Travel site Expedia has announced that it will cut 3,000 workers in an attempt to streamline its “bloated” company after the exit of its CFO and CEO, according to a report in the Financial Times.
In an email to its staff, Expedia said it plans to “reduce and eliminate certain projects, activities, teams and roles to streamline and focus our organization.”
The worker reduction amounts to about 12 percent of the company’s employees. About 500 jobs will be cut from the company’s headquarters in Seattle.
The job-cutting measure follows a battle in the boardroom between former CEO Mark Okerstrom, former CFO officer Alan Pickerill and longtime Chairman Barry Diller, who conflicted over the strategic direction of the company.
Diller said Okerstrom was leading during a “material loss of focus.” During an earnings call, Diller also said Expedia was “sclerotic and bloated” and that it was “all life and no work.”
“We are stopping doing dumb things and starting [to do] what we think are good things,” he said.
U.S. brokerage Atlantic Equities Analyst James Cordwell said that Expedia’s fixed cost base was twice the amount of rival Booking.com on a nightly basis. “Anyone who has looked at Expedia and Booking.com over the last four to five years has realized that the margin difference between the two of them is very different,” he said.
A group of nine top Expedia executives dubbed the “Travel Leadership Team” admitted that the decision to cut jobs was “difficult” and that “travel is intensely competitive and demands our very best leadership.”
Travel companies are facing not only Google’s recent entrance into the sector, but also the effects of the Coronavirus. Expedia execs said the virus will cost them between $30 million and $40 million in lost earnings.
In Q4 of 2019, Expedia’s revenues went up 8 percent to $2.63 billion, but its adjusted net income dropped 4 percent to $174 million.