Home > > Expedia, Inc. Reports Second Quarter 2011 Results

Expedia, Inc. Reports Second Quarter 2011 Results

07/29/2011| 10:38:22 AM| 中文

BELLEVUE, Wash.—July 28, 2011—Expedia, Inc. (NASDAQ: EXPE) today announced financial results for our second quarter ended June 30, 2011.

BELLEVUE, Wash.—July 28, 2011—Expedia, Inc. (NASDAQ: EXPE) today announced financial results for our second quarter ended June 30, 2011.

Revenue grew 23% for the quarter driven by a 21% increase in hotel room nights. Combined gross bookings growth for Hotels.com® and Venere.com® accelerated to 54% year-on-year for the quarter.

Advertising and media revenue grew 27% for the quarter fueled by TripAdvisor® Media Group’s strong performance with its sixth consecutive quarter of over 30% revenue growth. 

Free cash flow increased 29% for the first six months of 2011 due to strength in our merchant hotel business and for the second quarter adjusted EPS grew 25% year-over-year. 

Financial Summary & Operating Metrics (figures in $MMs except per share amounts)


Three Months Ended 6.30.11

Three Months Ended 6.30.10

Y / Y  Growth

Transactions (mm)




Gross bookings








Revenue margin




Operating income before amortization* (―OIBA‖)




Operating income




Adjusted net income *




Net income attributable to Expedia, Inc.




Adjusted EPS *




Diluted EPS




Free cash flow *




Discussion of Results
Gross Bookings, Revenue & Revenue Margins

Gross bookings increased 19% (15% excluding the estimated impact from year-on-year changes in foreign exchange rates) for the second quarter of 2011 compared with the second quarter of 2010, driven primarily by 15% growth in transactions, in addition to rising average airline ticket prices and average daily rates for hotel rooms. Domestic bookings increased 10% and international bookings increased 37% (22% excluding foreign exchange). International bookings totaled $3.0 billion, accounting for 38% of worldwide bookings compared to 33% in the prior year.

Revenue increased 23% (18% excluding foreign exchange) for the second quarter, primarily driven by an increase in hotel revenue and advertising and media revenue. Domestic revenue increased 10% while international revenue increased 45% (31% excluding foreign exchange). International revenue equaled $437 million, representing 43% of worldwide revenue compared to 36% in the prior year.

Revenue as a percentage of gross bookings (―revenue margin‖) was 12.9% for the second quarter, an increase of 40 basis points compared to the second quarter of 2010. The primary driver was strong growth in our higher margin hotel business partially offset by rising average air ticket prices.

Product & Services Detail

As a percentage of total worldwide revenue in the second quarter of 2011, hotel accounted for 65%, advertising and media accounted for 13%, air accounted for 10% and all other revenue sources accounted for the remaining 12%. Merchant transactions accounted for 44% of total gross bookings compared to 40% for the prior year period. The increase in merchant transactions was driven by strength in our merchant hotel business, particularly internationally. Merchant revenue equaled 67% of revenue in the second quarter, and remained relatively consistent with the prior year period. The shift in Easter timing contributed to the variance between merchant bookings and revenue growth rates.

Worldwide hotel revenue increased 27% for the second quarter driven by a 21% increase in room nights stayed. Revenue per room night increased 5% primarily due to higher average daily hotel rates during the quarter.

Worldwide air revenue decreased 1% for the second quarter, primarily due to a 3% decrease in air tickets sold, partially offset by an increase of 1% in revenue per ticket. The decrease in ticket volume was partially due to an 11% increase in average air ticket prices.

Advertising and media revenue increased 27% for the second quarter, driven by a 34% increase in third-party revenue for TripAdvisor. TripAdvisor experienced accelerated growth in cost per click (CPC) based revenue and display advertising revenue and robust growth in other revenue, primarily comprised of subscription-based products.

All other revenue (primarily car rentals, destination services and insurance) increased 19% for the second quarter driven by higher insurance revenue as well as fees related to our corporate travel business.


OIBA for the second quarter increased 11% (7% excluding foreign exchange) to $243 million due to increased revenue, partially offset by increased expenses. OIBA decreased 255 basis points as a percentage of revenue to 24% due to growth in selling and marketing expenses as well as technology and content expenses in excess of revenue growth.

Operating income increased 17% primarily due to the same factors impacting OIBA. The higher growth in operating income versus OIBA stems from a realized loss on revenue hedges in second quarter 2011 versus a realized gain on revenue hedges recorded in the prior year. Realized gains and losses from our revenue hedging program are included in OIBA and excluded from operating income. Operating income for second quarter 2011 includes approximately $2 million in costs related to the planned spin-off of TripAdvisor Media Group later this year.

Interest expense increased $11 million for second quarter 2011 as compared to the prior year period primarily due to the $750 million of additional debt issued in August 2010. Other, net represented a loss of $5 million in second quarter 2011 primarily comprised of realized foreign exchange losses on our hedges offsetting book-to-stay gains related to revenue earned in foreign currencies.

