Expedia Recorded $326 Million in Losses on Stake in Amex GBT

13.02.2024 - 07:15 / skift.com / Dennis Schaal / Ariane Gorin

Expedia Group frequently talks up the benefits of its sale of corporate travel agency Egencia to American Express Global Business Travel. Benefits include: A 10-year pact to supply Amex GBT with lodging inventory, and Expedia’s equity stake in it, initially valued in 2021 at $815 million.

But in 2023, Expedia Group recorded a $26 million loss on the fair value of that stake in Amex GBT, and that came on top of a $300 million loss in 2022, according to a recent financial filing.

Expedia confirmed Monday that the fair value of its equity stake in Amex GBT was around $490 million at the end of 2023 — a 40% plunge.

That loss will not shake the financials of Expedia Group, which notched $797 million in net income in 2023 on $12.8 billion in revenue.

Expedia’s deal to sell Egencia to Amex Global Business Travel may have been advantageous to Expedia on a number of levels. It enabled Expedia to lock in that long-term deal to offer hotel stays and vacation rentals to business travelers through Amex GBT, the largest corporate travel agency in the world.

Expedia Group CEO designee Ariane Gorin played a key role in the Egencia sale to Amex GBT, an Expedia spokesperson said Monday.

The deal enabled Expedia to shed a non-core business during a period when Expedia was trying to simplify its far-flung operations. And Expedia saw the deal as innovative because it enabled the company to secure a significant minority position in the leading player in business travel without having to operate its own business travel firm. Expedia has 16% voting power in Amex GBT, has a board seat, and is the third largest shareholder.

But that Expedia equity stake in Amex Global Business Travel has taken a battering since the closing of the deal, the financial filing showed.

Here’s what happened:

An Expedia spokesperson noted that that Amex GBT was a private company when it initially estimated the value of its stake. Once its shares began trading, there was a known public value.

“Amex GBT was a private enterprise when we made our initial investment in the company, and the value of that investment was based on an assessment of AmexGBT’s fair value using discounted future cash flow and other techniques,” an Expedia spokesperson said. “Amex GBT became a public company in 2022, and we now mark-to-market our equity ownership in the company. So the value of our stake changes based on the changes in AmexGBT’s public value.”

Beyond the value of Expedia stake in Amex GBT, Expedia sees the supply relationship as advantageous.

“Our 10-year supply agreement with Amex GBT is working very well and we do not publicly disclose those details,” the Expedia spokesperson said. “The value we get from our supply agreement is separate from the equity