American online travel company Expedia on Monday announced to let go of 1,500 employees, or 9% of its workforce, as a part of its restructuring actions aimed to recalibrate resources for “organizational and technological transformation”. The Seattle-headquartered company has begun informing affected workforce, it said in a stock market filing.
Expedia expects to incur $80 million to $100 million in restructuring expenses, which predominately account for employee severance and compensation benefits costs, all of which should be recorded this year.
Speaking to CNN, Expedia’s spokesperson said that it has recently completed many “technical” milestones in the company’s transformation and that “the business continues to evaluate the appropriate allocation of resources to ensure the most important work continues to be prioritized.” The restructuring action will allow the travel company to invest in core strategic areas for growth.
A Reuters report highlighted that the news comes after the company said earlier this month that its revenues will soften in 2024 as airfares drop from post-pandemic highs. Expedia’s chief executive officer Peter Kern also stepped down from his post and Ariane Gorin, who was appointed as the new CEO, will take over the position in May.
It is noteworthy that after a period of pent-up demand leading to a “revenge travel” boom after the COVID-19 pandemic, the U.S. travel industry is experiencing a slowdown. This is evident in several ways, including slower than expected growth reported by major travel companies, challenges faced by budget airlines due to excess capacity, and a shift towards international travel versus domestic trips. While the reasons for this shift are multifaceted, they likely include a return to pre-pandemic travel frequency, economic factors like rising inflation impacting discretionary spending, and evolving travel preferences. Although the travel industry isn’t experiencing a decline, it’s entering a period of slower growth compared to the initial post-pandemic surge.
