The accommodation business continues to drive revenues at Expedia as the group announced its third quarter results for the period ending September 2013.
There was no mention of the recent personnel shake-up at hotels.com on the earnings call but highlights of Q3 include:
- A 20% increase in room nights year-on-year driven by Expedia and Asia's eLong while revenue increased 17% put down to the room night growth as well as advertising and media revenue. Domestic room nights increased 12% and international were up 28%.
- Revenue per available room night declined 7% and the company is expecting to see a continued decline because of a shift in the mix in certain markets, especially Asia, as well as discounting and other factors.
- Sales and marketing costs saw an increase of 12 percentage points for the period largely because of the Trivago acquisition.
- Top line growth and leverage on fixed costs led to 16% growth on adjusted EBITDA compared to Q3, 2012.
- Mobile application downloads across the brands total 80m including 35m at eLong, 25m at hotels.com and 18m for the Expedia brand.
- Revenue and profitability at Hotwire still down although the group says trends have stabilised and the Hotwire team has a handle on the 'challenges'.
TripAdvisor, mobile strategy,
Trivago,
Travelocity and vacation rentals were all discussed during the earnings call (transcript available
here) with some of the highlights as follows:
TripAdvisor:
According to boss Dara Khosrowshahi the company is confident about TripAdvisor's ability to compete in the metasearch channel and, in general, the reviews giant has improved since the transition to meta in the second quarter.
"...although it varies week by week and by geography. Bidding models are improving and we're regaining click share."
Travelocity:
The go-live for the partnership with Travelocity is planned for the first half of 2014 although it will not be a sudden 'switch that is flipped' but rather a phased approach to see what works.
The company is expecting incremental adjusted EBITDA of between $40m and $65m annually once the partnership is live and with 100% of traffic moved over.
As previously stated, Travelocity will be responsible for driving traffic for the new sites via marketing channels and Expedia will be a competitor.
Trivago:
Expedia announced its acquisition of a majority stake in the company just under a year ago and says it is pleased with Q3 results and will continue the international expansion. Khosrowshahi also said he expected it to be 'nicely profitable' for 2013.
The strategy for Trivago is the same for TripAdvisor with the metasearch company continuing to be run independently. Khosrowshahi says:
"As it grows it will become a larger portion of our business on a go-forward basis."
Mobile:
The company says mobile continues to be one of its fastest growing channels with high double digit and in some cases, triple digit growth. Asia is seeing particularly strong growth.
The group is now focusing on responsive design for its sites with the Expedia brand's hotel path already fully responsive and plans to develop other elements accordingly. The company is also seeing positive 'early results' from the Expedia air path recently introduced on the mobile application.
It is not experiencing any significant shifts between tablets and smartphones with the latter tending to be for much 'nearer in' bookings and tablets more like desktop. Asia is the exception here where smartphone usage is more akin to desktop.
The company is also expecting to enable review collection via mobile for TripAdvisor as the mobile experience improves.
Vacation rentals:
Expedia announced its partnership with HomeAway last month and although early days, Khosrowshahi was positive about the potential of short-term rentals.
Responding to a question on the sharing economy's prospects he highlighted the regulatory environment as a challenge and questioned whether the sector was safe long-term with issues such as occupancy tax and VAT raising their heads.
"We do think it (the marketplace) will continue to form and we do think it will be regulated over time, and its size will, to some extend, partly depend on that regulation.
We think from a consumer standpoint it seems to be a good product. So, as part of our relationship with HomeAway we want to see whether that is product that is important to Expedia customers and Hotels.com customers."