Expedia Group, Inc. (EXPE) Earnings Call Transcript & Summary

Okay. All right. I know everyone's still finding their seats, but we're going to keep moving here to stay on schedule with our next fireside chat. It is my pleasure to have Peter Kern, CEO of Expedia here today. Peter, thanks so much for being part of the conference.

Pleasure to be here. It's nice to have it back.

We did this a year ago over Zoom, and I was looking forward to doing it in person this year.

So Peter, I think maybe just to set -- to level set, I think maybe we can start with, obviously, what we just came through is a lot of recovery in the broader travel industry, a lot of growth and a lot of dollar volume through the summer months. How are you thinking about what we're seeing from the broader travel landscape as we exit summer and move into the fall of 2022?

Yes. Well, it's always great to go on a day of new inflation numbers and everybody worried again about the Fed. But we said at earnings, but it remains consistent, which is, we're not really seeing the impact of any -- the feared whatever theoretical recession coming in travel, at least not yet and at least not in any like noticeable material way. So we came out of, as we mentioned, there was a softness in late June into early July that we attributed generally to all the dislocation that was happening in airlines and airports and people deciding it was all getting too hard. I think the broader industry saw that. And then the back end of July started to perform much better, more like the balance of the quarter, and we've seen that continue. So there does not appear to be any material falloff. We are starting to see a little more softness in pricing in air, in a few places, which we view as helpful, but all -- some of that's seasonal, too. So -- and we'll see what business travel does. I think this augurs pretty well, but that always is -- theoretically fills in the fall. But so far, things seem fine.

Okay. So I wanted to shift to one of the debates we see tying it back to demand. A lot of investors ask about market share dynamics. And I think one of the themes that you've talked about over the last couple of earnings calls is elements of what kind of growth you want to go after as a company as the landscape comes out of the summer and normalizes. So can you help express to us sort of your broader view about how you see the market share landscape and bring it back to what your growth goals are as a company?

Yes. So let me begin by saying we obviously in a perfect world want to own the market, right, we like all the share. It's not a question of wanting the share, it's a question of wanting profitable share and the right kinds of customers. And a lot of our business, the industry has been built on, a lot of throughput a lot of just customers through the machine, we joked that we didn't have a funnel. We had a sieve. Everything just came through and went out the other end. And we're much more focused now on customer retention, trying to buy as best we can the right kinds of traffic, the high-value traffic, keeping them longer. We talked at our last earnings about the value of turning them into members, the value of turning them into app users. And it's pretty intuitive, right? If you come in and you buy a hotel room at The Palace, and you don't become a member, you don't get a special deal because you're a member, you don't get any points because you're a member, it's just a transactional thing, and you're out the other end, and you got what you needed, but you may or may not have loved the experience, whatever. What we want is for you to become a member, get the app, get all the best tools, get all the sticky stuff you can use. And then we have a much higher likelihood of you becoming a high-value, long-term member, so -- long-term customers. So we're focused on that. We're doing a much better job of turning new people coming through the funnel into those things. We believe those are great steps in turning them into high-value customers. And we're refining and refining towards getting better at buying the right kinds of traffic so that we are inclined to get the high-value customers.

Okay. One thing you touched upon with respect to air pricing in your earlier answer, I think if we can broaden that conversation out, that we get a lot. And even you as a company have talked about, is that ADRs have been elevated because of the demand environment you found yourselves in going into the summer. Eventually, whether it's an output of mix or just the consumer normalizing ADRs probably come down. How do you think about the normalization of ADRs? What are you watching and looking for? And on the other side of the normalization theme, how -- what do you think that means for broader travel and services as a percent of sort of the way people spend money and organize their lives?

