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Expedia Quarterly Revenue Tops Estimates in Strong Start to Summer

·3-min read

(Bloomberg) -- Expedia Group Inc. reported second-quarter revenue that topped analysts’ estimates, suggesting a solid start to the busiest travel season as voyagers shake off two years of Covid-19 restrictions. The shares jumped about 6% in extended trading after the report.

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Sales rose 51% from a year ago to $3.2 billion, beating the average analyst estimate of $2.99 billion. Gross bookings, which represent the total value of transactions booked, adjusted for cancellations and refunds, rose 26% to $26.1 billion, in line with analysts’ estimate.

“Despite the disruptions during the summer travel season and an uncertain macroeconomic backdrop, travel demand has remained strong,” Chief Executive Officer Peter Kern said in a statement.

Kern’s peers at Airbnb Inc. and Booking Holdings Inc. have also remained optimistic about travel demand, despite some creeping signs that the industry’s challenges this summer have started to take a toll. Airbnb and Booking both reported strong second-quarter results earlier this week and their executives expressed confidence that third-quarter revenue will be even better, but they also showed slowing growth in room nights booked in the summer months.

On a conference call with analysts, Chief Financial Officer Eric Hart said Expedia is also seeing a tapering from the fast rates of growth it saw in April and May. The Seattle-based company expects lodging bookings in the third quarter to be ahead of where they were in 2019, and more of the same for the rest of the year.

Despite consumers’ fierce determination to travel, this season has thrown several hiccups into the best-laid plans. Long lines at airports, thousands of canceled flights and lost luggage have contributed to travel chaos. Airbnb said it saw more cancellations than it was expecting in the second quarter due to the scrapped flights.

Expedia saw “some choppiness” in bookings in July due to service disruptions in North America and Europe, Kern said. Those normalized in the second half of the month and have reverted to 2019 levels. “There’s been a lot of noise and a lot of cancellations and we think that’s responsible for a lot of it,” he said on the call with analysts. “We feel like it was more temporary than anything.”

The hospitality industry has remained upbeat, too. Hilton Worldwide Holdings Inc. is raising its earnings forecast through the rest of the year, suggesting that inflation fears aren’t limiting vacation planning. And Airbnb said higher average daily rates will offset the softness in bookings.

Expedia reported 82.5 million room nights booked in the second quarter, compared with analysts’ estimates of 87.5 million.

The strength of the US dollar, which has gained substantially against most major currencies, has hampered results at technology companies ranging from Microsoft Corp. to Airbnb. But Expedia is less exposed to currency fluctuations than its peers because only about a quarter of its revenue comes from overseas.

Expedia, which offers flight, hotel and rental car accommodations, benefited from its short-term rental business Vrbo during the pandemic, as workers took advantage of remote-work opportunities and fled to vacation homes. Vrbo focuses on whole residences and doesn’t have as much market share in cities, which are dominated by Airbnb.

The company has undergone two years of restructuring to try to make it more nimble, selling off corporate travel arm Egencia and launching a new e-commerce platform in a bid to build out its business-to-business segment. A new platform, Open World, allows partners of all sizes to use Expedia’s technology to book rental cars or employ fraud detection.

Expedia’s shares have fallen 43% this year, compared with a 30% decline for Airbnb and 19% for Booking.

(Updates with executive comments on current quarter.)

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