Expedia Group’s financial results for period from July through September provide more proof of the travel surge seen – nearly – around the
One day after competitor Booking
Holdings reported record quarterly revenue and adjusted EBITDA, Expedia
Group is also reporting its highest ever adjusted EBITDA and revenue and highest
lodging bookings in a third quarter.
“The third quarter marked another period of robust travel
demand despite the uncertain macroeconomic environment. We delivered strong
financial performance with record quarterly revenue and adjusted EBITDA, which
exceeded $1 billion for the first time. These results reflect our emphasis on
driving topline growth while improving margins,” says Peter Kern, Expedia Group’s
vice chairman and CEO.
"Our active loyalty members and active app users are at
all-time highs, reflecting our ongoing focus on enhancing our products,
technology and consumer offerings to drive greater engagement with our
travelers and a more direct and valuable base of business."
Revenue in the quarter came in at $3.6 billion compared to
$2.9 billion in Q3 2021, a 22% increase.
Gross booking value was $23.99 billion – up 28%
year-over-year but below the average anticipated by Wall Street analysts of $25.1
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In a call with analysts to discuss the results, new
CFO Julie Whalen says bookings took a hit from both an industry-wide
slowdown in July and the impact of Hurricane Ian in September. But Whalen says since
then the company has seen “meaningful improvement,” primarily driven by growth
in lodging bookings, and is optimistic about the coming months.
“Overall we are pleased to see strong demand expand into the
fourth quarter as consumers continue to prioritize travel spend over other discretionary
spend,” Whalen says.
“And while it is still early in the quarter, we are seeing total
lodging bookings for stays expected to occur in the balance of year and into 2023
continuing to outpace 2019 levels.”
As a percentage of total revenue in Q3, lodging accounted
for 80%, advertising and media accounted for 6%, air for 3% and all other
revenues accounted for the remaining 11%.
Lodging revenue was up 25% in the quarter compared to 2021 driven
by growth in stayed room nights and in average daily rates. Air revenue jumped
even more – up 61% year-over-year - driven by growth in revenue per air ticket.
Selling and marketing expenses in Q3 came in at $1.5
billion, up from $1.13 billion in the same quarter of 2021. The company says
the increase is primarily due to “an increase in B2B partner commissions, as
well as increased spend in retail marketing channels.”
Answering analysts’ questions about marketing spend and
strategy, Kern says the company is investing for “long term ROI” and shifting
spending toward driving app usage and growing loyalty members.
“Our active membership base is now higher than it’s ever been
and growing faster than it ever has... That gives us the ability to build more direct
traffic, which gives us the ability to invest in driving more direct traffic,”
The Company is rolling out its unified loyalty program, One
Key, next year.
“We will incorporate Vrbo customers among others... we want
everybody in a loyalty bucket,” he says.
“We will normalize around one single value for everything,
for the currency, and we think we’ve settled in a place that will be very good
for the customers. They are gaining flexibility, they are gaining the opportunity
to use the value on all our products, which is highly valuable and we know
they want it.”
Of the company’s total revenue of $3.6 billion, $788 million
came from its B2B business – still a small percentage of the total but up 61%
Kern says he’s very pleased that the company has grown “partners,
wallet share and product offerings” in its B2B business, and he sees
opportunities with its Open
World technology platform.
“We’ve been pushing into this idea of externalizing more of
our capabilities as microservices... We will test many other things this
coming year. And we are modeling that with different partners,” he says.
“But it’s a real opportunity for us to take our
technological advances and bring them to the industry and help create greater
efficiency in our partners running their businesses and then ultimately expand
the universe of partners who can sell travel. So that goes to social commerce
and other things... but we are really in a pretty unique position to do that at
scale as we role out these technical capabilities. So we are extremely bullish
The Phocuswright Conference 2022
Executive Interview: The Giant Refresh
Hear from Expedia Group CEO Peter Kern