Yes. Well, I think -- we believe we'll continue to see a relative, I won't say overspend, but a relative spend balance towards things that we do services as you call them as opposed to goods, given that we've had this prolonged period of COVID where everybody was buying goods for so long. That seems to be continuing. I'm not an expert on the retail market, so I don't know what they're seeing there. But certainly, in travel, in services, it appears that if -- we've all been to restaurants lately, prices are still high. There doesn't seem to be any downward pressure on that. And that is broadly true, I think, in travel. And I think given that there's a shortage of people, there's a shortage of -- products are more expensive, whether it's products to clean the building or sheets or anything they need here. So I think the inflationary environment is going to keep that up. And I think even if inflation comes down, I don't think you're going to see hotels at least give up a lot of price. Because they've struggled to stay equipped to service a fully occupied hotel because they can't get enough people. And so what's happened through COVID -- and it's still happening to a lesser degree now, but still happening -- is they're not staffing up to be essentially fully occupied. They'd rather price up and be less fully occupied and make the same amount of money with fewer headcount and everything else. So I think that's probably a trend that sustains until we get to an environment where people really need the throughput. I think we'll see that in the airlines before we see it in the hotels, but just a gut.

Got it. And then last one, just on broader demand, and then I really want to get deeper into some of the bigger thematic elements of the business. But the visibility you have at this point, I think investors really struggle with how much visibility given the volatility that's perceived around the consumer into how much visibility into the end of this year into next year you have at this point as a broader travel industry or a player in that industry.

Yes. I mean, to be clear, obviously, some -- a bunch of forward travel is already booked. And as we said after earnings, we are still ahead of our curve for the same time last year. If you think of it in pacings, I know a lot of you -- this used to be a media conference, you used to pay things. So we are pacing ahead of the curve from 2019. Now if you go out enough months, it's still a pretty small percentage of bookings. But from that perspective, everything still looks green, and that's the only indicator we have other than whoever is a great economist in this room who can tell me what's going to happen with inflation and the Fed. But look, we're certainly conscious that, as everybody is, that Europe could have a tougher time in the winter with fuel costs. That probably augurs relatively better for us than some other players who are more heavily dependent on Europe. We're more North America-centric, as you know. But we, of course, want to build our business there. We haven't seen APAC open up for travel. Latin America is lagging a lot. Those aren't huge for us, but those are all opportunities. And when the no-COVID rules are over in China, when APAC starts traveling more broadly, Japan just loosens some of their rules, you see it right away. Now again, those won't flip our numbers. They're not big enough for us, but they are good guys on the other side.

Got it. One area where you do have exposure to a secular growth theme within the broader travel sector that's quite interesting is shared accommodation through the Vrbo brand, obviously went through a rebranding dynamic a number of years ago. Now you're further removed from that dynamic and most people now know what is the Vrbo brand. How should we be thinking about innovation around shared accommodations? And how you think about aligning investments around product, supply, demand for setting that part of the business up for success over the medium to long term?

Yes. So I think there's a number of things. I mean, first of all, we did finally successfully, with the benefit of a great tailwind, land the brand and the rebranding. It was an answer to a New York Times crossword puzzle. So I figured we had made it at that point. But we continue to drive that. We continue to invest in brand. If any of you watch TV or watch football, recently, it's there. So we're continuing to push that. But Vrbo was the #1 app in iOS for half of COVID or most of COVID and it's still #1 in iOS today. So all of that landing of the brand, getting people to experience the product, getting people on the app, that will augur well for that product for a long time. Now we, of course, want to make the product better in lots of ways. One of the ways, frankly, is allowing Vrbo to be available on our other brands, tying Vrbo into our overall loyalty plan so that if you're a Vrbo user and you stay for a week and accrue points, you can use it for your flight, or your next hotel stay or an activity or a car. And of course, plumbing that through to our business partners because we power so many B2B partners who up until now really have a tough time booking. Vrbo, hasn't been a clean experience. So there's a lot of opportunity there. In the product itself, just like all our products, we are constantly trying to innovate, make the product better, Vrbo is in a very good spot, but device parity is not all the same. And so we're working on that. We're working on -- constantly working on more features about shared trips. We have this trip planning, product trip boards that has been very popular. We've now moved it into Expedia as well so that you and I could plan a trip together with our families and we could vote on where we wanted to stay and all these things. So we're looking for all of those tools to help the planning process. And of course, we're trying to build inventory, build the right inventory. We don't compete in all classes with the more well-known brand in the space. We're not in shared accommodations really. We're not in the low end as much as they are. But in our sweet spot, we're very strong, and we're building on it.

One question I get a fair bit is how to think about the supply dynamic longer term in that part of the market. What are the both opportunity sets and challenges you see to continue to stimulate supply, whether it's second homes and the like, to come into that process and open itself up to the growth dynamics you see?

