our margins are expected to be similar to last year's, as we balance investments in Vrbo and international markets with cost efficiencies.

AI and Machine Learning Initiatives
Q: What are your learnings from Gen AI, and how will it change user search?
A: We have been experimenting extensively with Gen AI across the company, both user-facing and internally. While still early, we've learned a lot and plan to introduce exciting new features soon. AI and machine learning are driving wins across our products, enabling personalized experiences for travelers, improved partner tools, and efficiency gains in customer support and development. We expect AI to touch every part of our organization and enhance how travelers search and book.

B2B Growth Prospects
Q: How do you view B2B growth over the medium to long term?
A: While we don't provide specific projections, we continue to have big ambitions for our B2B business. It's well-balanced geographically and across various partner types, including airlines, banks, and travel agencies. With investments in technology, supply, and partnerships, we have strong assets to remain leaders in B2B.

Bundling and Cross-sell Enhancements
Q: Has AI and mobile improved your ability to cross-sell and bundle products?
A: Yes, machine learning allows us to better understand the next best offer for travelers, enhancing cross-sell and attach rates. Our package path, especially dynamic bundling of air tickets with hotels, is a unique value proposition where we're seeing strong results. We have significant ambitions around cross-selling and believe AI will further improve these capabilities.

Direct Traffic and App Usage
Q: Can you provide commentary on direct traffic trends?
A: Approximately two-thirds of our business comes from direct traffic. We've seen strong improvements in app usage, with a 600 basis points increase in the proportion of business through the app. We're focused on driving more direct traffic, and initiatives like One Key are expected to bolster this over time.

Impact of Google Regulatory Changes
Q: Are you seeing benefits from Google's regulatory changes in Europe?
A: No significant impact has been observed. Google continues to operate much as before, pushing SEO traffic down and seeking new ways to monetize. We have not noticed any material changes benefiting our business from these regulatory actions.

New CEO's Priorities
Q: What are your priorities over the next quarter or two?
A: As the new CEO, I'll be focusing on helping teams get back to the basics of traffic and conversion, delivering the acceleration implied in our guidance. I'll be listening and learning, ensuring we execute effectively in the short term while considering any necessary adjustments to achieve our long-term growth objectives.