Skift Take
The equity stake of Expedia Group in American Express Global Business Travel has faced significant losses, but the overall deal has enduring advantages.
Expedia Group often highlights the benefits of selling corporate travel agency Egencia to American Express Global Business Travel. These benefits include a 10-year agreement to provide lodging inventory to Amex GBT and Expedia’s equity stake in it, initially valued at $815 million in 2021.
However, in 2023, Expedia Group reported a $26 million loss on the fair value of its stake in Amex GBT, following a $300 million loss in 2022, as shown in a recent financial filing.
As of the end of 2023, Expedia confirmed that the fair value of its equity stake in Amex GBT was approximately $490 million, marking a 40% decline.
This loss is not expected to significantly impact Expedia Group’s financials, considering its $797 million net income in 2023 on $12.8 billion in revenue.
The sale of Egencia to Amex Global Business Travel allowed Expedia to secure a long-term agreement to offer accommodations to business travelers through Amex GBT, the largest corporate travel agency globally.
Expedia Group’s CEO designate, Ariane Gorin, played a crucial role in the Egencia sale to Amex GBT, as mentioned by an Expedia spokesperson on Monday.
The deal enabled Expedia to divest a non-core business during a period of streamlining its operations and secure a significant minority position in the leading player in business travel without having to operate its own business travel firm. Expedia now holds 16% voting power in Amex GBT, a board seat, and is the third largest shareholder.
Expedia’s Stake in Amex GBT Battered
Despite the benefits of the deal, Expedia’s equity stake in Amex Global Business Travel has faced losses since the deal’s closure, as indicated in the financial filing.
Key events related to the stake include:
- On November 1, 2021, Expedia Group sold Egencia to privately held Amex GBT in an all-stock deal, acquiring a 19% stake valued at $815 million.
- Amex GBT went public in a special purpose acquisition company merger in May 2022, reducing Expedia’s stake to 16%.
- Following the trading of shares, Amex GBT’s price dropped 14% by December 29, 2023, and an additional 8% thereafter.
- In 2022, Expedia recorded a $300 million loss in the fair value of its Amex equity stake.
- In 2023, Expedia reported a $26 million loss.
The Expedia-Amex GBT Partnership
An Expedia spokesperson explained that the initial value estimation of the stake was based on Amex GBT being a private company. Once it went public, the valuation was adjusted based on the market value.
Aside from the equity value, Expedia views the supply relationship as beneficial and does not disclose details publicly.
Stock prices can fluctuate, so there is potential for Expedia to recover losses on its Amex GBT stake in the long run.
Additionally, the two companies have started collaborating on projects beyond the lodging agreement, such as Egencia using an Expedia fraud prevention solution.
