As coronavirus crushes travel industry, Expedia maps out private equity survival strategy

Beyond the pain inflicted by Covid-19 on the travel sector, Google’s travel platform has challenged the online travel industry, making it harder for Expedia among others to generate as much organic traffic to their website.

With no clarity as to when travel restrictions will be lifted, hotels, cruise lines and online travel agencies have had to pursue a range of options to stay afloat.

Carnival raised over $6 billion in equity and debt. The company, despite its issues, was also able to get a large foreign investor on board – the Saudi sovereign wealth fund. In the latest filing, the Saudi fund disclosed an 8.2% stake.

Sources say Goldman Sachs is helping Norwegian Cruise Line seeking financing options, including pitching to private equity. 

It is unclear whether Norwegian will be successful. Among the publicly listed cruise operators, it has the highest debt to equity ratio, according to Suntrust.

Both Apollo Group and TPG Capital invested billions into Norwegian Cruise Line back in 2008 and took the cruise operator public in 2013.

Perhaps the most instrumental role private equity played at that time was pushing Norwegian to acquire Prestige Cruises for $3 billion in 2014. The acquisition not only expanded the cruise operator’s portfolio but gave it a footprint in the premium travel segment.

One year after the deal was announced, Norwegian Cruise Line shares nearly doubled. Both private equity companies have since exited their positions in Norwegian and returned capital to investors.

Using Norwegian as a case study, experts are speculating as to whether Apollo Group and Silver Lake will push for Expedia to incorporate more MA into its growth strategy. Over the past ten years, Expedia has used inorganic growth to expand its portfolio of brands and enter the short-term rental space.