Expedia 3rd-quarter beats on strong hotel bookings
Online travel agency Expedia Inc's third-quarter profit beat analysts' estimates, driven by an increase in hotel bookings in the Asia-Pacific region and Europe, sending the company's shares up 16 percent after the bell.
October 26, 2012 / 08:20 IST
Online travel agency Expedia Inc's third-quarter profit beat analysts' estimates, driven by an increase in hotel bookings in the Asia-Pacific region and Europe, sending the company's shares up 16 percent after the bell.
Expedia, whose brands include Hotwire and Hotels.com, said hotel revenue rose 20 percent, while hotel room night bookings jumped 27 percent."We saw ongoing strength in our hotel business with room night growth accelerating across all major regions, especially in the Asia-Pacific regions and Europe," Chief Executive Dara Khosrowshahi said on a conference call with analysts.The company, which expanded its deal with Chinese online travel service Elong Inc last month, reported a 22 percent increase in international revenue."With Elong's consistent share gains, we believe that we are one of the few global e-commerce companies that have established a significant and lasting position in China," Khosrowshahi said.Air tickets sold grew by 11 percent primarily due to the acquisition of Nordic travel operator VIA Travel in March."Its clear that VIA travel is adding to their attach rates and that they are doing well capitalizing on taking global market share," The Benchmark company Analyst Daniel Kurnos said.Expedia said adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) grew 6 percent, slightly lower than its July forecast of growth in the high-single-digit to low-double-digit percentage range.The lower EBITDA growth is a result of the company's investment in its technology platforms and international expansion, analyst Kurnos said.Saturation in the online travel markets in North America and Europe, and competition from new entrants such as Google Inc and Yahoo Inc , prompted Expedia to consolidate its websites.In August, the company also launched mobile and tablet applications that offer discounts, to tap the large pool of customers who use smartphones to book rooms and air tickets."Expedia made these investments and upgraded their technology in the hope of improving conversions and there is evidence that they are starting to see the benefits of that play out," White said.Conversion rate -- or the percentage of visitors to the company's website that buy hotel or air packages -- is a key metric for online travel agencies such as Expedia.Net income from continuing operations fell to USD 169.9 million, or 1.20 per share, from USD 170.9 million, or USD 1.22 per share, a year earlier.Excluding special items, the company earned USD 1.32 per share.Revenue rose 17 percent to USD 1.20 billion.Analysts expected earnings of USD 1.26 per share, on revenue of $1.17 billion, according to Thomson Reuters I/B/E/S.Shares of Expedia, which has a market value of about USD 7.29 billion, have fallen 10 percent since hitting a life high on September 21. They closed at USD 51.25 on Thursday on the Nasdaq. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
