Cash & Liquidity Management

A successful journey

Published: Nov 2019

For any corporate treasurer, cash and investment management will always be high up on the business agenda. This is truly apparent for the international travel giant Expedia Group – a business operating in over 70 different countries. In this latest podcast with Treasury Today, Expedia Group explains how the company managed to build a comprehensive solution to give it enhanced portfolio visibility across its 40+ currencies.

Expedia with their Adam Smith Award

Listen to the podcast

Expedia Group is one of the world’s largest diversified travel companies, home to some of the leading travel brands in the world. Operating more than 200 travel booking sites in over 70 countries, the company currently employs more than 24,000 people across the globe. As the business continued to grow, the challenges of gaining better visibility on its cash and investment practices and performance had to be overcome – and they were. But how?

Going back to basics

Back in 2017, yields on roughly half of Expedia Group’s 600+ bank accounts, term deposits and money market funds (MMFs) were not effectively measured by Expedia Group’s treasury. “We were motivated by the idea that we needed to be smarter and faster in our liquidity and investment management practices,” says Ken Bugayong, CFA, CTP, Treasury Manager at Expedia Group. “In terms of data accuracy, details on rates on bank accounts were incomplete. We weren’t capturing the full scope of our portfolio due to spreadsheet limitations.”

Whilst the Group had a treasury workstation, it lacked the bespoke functionality required to perform the rigorous analytics and integration with internal systems. “Some tasks were repetitive and data was spread across multiple sources,” said Bugayong. “It was time-consuming to gather and standardise the information, and having to stitch Excel-based reports together across multiple files contributed to the challenge.”

In addition, Bugayong points out that the tremendous amount of data to process and analyse, coupled with the ever-changing banking and investment landscape, meant it was not going to be an easy task to revolutionise the Group’s existing system. “Looking at our global banking and investment infrastructure, we knew it would be a massive undertaking,” he says. “Add to this, because of the separate systems used for FX hedging, coming up with holistic investment results net of foreign currency hedging costs/benefits posed additional hurdles.”

Preparing for take off

However, it was a challenge that Bugayong and the team were more than up for taking, and in just over a year they managed to roll out a new and state-of-the-art data warehouse and business intelligence solution.

At the heart of the solution is Microsoft’s Power BI, with market intelligence data sourced from Bloomberg, while Kyriba and Oracle serve as the treasury workstation and accounting ERP systems respectively.

“The solution we’ve created provides enhanced analytics and reporting, along with a performance attribution model that explains the key drivers of investment results, allowing our company to uncover new investment opportunities and diagnose areas of underperformance,” he said.

Bugayong continues: “The solution has paved the way to over a million dollars in productivity benefits and value-adding investment strategies. It provided the team better visibility to cash and investment performance, uncovering approximately US$14M in benchmark outperformance over 2017-2018.”

What makes Expedia Group’s achievement all the more remarkable is that it managed to deploy and implement an entire data warehouse. Existing spreadsheets were converted into structured relational databases, whilst FX trades and hedging data were modelled intensively and incorporated into the benchmarking process.

This underlying schema covers the complex relationships across various data sets, encompassing accounting entries, workstation trades and key indices/benchmarks. This allowed Expedia Group to introduce a new framework for comparing interest income data and accounting journal entries on investments.

“Our team also introduced periodic investment meetings to systematically evaluate performance, both on a hedged and unhedged basis, and assess how the portfolio was performing against a benchmark,” says Bugayong. “This process offered the opportunity to arrive at better informed decisions on currency and investment allocations, allowing the team to continuously improve our cash and investment practices.”

Key benefits

A worthy winner in the 2019 Adam Smith Awards in the Judges’ Choice category, Expedia Group’s solution has improved decision-making through benchmarking and seen increases in income, whilst the more integrated financial systems has led to enhanced productivity.

“The project has uncovered new insights, elevated the speed and quality of decision making, and enhanced intelligence in investment and liquidity management,” concludes Bugayong.

Expedia Group Inc. is the one of the world’s largest diversified travel companies with an unmatched portfolio of leading travel brands, including, but not limited to, Brand Expedia, Hotels.com, Egencia, Vrbo, trivago, Orbitz, Wotif, Travelocity and Hotwire.

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