Yes. I mean I think there seems to be ample supply. I think, certainly, if we get to a tougher economic environment that encourages more people to monetize a second home perhaps than they might have -- maybe they didn't need to before, didn't care. So there's opportunities there. I think there's continuing in many of the biggest vacation spots that we cover, beaches, mountains, et cetera. There continues to be a boom of building that's gone on during COVID and second home acquisitions and all those things. So those are all good guys. And I think the shared accommodation -- sorry, the vacation rental model is a very good one even from a cost standpoint, right? A whole family can stay, or several families can stay in one place, it's often more affordable than a hotel and more comfortable for what they're trying to do. So I think it plays to both worlds. Now we're not playing at the very low end maybe in some of the shared rooms and things like that. That also may have a part in a down economy. But in our sweet spot, there tends to be plenty of volume. And as you know, the luxury, the upper end of the travel market makes up a disproportionate percent of the market. And that market appeared -- there appears to be no stopping at probably everybody in this room.

Understood. And against that theme of vacation rentals and new categories becoming a portion of the mix, how do you think about on the other side of the pandemic any element of normalization of travel trends? Obviously, we've benefited, all of us probably in this room, from elements of long-duration stays and elements of hybrid work and spending time with family over longer durations than maybe we might be able to in another world over the next couple of years. How do you think about normalization in the broader industry?

Yes. Well, as you know, I've been sort of saying it's all going to normalize from the beginning. And I think we're broadly seeing it, right? We're seeing corporate travel come back. We're seeing -- we've seen city travel come back strongly. So I think we are seeing it. Now whether the alternative accommodation space has expanded sort of what the scope of it is because people are working for extended periods from different places. Young people maybe are being more nomadic and traveling as a group and going around. To me, that's an expansion of the space as opposed to it eating into the hotel room nights per se. Now hotel ADRs are high. And if you want something really cheap, sometimes an alternative accommodation may be your only answer. If you need a $100 a night place in San Francisco, not that many hotels in San Francisco you can get for that...

No. I think everyone in this room...

But I guarantee there's a site you can find some alternative accommodation for $100. So I think you're getting some of that. You certainly -- I think it will normalize. I think hotels can fill up. It may be ADR-dependent. As I said, they may be keeping their prices up and be willing to give up a little room nights in the same way we've been willing to trade maybe less profitable room nights. And I think alternatives have kind of brought in some stuff from the edges that might have been thought of maybe as more like used to be rental -- it used to be people renting homes like regular rentals. And now they're kind of moving around. Like so there's some nights that have bled in from the outside as opposed to it's like a zero-sum game and they're just trading amounts.

Got it. Okay. On the last earnings call, I found it interesting, both the last 2 earnings calls, you wanted to go deeper into elements of strategy and the last earnings call is your B2B strategy. So maybe for those who either didn't listen or aren't aware of it, I think there's some interesting narratives building around B2B and what you've done in terms of aligning your platform against the B2B opportunity. Maybe just take a few minutes and help people understand what that strategy is and how you expect it to fuel growth over the medium to long term.

