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Expedia Posts Better Than Expected Profit on Jump in Bookings

Expedia Posts Better-Than-Expected Profit on Jump in Bookings

By Reuters | Updated: 1 May 2015 12:14 IST

Expedia Inc on Thursday reported first-quarter profit that exceeded analysts' expectations as it earned more money from travel bookings in and outside the United States, despite foreign currencies falling relative to the U.S. dollar.

The online travel services company, the world's second-largest after Priceline Group Inc, posted a 19 percent rise in travel sales, or bookings, over the year-ago period. Accounting for sales shrinking abroad in U.S. dollar terms, its bookings grew 25 percent.

"It suggests they're gaining market share," said S&P Capital IQ analyst Tuna Amobi, adding that this did not necessarily mean a loss for Priceline.

Expedia earned $44.1 million last quarter, or 34 cents per share. Analysts had estimated, on average, earnings of 9 cents per share, according to Thomson Reuters I/B/E/S.

Its stock rose 4 percent in after-market trading.

Expedia affirmed that it expects 2015 adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) to grow between 10 and 15 percent over last year. This excludes its long-term investment eLong, which is forecast to lose tens of millions of dollars quarterly from fierce competition in China.

Currency fluctuations make the company "more cautious" about where its EBITDA will fall in this forecast, Chief Financial Officer Mark Okerstrom told investors Thursday.

But in some cases, the strong U.S. dollar has helped bookings. It has encouraged more U.S. citizens to travel abroad and boosted spending within Europe to the benefit of Expedia's corporate travel subsidiary Egencia.

Acquisition sprees
Expedia and Priceline have embarked on acquisition sprees to dominate the online travel business, with Expedia both buying Travelocity and announcing plans to purchase Orbitz Worldwide Inc this year.

"We don't expect there to be a significant tailwind on profitability from (acquisitions) Wotif and Travelocity really until we move through the back part of (this quarter)," Okerstrom said.

Chief Executive Dara Khosrowshahi added that the company has "no real update" on the antitrust review of the Orbitz deal by the U.S. Department of Justice.

Some antitrust experts expect the U.S. government to approve the deal because there is no barrier to entering the online bookings market, with the likes of Google Inc, airlines and hotel chains selling itineraries on their websites.

Google, under investigation by the European Union for allegedly distorting Web search results, has market power that "should be addressed," Khosrowshahi said.

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