Expedia Group Inc. executives gave an optimistic outlook for travel demand in the current quarter, reassuring investors after the company’s fourth-quarter results were weaker than expected.
(Bloomberg) — Expedia Group Inc. executives gave an optimistic outlook for travel demand in the current quarter, reassuring investors after the company’s fourth-quarter results were weaker than expected.
Lodging gross bookings grew 20% in January compared with 2019, Chief Financial Officer Julie Whalen said on a call with analysts Thursday. Excluding the impact from Hurricane Ian in October and December’s winter storms, monthly growth reached high single digits in the fourth quarter, she said.
“We continue to see that people are prioritizing travel over just about everything,” Chief Executive Officer Peter Kern said on the call. “So far, demand continues to be quite robust and we’re really pleased with how ’23 is starting.”
After initially falling as much as 8.5% in extended trading, the upbeat outlook helped pare the stock’s losses. It was down about 2% by late afternoon.
The Seattle-based online travel agency has made itself more nimble during the pandemic by restructuring its operations. It’s been building out a business-to-business segment and a rewards program that works across all its brands. Most of that heavy lifting is done now and will benefit the company this year, along with strong travel demand, Kern said in an interview.
This is “the last leg of the journey,” Kern said. “There are a few big pieces of work to do, plenty of small pieces — there’s still some friction in the system. We have more tailwind than headwind.”
Though sales increased 15% to $2.62 billion last quarter, that missed the average analyst’s estimate of $2.7 billion. Gross bookings, the total value of transactions adjusted for cancellations and refunds, came in at $20.5 billion, short of Wall Street’s average forecast for $21.1 billion.
The company’s disappointing results capped a turbulent year for the travel industry that included strains from the war in Ukraine, hurricanes and airline chaos during the holidays — in addition to inflation and economic uncertainty. Other travel industry peers, from airlines to hotel companies, are signaling a potential rebound is underway, helping push Expedia’s shares up more than 30% this year. They had lost more than half their value in 2022.
Expedia is the first of the major online travel companies to report results for the final three months of 2022. Its stock gains have made it the 13th-best performer in the S&P 500 in the year through Thursday. Shares of Airbnb Inc., which reports results Feb. 14, have risen about 34% in 2023, while Booking Holdings Inc., due on Feb. 23, has gained around 21%.
Expedia reported stayed room nights of 74.6 million in the fourth quarter, up 19% from the same time last year. Analysts were looking for 75.4 million, or a 20% increase.
Expedia’s consumer-facing website offers flights, hotels, rental cars and rental properties. Its short-term rental business, Vrbo, boomed during the pandemic as people took advantage of remote-work opportunities and sought out scenic destinations.
Last January, travelers were still shrugging off the omicron variant and vacation rentals were popular. Now the mix between rentals and hotels has normalized, Kern told Bloomberg.
Adjusted earnings before interest, taxes, depreciation and amortization for the quarter came in at $449 million, compared with the average analyst estimate of $559 million. Adjusted earnings per share were $1.26, compared with estimates for $1.77.
(Updates with CEO interview starting in fifth paragraph.)
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