Travel Disruptors: Capturing B2B growth (2024)

In 1996, Expedia—then under the auspices of Microsoft—debuted as one of the internet’s first online travel agencies (OTAs). Expedia Group is now a publicly held company encompassing brands such as Expedia, Hotels.com, and Vrbo. It sees more than six million average daily visitors and more than one billion average monthly searches across its sites and apps.

Ariane Gorin joined Expedia Group in 2013 and is now president of Expedia for Business. She oversees the company’s fast-growing global B2B ecosystem, which counts Walmart and United Airlines among its partners. Gorin’s advice to young people who are thinking of entering the travel industry? “Go for it,” she says, “because once you get in, you’ll never want to leave. What we do as an industry is help people create memories, and that’s incredibly meaningful.”

In this installment of Travel Disruptors, Gorin spoke with McKinsey’s Emma Loxton about the industry’s postpandemic recovery, Expedia Group’s B2B offerings, and how generative AI (gen AI) might change the business of travel. The following is an edited transcript of their conversation.

McKinsey: As the travel industry continues to bounce back from the pandemic, we see people traveling and interacting with travel companies in slightly altered ways. How has Expedia Group responded? Where have you invested to deliver for customers?

Ariane Gorin: It’s been an interesting few years. One thing that’s certain is that people need to travel, want to travel, and—no matter what barriers are put up—will find a way to travel.

At Expedia Group, when COVID-19 arrived in 2020 and borders closed, we saw consumers shifting to Vrbo, which is our vacation rentals brand. People were concerned with health and safety and wanted to be in their own bubbles, so they started renting whole homes. This meant that, while the air and hotel businesses didn’t do as well, the Vrbo business thrived.

Then, as vaccinations began and international borders opened, we saw people returning to international travel, hotels, and airlines. At Expedia Group, we have a diversified business, both geographically and in terms of brands and lines of business, so that as travel patterns changed, we always had an answer.

In terms of investments, I think we’ve led the way in having a focus on self-service and automation. When the pandemic began, we needed to handle a sudden onslaught of requests for cancellations, refunds, and credits. We were prepared because we’d already made a lot of investments in self-service technology. We quickly developed the ability, for example, for people to self-service airline credits, which was important for travelers but also really important for our airline partners. We let consumers make modifications using chats on our platform, instead of having them spend time on the phone with an airline trying to cancel or modify a ticket.

We also took advantage of the past couple of years to replatform our entire company. We have a number of brands—Expedia, Hotels.com, Vrbo, and others—that were each running on different technology stacks. In a world where having access to data and scale can be an advantage, the idea that we had these separate stacks and couldn’t innovate on them all at the same time was a problem for us. We found we had an opportunity, during a period of depressed demand, to do a lot of technology work under the covers and to then reemerge with a great platform that had scale and modern infrastructure and that allowed us to use modern data science to innovate faster for our travelers.

McKinsey: Countries have taken different paths back from 2020, and travel markets are developing at varied paces. How do you see the industry evolving in different markets?

Ariane Gorin: There are parts of the industry that have grown past where they were prepandemic, but other parts haven’t fully recovered yet. For example, air capacity in the United States is above prepandemic levels, but airlift between the United States and China is still only a fraction of what it was. Corporate travel is expected to recover, at a dollar value, in 2024 to where it was prepandemic, but when you factor in inflation, it means that from a volume perspective it still won’t have fully recovered.

There remain a lot of areas where there could be waves of growth. When you look at the middle-class population in Asia, it was about 2.0 billion people in 2020, but it’s expected to be 3.5 billion people by 2030. India, over the past decade, has issued 100 million passports, but still only 7 percent of the Indian population has a passport—compared with more than 40 percent in the US.

McKinsey: You’ve been instrumental in developing B2B offerings for Expedia Group. What was the genesis of that effort, where does it stand now, and what’s your value proposition for the different organizations that you work with?

Ariane Gorin: I started working on B2B initiatives in 2014. At the time, B2B was a small part of our business—basically using our hotel inventory to power other travel companies—and it wasn’t growing much. I think there was a perspective that the B2B business was sort of a sideshow.

What my team and I realized was that the travel industry was immense and that the major OTAs, at that time, were only a small portion of it. There was still a ton of business being done through corporate travel, OTAs in emerging markets, offline retail, and loyalty programs. Those were huge pockets of demand that our brands weren’t going after and that our hotel and airline partners wanted to be able to access.