Yes. Yes, happy to do that. So basically, as many of you know, if you followed us, we've been on this journey to consolidate all our technology, get faster, get more agile, build better features and just make better products, stickier products for all our customers. In doing that and bringing all our stacks together, we realized we had an opportunity to also build things that were extensible. Now we've had a big business in our B2B business. It's kind of quietly been growing for years. But we've powered big rewards programs, the likes of Chase and Amex and many other major banks. We've powered ARP and people like that. We powered small OTAs and travel players all over the world, particularly in markets where we are not as competitive. And we've powered thousands and thousands of small travel agents. So we have a big B2B business that was basically built on the back of us having great supply, certain technologies where we could create templates for partners and put them in the travel business. But it was very much built for an -- you had to do the whole thing, and it kind of had to be at an enterprise level because it was hard to do. And what we're doing now is really rebuilding all our technologies so that we can component-ize it so that people can take pieces of it, or all of it. We just have our first pilot of using our fraud capabilities for a travel partner of ours. So they're literally just taking -- we have best-in-class fraud capabilities, detecting fraudulent transactions, reducing chargebacks, all the things that cost retailers money. And we are trialing that now with our first partner so that they can take advantage of our best-in-class fraud capabilities. But imagine [ that ] time service times, payments times, machine learning times, whatever. And most travel companies, as you know, hotel companies, they're not technology companies, right? So they don't have all the tools or the engineers or the product people to go figure -- or let alone data science, which nobody can afford, to go build all these things themselves. So we are in a position to create opportunities for them to use our tools that we've built at scale to help their businesses, which allows us to touch a lot more transactions. Now it's a different model. Those would be more like SaaS models are historically the models where we powered travel through airlines and so on. We recently won the Delta car business. We're constantly doing those kinds of things is really like a sharing of the transactional value, if you will. But these will be more like SaaS model. So there will be a combination of things. And then the sort of last piece of it is we're also trying to make it really easy to onboard even the basic capabilities, so that small players, entrepreneurs, new developers, anyone who wants to get into travel, influencers, et cetera, social can get in the game. I mean there's thousands and probably millions of people that have blogs about travel that have people that are following Eric's favorite 20 beach destinations, whatever it might be, we can put you in the travel business by basically saying, "Take our tools. Put your package together to your favorite beach. Sell it to your followers. And you can participate in that economy." And we're going to be able to do that ultimately at scale. A lot of work to do, but that's where we're heading.

Got it. And it's been a while since we've had a conversation as the online travel industry about the relationships between the platforms and the suppliers because we've obviously had a pandemic. We've now had a pandemic recovery. Maybe talk a little bit, 2-part question sort of, what's the latest interests of the way hotel supply works with you as a platform and the current state of affairs of sort of the relationship, some of which comes with tension from time to time? But I would argue, what seems like the B2B initiative might argue for like a better, more improved supplier relationship on the hotel business as you think about it over the long term, how do those factors sort of work their way through over the next couple of years?

Yes, I think that's exactly right. I mean, starting at the base of it, right, we take a piece of a transaction. Obviously, partners of ours, suppliers of ours would like us to take a smaller piece of that transaction, but we think we take a very fair and reasonable piece of that transaction. And of course, that's a constant negotiation. But I would say during COVID, where we all needed each other and where all of us, myself included, but certainly big hotel partners had to reevaluate sort of how they looked at their entire business, where they wanted to invest, who they wanted to fight with, for what, was it really -- were we really the enemy or the friend, et cetera. I think relations have gotten much improved. And then as you say, we are trying very intentionally to provide much more value to our partners beyond just, "Hey, we can sell some rooms for you, but we can help you drive more sales of products even on your own sites, even to your own customers, we can help you do it more efficiently. That's all value for you." And so a good example of that is our -- we call it optimized distribution. It's our wholesale product. And for those of you who don't know, if you look up this hotel on Google today right now, you would probably see us, you'd see a bunch of prices. And then you see prices that seem abnormally low. And the reason that happens is because hotels put out wholesale rates in the world. They might put it into travel agents in Shanghai because they're trying to attract Chinese customers or special deal for this or whatever. And these -- what are meant to be closed universes, but they bleed back into the market and they show up in Meta and they show up on Google and they show up all over the place. And Google, we're trying to get Google to be better policemen of the market, but they're not always as quick to it as we'd like. But what we've done with Marriott, with IHG and with many others that are coming online is we're able to distribute it to our B2B network, replace all that wholesale business, but make sure that the rates don't get abused in the market and watch it and take care of it. So Marriott is basically all in with us. IHG is all in with us. That's something where we all win. They make more money, they protect their rates. We make more money. It's good for everybody.

Okay. I want to come back to what you talked about earlier, which is sort of realigning marketing initiatives, driving higher brand awareness, driving more loyalty. Maybe we could take a step back. Since you joined the organization, I think getting more efficient and doing business more efficiently and rethinking the model has been a pretty consistent mantra of yours on a lot of earnings calls and a lot of investor conversations, including when we talked live at this event a year ago over Zoom. Where are we now on implementing those initiatives and getting the organization to where you want it to be so it's about execution going forward as opposed to integration and streamlining internally? Then I've got a few follow-ups on that theme.

