Expedia records another positive quarter, double-digit growth in revenue and bookings

Expedia Group saw its gross bookings increase $2.5 billion, or 11% year-over-year, in the third quarter of 2018, fueled by growth in Brand Expedia, HomeAway, Hotels.com and Expedia Partner Solutions.

Domestic gross bookings increased 13%, and international gross bookings increased 9% and accounted for 38% of worldwide bookings in the third quarter.

Revenue increased at a similar rate, up 10% year-over-year, to $3.3 billion, with domestic revenue up 14% and international revenue up 7% compared to the third quarter of 2017.

Overall for Expedia Group, net income and adjusted EBITDA grew 49% and 29% year-over-year, respectively, during the third quarter.

In a call with analysts to discuss the results, Expedia Group president and CEO Mark Okerstrom sounded upbeat about future growth potential.

“We think that the overall opportunity we are moving into remains very significant,” he says.

“You hear, ‘Is the industry fully penetrated?’ The answer is not even close.”

Okerstrom says as long as the digital experience is good, he believes travelers would rather conduct business online than through talking to someone.

He says Expedia Group will continue to invest in products and services to ensure its brands are the place "people go to for travel.” He says the company will continue to follow a “focused approach for global expansion,” and build out its language translation and localized content.

In addition to adding hotel and alternative accommodations around the world, Okerstrom says Expedia Group is working to be smarter about the way it uses data, to provide travelers with more personalized, real-time results.

Alternative accommodations

HomeAway, which has consistently been one of the company’s strongest brands in recent quarters, grew operating income and adjusted EBITDA 66% year-over-year, to $209 million. Okerstrom says that is a higher figure for adjusted EBITDA for HomeAway than it did in all of 2017.

HomeAway’s stayed lodging nights grew 13% compared to the same period in 2017, and stayed property nights increased 28% in that period.

Expedia Group's global lodging portfolio increased to more than 895,000 properties available as of September 30, including more than 300,000 integrated HomeAway listings. HomeAway now offers nearly 1.8 million online bookable listings.

When asked about how HomeAway properties are being shown to users on Expedia Group’s core online travel agency sites, Okerstrom says: “We are really getting a lot smarter, although it’s a muscle we’re building around identifying those use cases around when this type of inventory is highly valuable."

“We are very much in the early stages here.”

Regarding today’s news of Expedia Group’s acquisition of Pillow and ApartmentJet, two software companies for the alternative accommodations sector, Okerstrom says these technologies will be valuable in growing the company’s inventory in apartment buildings and communities.

“We are super excited about these two acquisitions we’ve made,” he says.

“I wouldn’t expect it to have any significant impact on length of stay or booking windows or really be a significant driver in the near term, 2019, of HomeAway booking volume. I think these are foundational investments that are going to build a platform on which we can really start to build an urban business over time.”

Looking at earnings across the company’s broad range of brands, lodging accounted for 72% of total worldwide revenue in the third quarter of 2018, advertising and media accounted for 9%, air accounted for 6% and other revenue accounted for the remaining 13%.

Lodging revenue increased 12% in the period, primarily due to growth at HomeAway, Expedia Partner Solutions and Hotels.com. Air revenue and other revenue were both up 11%, while advertising and media revenue increased just 1%.

Regarding its marketing expenses, Expedia Group reports an increase of 3% in that spending in the third quarter of 2018 compared to the same period in 2017.

When asked about Expedia Group’s work in tours and activities, Okerstrom says he sees a big opportunity for growth, particularly on mobile.

“It has been one of those spaces, as happens in this industry, where suddenly it has attracted a lot more attention and lot more capital. So there’s certainly much more competition in the space than there has been historically. There’s a lot of pretty exciting players out there that are doing interesting things,” he says.

“Our focus is really about harnessing one of the big advantages we have, which is we have an incredible installed base of mobile applications - nearly 300 million across the portfolio. We have a multi-product offering, so we know where our customers are going and can generally tell where they are, and we will be working on building out our set of activities inventory so that we can deliver the perfect activity to the perfect customer at the right time.