It's common wisdom that hotels increase the margins they give to online travel agencies during tough economic times when lodging companies need to find ways to get more heads into beds.
Forbes published some interesting data about Expedia from Trefis, which analyzed Expedia's hotel margins and reinforced the larger-margin in tough-economic times theory.
Trefis found that in a relative boom year, 2007, the revenue margin for hotel bookings at Expedia Inc.'s global websites, including the Expedia, hotels.com, Hotwire and Venere brands, stood at 23%.
And, then fast forward to 2009, when a recession hammered away at hotel occupancy and average daily rates, and Expedia's revenue margin on hotel bookings increased to 25%, Trefis says.
The difference between a 23% and 25% revenue margin on hotel bookings may seem piddling, but it actually has substantial implications.
Revenue margin, incidentally, was calculated as a percentage of hotel bookings, Treffis says.
And, as the economy picks up and Expedia faces strong global competition from Priceline's Booking.com and hotels' own websites, Trefis envisions Expedia's revenue margin on hotel bookings falling gradually to around 22.5%, a tad below 2007 levels.
Trefis didn't mention it, but perhaps Google Places and new Google Maps advertising programs will begin to have an impact on Expedia's hotel margins and advertising revenue, too.
And, Trefis provided another interesting data nugget about the importance of Expedia's hotel margins:
"Hotel bookings constititute more than 55% of Expedia's stock value by our estimates, and hence the company's value is sensitive to revenue margins from this business segment," Trefis says.