Yahoo Finance Expedia Posts Earnings Beat While Warning of Soft Demand
(Bloomberg) -- Expedia Group Inc. posted better-than-expected second-quarter results while warning of “softening” travel demand in the current quarter, leading it to adjust its expectations for the rest of the year.
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Gross bookings across Expedia’s platforms, which include flight reservations, hotel stays, car rentals activities and vacation rentals, increased 6% to $28.8 billion in the three months ended June 30, the company said Thursday in a statement. Wall Street was expecting $28.6 billion, according to data compiled by Bloomberg.
In particular, the company signaled the vacation rental business returned to modest growth in the second quarter after decelerating the past few periods, which had weighed on Expedia’s results.
Room nights booked — a key metric in the travel industry — jumped 10% to 98.9 million, exceeding estimates for 96.1 million nights. Second-quarter revenue increased 6% to $3.56 billion, ahead of analysts’ average estimate of $3.53 billion.
The shares jumped as much as 11% to $131.31 after trading opened in New York on Friday, the stock’s biggest intraday gain since November.
As a result of that tapering demand, Expedia is cutting its full-year gross bookings growth forecast to the low end of its previous guidance range to 4%, Chief Financial Officer Julie Whalen said on a call with investors, while projecting 6% growth in annual revenue. She also expects third-quarter gross bookings and revenue to increase in the range of 3% to 5% compared with a year ago.
The warning is the latest evidence of slowing travel demand, which has been cited by a chorus of executives from companies including Airbnb Inc. and Booking Holdings Inc. Investors have been watching closely for signs of revived growth, especially because travel spending is sometimes seen as a bellwether for consumer confidence more broadly. Airbnb shares plunged the most in two years after the company projected its slowest growth since 2020, noting that more US travelers seemed hesitant to book trips months in advance.
“In July, we have seen a more challenging macro environment and a softening in travel demand. We are therefore adjusting our expectations for the rest of the year,” Chief Executive Officer Ariane Gorin said in the statement.
This is the second time the company has cut its full-year forecast this year due to softer-than-expected demand. It had reduced guidance in May to mid- to high single-digit growth.
Booking, which does more business in Europe than some of its peers, also gave disappointing guidance, citing mild moderation in the region. It also observed that US consumers were trading down for lower-star hotels or shorter trips, while cheaper flight prices also weighed on the company’s results.
Seattle-based Expedia is one gauge of the broader US travel market, which has leveled off in growth after an initial post-pandemic travel boom. The company has more domestic exposure than its peers, making it especially sensitive to shifting travel patterns of Americans considering urban or international trips over more domestic coastal or resort locations, where most of the vacation rentals from its Vrbo business are located.
The company’s second-quarter revenue gains were almost entirely driven by 22% growth in Expedia’s enterprise business-to-business segment, which makes up nearly 30% of total revenue. Meanwhile, consumer business revenue gained only 0.7%. Gorin said on the earnings call that she expects the normalization of gains by the B2B business going forward after four straight quarters of more than 20% growth.
(Updates share price in the fifth paragraph. An earlier version corrected the revenue figure in the fourth paragraph.)
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