Yes. So it's a big question. I mean I'd say we've come a long way, and we still have plenty of opportunities. So we've consolidated, as I said, around technology. I now have 3 primary operating leaders for the whole business. It used to be many across many things. We've pooled together technology. We put together our brand marketing and all the marketing, performance marketing. So everything is in the right buckets, and we've made great progress in reducing cost in many places. But every day, there's more opportunity for that. And I would say as the technology comes together -- and we're still -- I wouldn't say we're in the early innings, but we're in the middle innings. We are getting some delivery. I talked at our last earnings about we've now migrated most of Hotels.com onto the Beck stack -- or Expedia stack, excuse me. And pushing -- Vrbo is the next to go. And as all of these things come across, we free up engineers, we free up technology, we reduce licensing, we reduce AWS instances, like all of those things are opportunities to get more efficient. So as far as we've come, and we took out, I think, roughly $1 billion of costs over -- during COVID and a bunch of pockets. There's definitely much more for us to go on the cost side, but also the growth comes at a greater efficiency because it just doesn't take that much to go faster and, in fact, probably takes less. So we're still on that trajectory.

Okay. Maybe sticking with the marketing and the brand piece for a minute. I think this -- a lot of this probably predates your leadership at Expedia. But I think most folks who've been around the online travel industry for a long time feel like every couple of years there's a narrative of we're going to finally lessen our dependence on Google. We're going to get better at brand. We're going to get better at loyalty. It's a narrative that hangs around for a little while and then it sort of loses momentum. Why would this time be different? Or what do you see in terms of the -- what you're tracking in the industry and where you want to take the company that, that theme is different this time than it has been in prior iterations that, frankly, have nothing to do with your role in the organization? But we've been through this before a few times.

Yes. No, I think that's fair. I think the difference is and the important thing here is to not think too short term. Like everyone gets caught up -- I mean, even this last earnings, we had this debate over, I'm sure I'll get questions in my next 2 sessions about it again. There's a bunch of things that go into investing in customers, right? You can discount price. You can give them loyalty. You can pay Google to find them. You can do all of those things. Some of those are below the line -- below revenue and some of those get netted above revenue. And most of you don't get to see what those numbers are from us or anybody else. And it's competitively sensitive, so nobody is going to disclose it. But we look at that -- we were looking at that for the first time as an all-up set of numbers, including the cost of service, all the things we do to repair problems that occur. And we are looking, as I said in the beginning, at how do we drive great long-term customer experiences, obviously, to our most valuable customers. So all customers are not created equal. Somebody might come in from Meta for 1 transaction for $80 at a 1-star hotel. That's probably not a big lifetime value opportunity. And somebody might come in and book a $20,000 Vrbo, pretty good lifetime value opportunity. So we are getting much better at discerning the difference, and we're getting much better at retaining those customers. That doesn't necessarily mean in the short term we're going to take tons of money, we're magically going to have this brand campaign that changes everything, and now we no longer need Google, right? Our brand campaigns are way better than they were. We're sure we have best-in-class brand campaigns. But that alone: a, that takes time; and b, it's not just going to flip a switch. So what we're trying to do is really use all of those capabilities, brand loyalty, one combined loyalty, which is hugely powerful, and all these things to not only get customers, make sure we get them to stick, make sure they're signed up, make sure we have great CRM tools to reach them and remind them of all the goodies they have, make sure they have great products. So they're like, "Wow, I used flight tracking and that was really valuable to me. And now I use trip planning, and I can't get that anywhere else. I'm going to use that." Those are all the things that create high LTV. And frankly, that allows us to invest more efficiently over a long term, not in 1 quarter for 1 quarter's worth of transactions, but LTV takes time to play out, which is part of the discussion we've been having over these last few quarters, as you've noted, which is it's not just about today, it's about long term. And as we get better and we are getting better at turning those customers into members and turning them into high-LTV customers, then our -- we will naturally get more efficient because they start to deliver more on a repeat basis, and we don't have to fish as much, which doesn't mean, just to be clear, we won't spend more in marketing. Because if we're really good at getting the right customers, it may be hugely efficient for us to spend even more than we've ever spent, but more leverage in that model...

Growth from that. Yes. Okay. Maybe just one follow-up. How key is building a loyalty layer to the business to what you want to accomplish medium to long term? Is it a cog? Is it a critical piece? How do you think about what has to be built around loyalty tied back to the platform and the brand?

