Expedia Falls as Sales Miss Estimates, Signal Travel Slump

Expedia Group Inc. tumbled the most in more than a three years after reporting second-quarter revenue that missed analysts’ estimates, signaling a potential slowdown in travel demand during the busy summer season.

(Bloomberg) — Expedia Group Inc. tumbled the most in more than a three years after reporting second-quarter revenue that missed analysts’ estimates, signaling a potential slowdown in travel demand during the busy summer season. 

Revenue increased 6% to $3.36 billion, slightly below analysts’ average estimate of $3.37 billion and the slowest pace of growth since the beginning of the pandemic. Gross bookings across Expedia’s platforms, which include flight reservations, hotel stays, car rentals, activities and vacation rentals, grew 5% to $27.3 billion, according to a statement Thursday. That was less than analysts’ projections for $28.9 billion. 

The shares fell as much as 18% to $97.27 in New York, the biggest intraday decline since March 2020. They had gained 35% this year through Wednesday’s close.

Expedia is the first among the big online travel companies to offer insight into the state of travel at the height of the busiest period of the year. International travel has surged this year, as Americans take advantage of a stronger dollar, while domestic trips in the US have generally slowed. 

The report showed a mixed picture across the industry. Lodging gross bookings and revenue were both at record levels for any second quarter and beat analysts’ estimates, driven by the hotel business. But revenue from air travel, as well as advertising and media services, came in lower than expected. 

Delta Air Lines Inc. and United Airlines Holdings Inc. recently raised their annual profit forecasts on continued strength in international bookings, and a record number of passengers are expected industrywide this summer. But after facing the highest inflation rates in decades, consumers have been reducing various discretionary purchases and recently appear to have added flying to the list.

“Travelers worldwide continue to favor shorter stays in urban locations versus longer trips in sun and ski destinations,” Chief Executive Officer Peter Kern said on a conference call with analysts. Pricing on hotel and vacation rental average daily rates are “holding up” year-over-year, he said. “International cross-border airfares are stable. US domestic airfares have seen some declines as capacity increases.”

In an interview on Bloomberg TV, Kern said there’s been “very high interest” in international travel, with cities being particularly popular. “What you’ve seen is the travelers moving around a bit,” he said, “so you see pockets that might be retreating a little bit, but other pockets are advancing.” He cited strength in Asia and Latin America in particular.

The shift in traveler preference toward shorter stays and urban markets has had an impact on Expedia’s short-term rental platform Vrbo, which competes with Airbnb Inc., Chief Financial Officer Julie Whalen said. Expedia doesn’t break out metrics for Vrbo.

Airbnb and Bookings Holdings Inc., an Expedia search rival that has a bigger international exposure, are both due to report results Thursday after markets close.

Seattle-based Expedia rolled out a long-awaited loyalty program last month, allowing travelers to use and earn rewards across the platform, for example, by building up cash on vacation-rental platform Vrbo and spending them to book a flight on Expedia.com or a room on Hotels.com. The technological streamlining behind the scenes could cause Expedia to temporarily lose some market share to Airbnb, though Kern has said the platform would help drive efficiencies later this year. 

(Updates with CEO comments in eighth paragraph.)

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