Expedia Group reported positive results in the second quarter, with bookings up 5% to $30.4 billion and revenue up 6% to $3.8 billion year over year. The increase in revenue was attributed to its B2B arm and advertising, which were up 15% and 19%, respectively.
Booked room nights were up to 105.5 million, a 7% year-over-year increase, with this metric “driven by B2B with strong international performance,” Scott Schenkel, chief financial officer of Expedia Group said during a Wednesday night call with analysts. Adjusted EBIDTA also increased by 16% while direct selling and marketing was up 7% to $1.9 billion.
“We saw notable strength in Asia, which grew almost 30%, with particular strength in our Rapid API product,” Schenkel said.
But while numbers improved overall, results were still tempered by softer U.S. travel demand and consumer spending. Expedia Group observed a similar trend in Q1, when demand for inbound U.S. travel fell 7% and bookings from Canada fell by nearly 30%.
“We delivered these results in the context of a soft U.S. travel market, reflecting our focused execution and continued progress on our strategic priorities,” Expedia Group CEO Ariane Gorin said during the call. “The U.S. travel market was muted in the second quarter. Consumers at the higher end of the market remained resilient, with those at the lower end taking a more cautious approach to discretionary spending.”
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Schenkel added that the U.S. travel market faced specific pressure with inbound travel during Q2, with shorter booking windows and higher cancellations.
“Even with that backdrop, we believe our company grew faster than market in both air and hotel lines of business, while vacation rental room nights grew roughly in line with the market.”
Gorin also pointed out that there has been an uptick in travel demand, particularly in the U.S., since the beginning of July. The online travel agency (OTA) confirmed that it is raising its annual guidance in light of its “solid first-half performance” and “current trends.”
“We delivered a solid second quarter, surpassing our top and bottom-line expectations while navigating a dynamic environment” Gorin said in an earnings release.
“Our performance was driven by continued strength across B2B and advertising and further progress on our key priorities. Based on our first half and ongoing trends, we have increased our annual guidance. We will continue to capitalize on our brands, supply and technology to help travelers create memories and partners grow their businesses.”
Hotels.com and Vrbo
Gorin said that the Expedia brand was again the company’s largest and fastest growing consumer brand, seeing the highest rates of multi-item attach rates since the COVID-19 pandemic.
Expedia Group’s two other B2C brands, Vrbo and Hotels.com, didn’t fare as well in Q2.
Gorin said bookings on Hotels.com were down “slightly,” while room nights were up from Q1, attributed to the brand relaunch in April.
She continued by saying Vrbo’s room nights were “roughly in line with the market in the U.S.,” reporting lower daily rates, shorter length of stay and higher cancellations.
“We are still filling some of the foundational gaps that we had, in particular around supply, that during the period that we were going through those big migrations, we haven’t been able to get to,” Gorin said, adding that the company is introducing new promotions to serve different trip types, such as weekend stays, rather than focusing on longer annual vacations.
When asked about Hotels.com, Gorin said that it was the “most disrupted” brand amid the platform migration, loyalty program changes and the company’s decreased focus on international.
However, Hotels.com is seeing improved brand awareness and direct traffic following the brand relaunch, the introduction of capabilities like price alerts and platform improvements. Additionally, Gorin said they are “leaning back into international markets” where Hotel.com is “quite exposed.”
“It’s been a road to get here, and we have a full road map for the second half, and we feel good about the progress that we’ve made,” she said.
AI updates
Gorin told analysts that while traffic from generative AI search engines is small, “it’s converting well.”
“It’s exactly my hypothesis ... which is it’s traffic that is sort of further down the discovery funnel, and so when it comes to our brands, it’s more qualified.”
Expedia Group is also “doing a lot of work” with artificial intelligence (AI) companies such as Open AI and Google to ensure brand visibility and improve personalization.
“[We want] to make sure that then when the traveler comes to us, we’re able to have the context that that traveler has so that we can give them a more personalized experience,” Gorin said.
“We’re experimenting, we’re testing, and it’s an exciting area,” she said. “I believe, in all of it, what remains important is that our brands have strong supply, a great loyalty program, that we have a great, simple user experience with really good servicing so that whether travelers start with us or start in these AI experiences and then come to us, that they are loyal with our brands.”
Gorin mentioned later in the call that she also sees internal use of AI as an opportunity “to get more effective and to move faster.”