Yes. I mean, we think it's critical, but maybe not -- maybe I should go a little deeper. It's not just because you can get some points, right? It's because members get special deals. The higher you are in our membership, you get more features, you can get VIP attributes and things with certain hotels. You can get bundling benefits. It's not just about like, "Oh, I have 832 points and that's worth $20 or whatever that might be worth." But it's about getting people to enjoy the benefits of your product. And one of the benefits are really good pricing and really good rewards back to the customer in terms of what they can get by being signed up with us. And if a customer doesn't experience that benefit, then you've made yourself generic. But if the customer does experience that benefit, then they're more likely and the numbers prove it, right, in terms of our own math on LTV and everything else. A member is basically worth about twice as much as a nonmember. And a member with app is worth basically twice as much as that. So again, that -- some is causal, some of it may not be, but that's what the math is. And if that's true and we can move people up there -- and that's to say nothing of the benefits of the product. The product is every day getting better. We've launched really good features. They're rolling out across the world, and we will continue to do that. And if our stack gets more unified, that will be easier and easier to do across more and more of our products with speed.

And I want to come back to that point. I don't think this gets enough attention, at least in the conversations I have, but there is a lot of innovation work going on with respect to the consumer-facing part of the product. Can you just refresh investors on what you have built and deployed in the recent past? And how should we be thinking about the engine of innovation on the consumer-facing product side and how that can improve traffic, conversion, retention, all these things that you're aiming after over the medium to long term.

Yes, totally. So I think you can think of it in 3 buckets, right? We've got the long-term projects of consolidating the big stacks, right? It's like a back-end massive spaghetti that we've got to put together, and that's on its journey. We've got the medium term, which I would call more like features, like these bigger features that we rolled out. We rolled out price tracking, which is an air price tracking capability. It actually has forecasting. So if you go on it and you pick a flight and you want to track it, you'll see a forecast, which is what we expect to happen based on our data science for prices over -- between now and the day it flies. So if you -- you might do like, "Oh, it's expected to dip, maybe I'll wait a little bit. Or it's only going up, maybe I should pull the trigger." And if you just want to track it, you can track it. And the engagement numbers on that product are tremendous. People -- the open rates, when they get notices, are higher than any product we've ever had, et cetera, et cetera. And it's actually driven higher conversion into lodging because people are coming back and they're like, "Oh, now I'm finally going to book. You know what, I'll get a hotel." And that's benefiting. And the trip boards, which we had in Vrbo, which is this capability to save things, collect your trips, share your trips, et cetera. And we're adding new features with voting and capabilities to share. That, again, has been a huge success in Vrbo. It's demonstrated much higher propensity to book, value of bookings, et cetera, we're now finally launching that into hotel -- into Expedia and our other OTA brands. And then the price tracking, we're going to launch into hotels and other products so that you can also track the hotel prices that changes. So all of those capabilities are meant to give the customer better information, make sure they get into the right thing. We've launched into search, and it will be present in the UI over time, a basically experience score so the customers know, "Hey, when I stay at the Palace Hotel, I get the experience I thought I was going to get." Or have -- have there been a lot of problems? Has Expedia gotten a lot of calls with problems? Are the ratings low? Do we know there's issues? So not just price benefit, but how good is the experience. So the customers get what they expect so that we can match the expectation better for the customer. So we are continuing to launch better and better tools for the customer to be in the right product, to feel confident booking, know what they're getting. And then all of those things will accelerate as we bring it all together into one stack. Because right now, if we want to -- until 3 weeks ago or a month ago, if you wanted to launch something in Expedia and Hotels.com, you had to build it literally twice. And now you build it once and it goes. So we've got -- give you simple tiny -- then the third bucket is the short -- very short-term stuff like the stuff you're constantly testing and learning from. So we have a great capability that we've used to use machine learning to optimize the picture you see next to the hotel card, whether it's the 2 beds in the room or it's the pool or it's the whatever. And of course, it's optimized differently. If you've entered 2 adults and 2 children, we know what kind of trip it is and we know where you're going. And so maybe you want to see the pools, right? You're going to Florida with your kids, you want to see the pools. If you're on a business trip to Omaha, maybe it's the 2 beds in the room or whatever. So we're using machine learning to optimize the picture. It's been a huge winner, but was only on one of our brands. Now it's going to roll out across everything. So all of those -- those are modest wins in the scheme of things, but they're all opportunities to make the product better. And I'll say finally, the biggest win of all will be when we can truly personalize. Now we've had -- some of you may have multiple accounts with our brands. You may have a Vrbo account, you may have an Expedia account, you may have different passwords. You don't even remember what the passwords are. When we get it all unified, all unified in one loyalty, all unified on one data set, we're going to be able to personalize to you. We'll know where you've been. We'll know what you like to stay in. We know that you like boutique hotels. We know -- we'll personalize the sort. We'll personalize the pictures. We'll personalize everything. So -- and in fact, be able to say, "Oh, Eric, you took this trip last time. I say you want to go to Paris again. Do you want the same hotel? Do you want the same flight?" So that's a huge step function change, I think, for us over time. But there's a lot of plumbing that has to get finished, but that's -- there's a big objective of ours there.

