The last quarter of 2020 reflected what the entire last year looked like, online travel agency Expedia Group Vice Chairman and CEO Peter Kern said, and he expects those challenges to continue into 2021.

During the company’s recent earnings call, Kern said the optimism from the vaccine rollout is mixed with COVID-19 caseloads across the world. Booking trends in the fourth quarter mirrored third-quarter results, down about 60% for total gross bookings net of cancellations. By the end of the quarter, that percentage moderated to being down in the high 50s, and by the latter part of January improved again to the high 40s.

“So the trends are generally good, although very bad overall, and going in the right direction,” he said, adding some caution that he expects further challenges caused by the pandemic.

The improvement was mostly driven by Expedia’s vacation rental platform Vrbo, Kern said. Vrbo continues to be a “terrific use case” as the whole-home market remains attractive for family travel, especially in North America, he said.

Expedia continues to hope and expect the COVID-19 vaccine rollout will drive consumer confidence, he said. However, the company will continue to watch how the virus changes, how governments respond and how rules will change regarding international travel.

“We know there's a lot of pent-up demand, and we certainly want to serve it as much as we can,” he said.

Relations with hoteliers have been good, Kern said, adding he believes they are aligned in working toward helping hotels come out of the pandemic. Expedia has renewed a number of agreements without much debate.

The company has been working hard on new tools to provide more data to drive real-time decision-making for hoteliers so they can optimize revenue, he said. It has also helped optimize distribution, essentially becoming the wholesale distribution point for a number of hotels now.

“That gives us an opportunity to help them clean up the marketplace where they might have the wholesale market that has been abused by some players and driving the wrong outcomes for them,” he said, adding it’s a net positive for both sides.

Expedia has also been doing its part to try to drive and improve the product so it can sell higher-value rooms and room types and create upsell opportunities, which helps drive average daily rate and overall revenue, Kern said.

“We're tightly aligned in wanting the hotels to come out and be successful,” he said. “I think hotels understand and appreciate the role we play in a rebound, and it's been quite a good environment and good relationship all around. We're all working to try to rebuild the market.”

Expedia is using this moment to try to drive as much brand recognition and long-term value into the brand over time, so it pushed Vrbo on the performance marketing side, Kern said. The company has continued to be relatively conservative as there were lots of closures across the globe, and those closures drive massive cancellation spikes.

“They can make performance marketing very unattractive very quickly when it goes the wrong way, so we have been relatively conservative,” he said.

In that vein, the company has removed Vrbo from Google’s vacation meta product.

Expedia’s focus is driving direct traffic as much as possible, Kern said. When there’s an opportunity to remove unprofitable activity, the company takes it. As things begin to return to normal, he expects the company can drive more direct traffic and be more calculated in performance marketing.

Virtually all of the success of Expedia’s alternative accommodation platforms and Vrbo has been through the branded Vrbo sites or sub-brands specific to certain countries, he said. The company also intends to drive its alternative accommodations through its OTA brands. It’s been a long-term goal, but it’s been a less-than-satisfactory product that the company has been working on aggressively.

“We do believe, though, that in time, that can be an important part of the business, particularly when you think about markets where Expedia or Hotels.com or any of our OTAs might have strong brands,” he said.

There’s also an opportunity for alternative accommodations with Expedia’s business-to-business partners, he said.

Expedia reported a 61% decline in room nights for the fourth quarter of 2020 compared to 11% growth for the same time period in 2019, according to its earnings release. Gross bookings reached $7.6 billion in the quarter, down 67% year over year. Revenue in the quarter similarly fell 67% year over year to $920 million, and the company reported an operating income loss of $463 million. Adjusted earnings before interest, taxes, depreciation and amortization was -$160 million.

In full-year 2020 results, Expedia reported a 55% decline in room nights compared to 11% growth in 2019. Gross bookings amounted to $36.8 billion, down 66% year over year. Revenue in 2020 decreased by 57% year over year to $5.2 billion. The company reported an operating income loss of $2.7 billion. Adjusted EBITDA was -$368 million.

As of press time, Expedia’s stock was priced at $149.18 per share, up 12.6% year to date. The NASDAQ Composite was up 8.5% for the same time period.