The effective tax rates on GAAP pre-tax income were 28.2% for the second quarter 2011 compared with 34.3% in the prior year period. The effective tax rate on pre-tax adjusted net income (―ANI‖) was 28.6% for the second quarter 2011 compared with 34.2% in the prior year period. The lower rate in the second quarter 2011 was primarily driven by an increase in estimated earnings in jurisdictions outside the United States.

Adjusted net income for the second quarter increased $26 million compared to the prior year period primarily due to higher OIBA and a lower effective tax rate, partially offset by higher interest expense. Net income increased $26 million compared to the prior year period primarily due to higher operating income and the same factors impacting adjusted net income. Adjusted EPS increased 25% to $0.55 and diluted EPS increased 25% to $0.50. The higher growth in adjusted EPS versus adjusted net income stems from our lower adjusted weighted average shares outstanding in second quarter 2011 versus the year prior.

The results for the second quarter of 2011 include Travelforce™, which was acquired during the quarter, as well as Holiday Lettings™, Mobiata® and EveryTrail®, which were acquired during the second quarter of 2010, fourth quarter of 2010 and first quarter of 2011, respectively. The collective impact of these acquisitions on second quarter 2011 results was not meaningful.

Global Presence

Expedia launched a localized site in Korea extending its global reach to 23 countries.

Tencent became the second largest shareholder in eLong through acquisition of a 16% equity stake. Tencent and eLong plan to form a business partnership developing online travel services and distributing eLong's travel products to Tencent's online community of 674 million active user accounts in China. Expedia also made an additional investment in eLong in order to maintain our controlling ownership position, which is currently 55% or 51% on a fully-diluted basis.

Hotels.com launched sites in Indonesia and Vietnam expanding its global presence and its focus on the Asia- Pacific region.

TripAdvisor introduced its flight metasearch tool on sites in Canada, France, Germany, Ireland, Italy and Spain, giving users the ability to search flights, estimate fees and view airline ratings. TripAdvisor also launched a localized site in Egypt, extending TripAdvisor’s global footprint to 30 countries and 21 languages.

Traveler Value Proposition and Innovation
Collectively Expedia, Hotels.com, TripAdvisor and Hotwire’s Travel-Ticker® travel apps are downloaded an average of 36 times per minute, an increase of approximately 20% over first quarter.
Expedia and Groupon announced an exclusive partnership and launched Groupon Getaways with Expedia becoming the largest distributor of daily travel deals. Customers bought more than 15,000 travel deals within the first 3 days of launch.
Expedia also launched an Expedia Hotels app for Android users, and rolled out an optimized mobile site featuring upgrades like one-finger navigation and location-enabled search that allows users to find nearby accommodations. Expedia in Germany launched the first ever holiday package iPhone app, enabling travelers in Germany to shop for and book their complete vacation package right from their mobile phone.
Hotels.com introduced new smart phone apps for iPhone and Android, giving users the ability to search for and book more than 20,000 last-minute hotel deals.

Media, Advertising and Distribution

Expedia® Affiliate Network (EAN) signed agreements to power online travel bookings for a number of partners worldwide, including South African Airlines, the premier airline carrier in Africa; Cheaphotels.org, a leading website for budget hotel rooms in Europe; GLOBE-TROTTER T&E Inc., Japan’s leading travel guide company; Japanese travel site Arukikata; and E-Travel SA, a Greek search partner operating several travel sites. EAN has also partnered with Wooba, a booking system for Brazilian travel agents; Reserve, a software provider for corporate travel agencies; and Jetstar, the largest revenue-earning low-cost carrier in Asia-Pacific.
Expedia® Media Solutions, the advertising sales division of Expedia, announced the expansion of its TravelAds search advertising program to France, Germany and Italy. This expansion brings ease-of-use, flexibility and high marketing return on investment to more Expedia partners worldwide.
TripAdvisor acquired leading travel site Where I’ve Been®, an interactive social platform that lets users share where they’ve been, lived and want to go. TripAdvisor also announced it recently reached 50 million reviews and opinions on its flagship site, growing from 45 million in April 2011.
TripAdvisor content has been integrated onto the websites of more than 250 premier brands worldwide, reaching more than 150 million viewers each month. To-date, approximately 40,000 unique domains worldwide feature a TripAdvisor badge or widget.

Supply Portfolio
Expedia Partner Services Group (PSG) reached partnership agreements with leading German low-cost airline, Air Berlin; Lufthansa Airlines; leading Spanish hotel brand, RIU Hotels & Resorts; Kempinski  Hotels, Europe’s oldest independent luxury hotel group; and Dollar Thrifty Automotive Group.

At quarter end, Expedia global websites featured almost 140,000 bookable properties, with over 55% operating under our merchant model and approximately 25% representing agency properties where we have direct relationships.  Expedia sites offer over 85,000 hotels in EMEA and APAC countries. 


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