Is Expedia, with 150,000 hotels in the fold around the world, finally giving up in its race to outpace Priceline's brands, which count more than 210,000 hotels in their portfolio?
Over the last couple of years, Expedia officials have emphasized how the company has been building up its global hotel inventory, but Dara Khosrowshahi, Expedia's CEO, was singing a different tune during yesterday's first quarter 2012 earnings call.
Expedia is now emphasizing balancing hotel supply and demand, and has abandoned an all-out effort to increase its number of participating hotels, Khosrowshahi said. He adds:
We did have a period over the course of the last few years where we've been pretty aggressive in building up our inventory position, helped in part by the agency product that we brought on with Venere. And so we've had some time to really have demand catch-up. And I think we'll see what happens throughout 2012, but our focus is going to be primarily on really sort of optimizing what we've got and adding tactically as opposed to a massive acquisition effort.
These statements came as Expedia Inc. saw its global hotel room nights sold increase 24% in the fourth quarter, and if the company's joint venture with AirAsia were to be included, then the worldwide room night increase would be 27%.
Expedia's Hotels.com brand, which saw room night growth of 37% during the first quarter, is driving that increase while the Expedia brand has been dragging things down.
"As we mentioned last quarter, all of our major brands other than Expedia, continue to perform well, with combined revenue growth of 27%," Khosrowshahi said. "Results for the Expedia brand are still not where we want them to be, but they did show improvement."
Expedia's performance has been sluggish, officials said, because it is transitioning to the company's new technology platform later than Hotels.com did, and also because Expedia's profitability is more dependent on air-hotel packages in contrast to standalone hotel rooms through Hotels.com.
And, with demand for airline tickets down year-over-year, Expedia's vacation package business has suffered.
Expedia Inc.'s bottom line is also being weighed down by higher technology and headcount expenses, although officials see these burdens lessening through the rest of the year.
During the first quarter, Expedia's adjusted EBITDA increased 24% year over year on revenue of $816.5 million, a 12% jump.
In other news, Khosrowshahi indicated that Expedia is "working very closely with TripAdvisor on Tingo."
A new hotel booking site, TripAdvisor's Tingo rebooks rooms at lower rates when the rate drops and it accesses hotels from the the Expedia Affiliate Network.
While conceding that Expedia and Tingo are in some ways competitors, "in a bigger way, we think that it's a partner," Khosrowshahi said.
On the mobile front, Hotels.com's apps for iOS and Android have been leading the way, with more than 5 million downloads since their launch a year ago.
In contrast, the Expedia Hotels app, designed by the acquired Mobiata team, launched a month earlier than the Hotels.com apps, and have been downloaded at a lower frequency with more than 2 million downloads.
Expedia expects to launch an air-ticket app later in 2012.
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