Despite the losses incurred, Expedia remains optimistic about the potential for its Amex GBT stake to regain value over the long term, considering stock price fluctuations. Expedia and Amex GBT have expanded their collaboration beyond the lodging supplier agreement, as demonstrated by Egencia's adoption of Expedia's fraud prevention solution.
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ExpediaThe sale of corporate travel agency Egencia by Expedia Group to American Express Global Business Travel (GBT) was structured to provide various benefits for Expedia, including securing a long-term supply agreement for lodging inventory with Amex GBT. However, despite these benefits, Expedia has experienced losses on the fair value of its equity stake in Amex GBT since the completion of the deal.
Key points regarding Expedia’s stake in Amex GBT and the related financial impacts include:
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Initial Investment: Expedia initially acquired a 19% stake in Amex GBT valued at $815 million when it sold Egencia to Amex GBT in November 2021.
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Subsequent Developments: After Amex GBT went public through a special purpose acquisition company merger in May 2022, Expedia’s stake in the company was reduced to 16%.
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Stock Price Fluctuations: The stock price of Amex GBT experienced declines, with a 14% fall by December 29, 2023, and an additional 8% decrease thereafter.
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Financial Losses: Expedia recorded a $300 million loss in the fair value of its Amex equity stake in 2022 and a further $26 million loss in 2023.
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Value Assessment: Expedia explained that the initial valuation of its stake in Amex GBT was based on estimates of the company’s fair value as a private enterprise. However, once Amex GBT became a public company, Expedia began marking-to-market its equity ownership, resulting in changes in the value of its stake.
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Separate from Supply Agreement: Expedia emphasized that the value derived from its 10-year supply agreement with Amex GBT is distinct from the equity value of its stake in the company.
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Long-Term Outlook: Despite the losses incurred, Expedia remains optimistic about the potential for its Amex GBT stake to regain value over the long term, considering stock price fluctuations.
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Additional Collaboration: Expedia and Amex GBT have expanded their collaboration beyond the lodging supplier agreement, as demonstrated by Egencia’s adoption of Expedia’s fraud prevention solution.
Overall, while Expedia’s equity stake in Amex GBT has faced challenges in terms of valuation, the partnership between the two companies continues, with both parties exploring opportunities for further collaboration beyond the initial transaction.
Source: Expedia
