Expedia Beats Estimates on Signs of Travel Rebound; Shares Gain
(Bloomberg) -- Expedia Group Inc. blitzed analysts’ estimates for gross bookings in the first quarter, buoyed by a surge in domestic travel and vacation-rental demand.
Gross bookings were $15.4 billion, down 14% compared with a year earlier, but a significant improvement from the nearly 70% decline in the previous two quarters, the company said in a statement Thursday. Analysts were expecting $11.6 billion, according to data compiled by Bloomberg. Revenue fell 44% to $1.25 billion, the Seattle-based company said, slightly ahead of analysts’ estimates. The shares climbed about 5% in extended trading.
Still, the travel industry remains a “study in contrasts,” Chief Executive Officer Peter Kern said in the statement, as demand for international and business travel and conventional lodging remain challenged. “Beach and outdoor destinations have shown robust rebounds while major cities remain muted, and some regions have been growing while others remain locked down,” Kern said.
After a year of pandemic-related border closures, steep revenue declines and mass layoffs, the travel sector is starting to see the green shoots of recovery. Booking Holdings Inc., the biggest online travel agency, on Wednesday reported a significant jump in the number of room-night reservations made in the beginning of the year. Analysts and industry experts expect the vaccine roll out in the U.S., which makes up more than 50% of Expedia’s revenue, will ignite a 2021 travel boom, driven largely by the alternative accommodation market.
Vrbo, the company’s vacation-rental unit that competes directly with Airbnb Inc., has weathered the pandemic better than its parent as travelers sought out regional staycations and remote work getaways. Expedia doesn’t disclose Vrbo metrics, but analysts expect the unit will lead Expedia’s recovery. Cowen analyst Kevin Kopelman estimated Vrbo accounted for more than 40% of Expedia’s gross bookings value in the quarter, up from about 14% in the same period in 2019.
“Travel was one of the hardest hit segments throughout last year and I think there’s light at the end of tunnel for travel overall,” Truist Securities analyst Naved Khan said in an interview before the results were published. Khan also predicted Vrbo bookings would see “robust growth,” reflecting consumer interest in home rentals amid rising travel demand. “We estimate that Vrbo’s 2021 revenue could easily be 35% above 2019 levels,” Khan said.
Earlier this week, Expedia sold its corporate business travel arm, Egencia, to American Express Global Business Travel. Financial terms of the deal were not disclosed. Expedia will become a shareholder and enter into a long-term commercial agreement with AmEx Global Business Travel as part of the agreement.
Expedia reported an adjusted loss before interest, taxes, depreciation and amortization of $58 million. Analysts were expecting a loss of $137.3 million. The adjusted loss per share was $2.02, beating the average analyst estimate of $2.27. Expedia’s shares are up about 25% this year, outperforming Booking and Airbnb, which were both up less than 5%.
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