Online travel company Expedia, Inc. has shared that a significant driver of its international strength continues to be its Hotels business.

Published: 03 May 2010

Online travel company Expedia, Inc. has shared that a significant driver of its international strength continues to be its Hotels business.

The company, which last week shared its first quarter results, saw an acceleration in room night growth from 24 percent to 27 percent. On the other hand, U.S. room night growth deaccelerated in Q1 due to lower growth of Hotwire and Hotels.com.

Expedia completed the integration of its Hotels.com U.S. and international platforms into one global platform, which according to the company cost it some volume in Q1 and early in Q2.

“For the balance of the year, growth on Hotels.com will largely depend on driving conversion increases through site optimisations, which will require strong execution going forward, but we have a very solid product plan in place and that’s exactly what the common platform is suited for,” said Dara Khosrowshahi, Expedia, Inc.’s CEO and president, while speaking during the company’s Earnings Call (seekingalpha.com).

International Growth

The company shared that its first quarter profit rose more than 50 percent and its revenue more than 13 percent. The online travel company reported a profit of $59.4 million, up from $39.4 million a year earlier. Revenue rose to $717.9 million.

Gross bookings from Expedia, Inc.’s international businesses were a record $2.37 billion in the first quarter, accounting for 36 percent of worldwide bookings, up from 32 percent in the prior year period. International revenues were $250 million, representing 35 percent of worldwide revenue, up from 30 percent in the prior year period.

Worldwide hotel revenue increased 12 percent for the first quarter primarily due to an 18 percent increase in room nights stayed, including rooms delivered as a component of packages, partially offset by a 5 percent decline in revenue per room night. Hotel revenues accounted for 58 percent of worldwide revenues in the first quarter of 2010.

Commenting on the acceleration in hotel room nights growth, Khosrowshahi said, “The acceleration that we saw was actually primarily due to the Asia Pacific business getting larger as a percentage of our overall business. The APAC growth has been quite healthy.” He added that the company is also witnessing encouraging results for hotels.com in the Latin American region.

“So most of the acceleration, the growth that you’re seeing is APAC, Latin America, Canada and some of these regions that we feel have huge potential for us and are really strong emerging markets. Europe, as a whole, is stable and doing well. And we think that there’s frankly more potential in Europe on a go-forward basis, which hopefully we’ll execute on,” Khosrowshahi added. “Our international businesses delivered their highest rate of FX neutral revenue growth in over two years, with our APAC region exceeding the $1 billion trailing four-quarter bookings threshold for the first time in Expedia’ s history.”

Advertising and Media

The company’s advertising and media businesses had a strong quarter, with top line growth accelerating to 34 percent for the business, which now contributes 14 percent of worldwide revenues, and generating run rate revenues of nearly $400 million. TripAdvisor delivered 33 percent of revenue growth on very strong traffic and click growth across its global media network.

Merchant transactions accounted for 41 percent of total gross bookings and 63 percent of revenue in the first quarter, compared with 43 percent and 64 percent in the prior year period.

The mix of merchant bookings declined primarily from a higher mix of agency air bookings due in part to an increase in air ticket prices. The mix of merchant revenues declined due to higher relative growth in our advertising and media businesses.