(Bloomberg) -- Expedia Group Inc. shares plunged the most since the onset of the pandemic after the online travel company announced a leadership transition plan and provided a first-quarter outlook that fell short of Wall Street’s expectations. 

Ariane Gorin, who has been an executive at Expedia since 2013 and most recently was the president of the enterprise division, will take the helm as chief executive officer May 13, the company said Thursday in a statement. She will succeed Peter Kern, 56, who has been in the role since 2020 and will be stepping aside at the end of his contract. He will continue to serve as vice chairman and member of the board.

Separately, Expedia gave an outlook for gross bookings and room nights booked in the current period, that fell short of analysts’ estimates for high-single-digit growth. The company cited lower airline prices, the grounding of Boeing’s fleet and some weakness from its vacation rental brand Vrbo.

The shares slumped as much as 21% on Friday morning in New York, the biggest decline since March 2020. Online travel peer Booking Holdings Inc. fell 3.9% and Airbnb Inc. fell 1.9%. 

The change in leadership caught the market by surprise and it could signal another struggle over strategic direction at the Seattle-based travel booking website, according to Bloomberg Intelligence analyst Kevin Tsao. Kern was named CEO at the outset of the pandemic, as Expedia and other travel companies were being decimated by global lockdowns. But Expedia had already been struggling and Kern was given the job by Chairman Barry Diller after the previous CEO and chief financial officer were ousted following a clash with the board over a disappointing growth outlook.

“When this started, the idea was for me to come in for a period of time and sort of right the ship, put us where we wanted to be, and build the team and make sure we have the people to take it forward for the next generation,” Kern said on a call with analysts. “The transformation turned into a bigger — I bit off more than I thought I was going to — and it was a bigger job than I thought it was.”

Under Kern, Expedia has spent the past two years focusing on technical upgrades and undertaking a long-awaited revamp of its loyalty program across its various platforms. Called One Key, the program allows travelers to use and earn rewards across the site, for example, by building up cash on vacation-rental platform Vrbo and spending it to book a flight on Expedia.com or reserve a room on Hotels.com. 

Kern had warned last summer that the technological streamlining behind the scenes might cause some disruption. Analysts said that translated into a temporarily loss of some market share to Airbnb Inc.. But Kern said the platform changes would eventually help drive efficiencies and lead to “faster and more profitable growth.” 

Expedia’s new CEO announcement “reduces our confidence in the turnaround,” John Colantuoni, an analyst at Jefferies, wrote in a note to investors. The disappointing guidance also implies “a cadence that arguably increases downside risk given industry growth could slow throughout the year,” he added.

Expedia hasn’t benefited in the way some of its rivals have from a post-pandemic boom in travel. The shift in consumer demand toward urban markets and shorter stays wasn’t the boon to Vrbo it was for Airbnb. Expedia also doesn’t have the same international reach as Airbnb or Booking Holdings Inc.

Chief Financial Officer Julie Whalen told analysts that the company is expecting “low to mid-single-digit” increase in gross bookings growth and “mid-single digit” growth in revenue in the first quarter, usually a busy booking season when consumers lock in their spring and early summer travel plans. 

In the fourth quarter, Expedia reported gross bookings of $21.7 billion, missing analysts’ average estimate of $22 billion. Room night growth also came in short of expectations. Revenue jumped 10% to $2.89 billion, in line with analysts’ projections for $2.88 billion, according to data compiled by Bloomberg.

Gorin’s division, which sells advertising and travel technology to corporate clients and powers travel booking websites for other major brands, like Walmart Inc. and American Express Co., has been growing faster than the bigger consumer-facing retail business in recent years. Her unit delivered “outstanding financial results” including revenue growth of 33% in 2023, Expedia said in the statement. In the fourth quarter, revenue from the B2B unit increased 28% to $864 million, and was the biggest contributor to overall sales gains.  

As Expedia strives for more aggressive growth this year, it’s also balancing bigger expenses to raise brand awareness. The company plans to spend a record amount on marketing as it seeks to gain share in the consumer travel industry and step up the competition with Airbnb and Booking.

“We’re seeing a shift from an emphasis on consolidation, cost cutting, and transformation under Peter, who came in during a tough time and focused on leading the company out of it,” Tsao, of Bloomberg Intelligence, said. “Now you’re transitioning to potentially more of a growth focus with Ariane who’s been focused on driving and growing their B2B business.” 

(Updates with share move in fourth paragraph and analyst commentary in eighth paragraph.)

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