Expedia Group’s financial results for period from July through September provide more proof of the travel surge seen — nearly — around the world.
One day after competitor Booking Holdings reported record quarterly revenue and adjusted EBITDA, Expedia Group (No. 2 on Travel Weekly’s 2022 Power List) also reported 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,” said 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 billion.
In a call with analysts to discuss the results, new CFO Julie Whalen said bookings took a hit from both an industry-wide slowdown in July and the impact of Hurricane Ian in September. But Whalen said 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 said.
“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.”
Segment breakdown
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 said 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 said 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,” he said.
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 said.
“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% year-over-year.
Kern said 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 said.
“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 there.”
Source: PhocusWire
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