Got it. Maybe just 1 or 2 more quick ones as we get into the last 5 minutes here. Obviously, you had to do a lot on the capital structure side in the last 2 years, starting in March of 2020 and where we sit now. As you think about returning to more normalized trends and we come out of this summer and into next year, how should investors think about the priorities for capital, the balance sheet, the current state of it, the cash you have on hand and how investors should think about you balancing a mixture of investments for growth and potentially returning more capital to shareholders?

Sure. Well, look, I think, barring some world economic condition that is worse than any of us can foresee, we're highly cash generative. We have plenty of money to invest in growing the business. As I said, we think we have more opportunity for efficiency long term than we do deleveraging. Now it's not all like a direct line. Sometimes you got to bubble up some things to [ get better, ] the engineers to get past some things, but we expect there's opportunity. So I think we have ample runway to keep investing in the business to grow. The question of how we return capital and what we might do, you've seen us delivering over the period since things got better. We just paid down another $0.5 billion -- or [ tendered ] for $0.5 billion of long-term debt. We expect to be firmly in -- we have been, thanks to the rating agencies but firmly within sort of historic investment-grade parameters by the end of the year. And we've got -- we still got 23 million shares of an authorization for a buyback. We have a history of doing that, and we used to have dividends, we'll see. But I think we have a strong tradition of trying to be efficient in returning capital in efficient ways. And as we continue to generate plenty of free cash flow, which I expect us to do, and barring something we want to buy, whatever, we will continue to look at the best ways to return capital to our shareholders.

Okay. In the last minute or 2, we have -- I've been asking everyone at this conference. As you think about your own company or the broader landscape that you operate in, anything you want to share with investors where you think either you have some outside-the-box thoughts, out of consensus views that you think are not front of mind for the investing community that you think people should be keeping in mind when you look across the landscape in the next couple of years?

For us and our growth, well, look, I think the B2B opportunity is a great, great opportunity for us. A lot to learn, a lot to figure out still, but it's been a great business, and we expect it can grow faster than it has and in more directions than it has. I think the other thing is, maybe I'll be wrong but I think people are underrating the power of turning so much more of our base of customers into members and into long-term users. And when you do the math, which admittedly is fun with math, when you reduce churn of those customers, when you grow that member base, that app base and if the LTV numbers hold, it gets really exciting pretty quickly. Now a lot to do. I'm not -- it's not a forecast or a projection or anything else. I'm just saying, if we're right about that -- and from our perspective, the fellow I brought in to run our brands from Apple who ran the services business there, we talk about it, we're like, "Okay, maybe this will turn out to be the one industry in the world that acts differently than all other industries. But if it works like everything else, we have come to know over the course of our careers and lives and you have come to know, then the power of that should be really strong. And I think will create inflection for us." So those 2 things together, I think, are huge opportunities. And yes, we'll be more efficient, and we'll save few hundred million dollars more over the whatever. But like in terms of growth, that's what I think people are missing.

Great. Well, Peter, thanks so much for doing this. I really enjoyed the conversation. Please, everyone, join me in thanking Expedia for being part of the conference this year. Thank you.

Thank you.