We thought about how we could power all these other companies by bringing to them our technology and, especially, our supply of high-quality inventory. In recent results, B2B was at a record $995 million and growing at a 26 percent increase year over year for us. And there’s still a big runway for helping to power other companies.

The first thing in any B2B effort is understanding what your client or partner needs. For example, we work with an online travel agency in Indonesia. They already understand travel, and they are experts at knowing what their local traveler wants—how to market to that traveler, what payment types that traveler wants to use, and so forth. They know all of that. What they’re looking for from us is mainly access to great hotel inventory in Europe and in the US.

On the other extreme, earlier this year we announced a partnership with Walmart in which we are powering the travel component of its loyalty program. Walmart is not a travel company, so it is looking to Expedia Group to bring in a turnkey travel solution. And that includes not only the hotel inventory and the like but also the front-end technology. It’s our content and it’s our customer support. Similarly, if you go to United Airlines online and you look at the hotel tab, that’s us. They’ll be the first to say they’re not the experts in hotels, so they want our hotel inventory and also the great e-commerce experience that we can bring.

It’s really about listening to your partner and then having modular blocks of solutions—from technology to inventory and all of the support around them—that you can then fit to what the partner needs.

One of the things that’s helped our B2B business succeed is that we are part of a company that also has a B2C business. So we know what kinds of photos, content, and descriptions travelers want, and we are constantly making sure that our technology has the best uptime possible because we’ve got millions of people shopping on our own brands. When a B2B partner decides to come to us for their inventory or their technology, they know that it’s going to be backed by what’s working for these massive consumer brands.

McKinsey: Expedia Group is a very large company in the travel industry. How do you think about working with smaller organizations and entrepreneurs to create value for the traveling public?

Ariane Gorin: We’ve realized there are a lot of small companies or even individuals that want to participate in the travel industry, and we work with them in a number of ways.

One is that we have a program that allows an individual at home to become a travel agent. You can sign up for the Expedia Travel Agent Affiliate Program, which we call TAAP, and we’ll put all the tools at your fingertips to start to sell travel. For example, one woman who lost her job at the beginning of the pandemic decided to start her own travel business through TAAP, and that helped her build back her income.

For start-ups that are trying to make their way in the travel industry, we recently created an accelerator program. Its theme was around making travel more inclusive and accessible, so we chose a handful of start-ups that were working on accessibility. We gave them technical expertise, marketing expertise, access to coaches and mentors in our company, and stipends. It’s a six-month program. And in some cases, we actually looked at whether we could integrate their services into our products. It’s really fun to see how all of those start-ups are evolving.

And, of course, there are the individual property owners using Vrbo. What these entrepreneurs are primarily looking to us for is distribution. And our promise to them is that we’re going to develop a great platform with great marketing that’s going to attract travelers, but we’ll also provide advice about photos, descriptions, and other things they can do to help themselves get in front of the travelers who interest them. We have a lot of intelligence about what makes a property successful that we can share with them.

McKinsey: What’s your view on the biggest use cases for gen AI in the travel industry?

Ariane Gorin: I think smart players are going to benefit from it. We have often talked about how to “put the travel agent back in the OTA”—how to create a personalized experience for people, so they feel that Expedia Group knows them, is recommending things that make sense for them, and is helping them discover new things. I think within that realm of personalization, we can use gen AI to respond more easily to people’s queries and make proposals for them. We’ve already integrated ChatGPT on the front end of the Expedia app and into the shopping flow for our travelers. For example, if you’re looking at a particular property, you can ask questions about amenities, and you’ll have more conversational customer service experiences.

But I think there are also a lot of internal use cases. I have a fairly large team of commercial people who are out talking to partners every day. How can we use gen AI to make them more effective when they’re speaking to a partner? Can we use gen AI to create a summary after a call? Can we off-load some of the less value-add work for them so they can spend their time on more value-add things?

I suspect that in every boardroom, management teams are talking about this. What can you do to make your product better, but also what can you do internally for your company? At Expedia Group, we’re asking what we can do for travelers and for our internal teams, but also what we can do for our partners. We have a lot of information and data about what’s happening in the industry, so we’re wondering to what extent we can provide insights to our partners to help them make better decisions.

McKinsey: What’s one thing you wish you could change about the travel industry?

Ariane Gorin: There’s no denying that, like many industries, we have a big impact on the environment—even though, over the past few years, the growth of the industry has been faster than the growth of our environmental impact. Simply because we’re moving people around the world, sustainability is a real issue. So if I had a magic wand, the first thing I’d do is help us reach our sustainability targets much faster.