BELLEVUE, Wash.—July 25, 2013—Expedia, Inc. (NASDAQ: EXPE) today announced financial results for the second quarter ended June 30, 2013.
• Room nights grew 19% year-over-year driven by continuing healthy growth at Brand Expedia® and eLong™ as Expedia, Inc. continues to reap benefits from technology investments and aggressive sales and marketing efforts in emerging markets.
• Revenue grew 16% year-over-year for the second quarter of 2013 due to growth in hotel room nights and advertising and media revenue generated by our recent acquisition of a majority interest in leading hotel metasearch company, trivago GmbH.
• Expedia, Inc. celebrated several milestones during the second quarter of 2013 including continued conversion improvements at Brand Expedia and Hotels.com, positive momentum on the global roll-out of the Expedia® Traveler Preference™ (ETP) program with successful conversions at major chains such as Hilton Worldwide, Accor and Marriott International; as well as growing Brand Expedia quarterly package revenue 26% only one quarter after moving to the new package platform.
• Year-to-date, Expedia, Inc. deployed over $700 million towards a combination of acquisitions, buybacks and dividends. Subsequent to quarter end, the Executive Committee of Expedia’s Board of Directors approved a 15% increase in the cash dividend payable in September; raising the dividend to $0.15 per share of outstanding common stock.
“We knew we were facing second quarter headwinds and those which we expected, as well as some we didn’t, materialized. Despite this, we remain confident about our long-term strategy. We see continued return on our core brands’technology investments, broader adoption of Expedia Traveler Preference Program, momentum in our recent acquisitions and emerging markets as well as exciting traction in one of travel’s fastest growth channels – mobile,” said Dara
Khosrowshahi, Expedia, Inc. President and Chief Executive Officer.
Financial Summary & Operating Metrics (financial figures in $MMs except per share amounts)
Discussion of Results
The information presented within treats the domestic and international operations previously associated with Expedia’s TripAdvisor® Media Group as discontinued operations and accounts for the reverse stock split that occurred on December 20, 2011. The results include Expedia.com®, Hotels.com®, Hotwire.com®, Expedia® Affiliate Network, Classic Vacations®, Expedia Local Expert®, Expedia® CruiseShipCenters®, Egencia®, eLong, Venere® Net SpA and trivago GmbH; in addition to the related international points of sale.
Expedia and AirAsia™ formed a joint venture on July 1, 2011, which is 50% owned by Expedia; therefore, subsequent results do not include the Brand Expedia websites contributed to the joint venture.
The results include trivago GmbH following our acquisition of a controlling interest during March 2013. The impacts are discussed in more detail below. Unless otherwise noted, all comparisons below are versus the second quarter of 2012.
Gross Bookings, Revenue & Revenue Margins
Gross bookings increased 13% (13% excluding foreign exchange) for the second quarter of 2013, primarily driven by a 19% increase in hotel room nights due to continued momentum at Brand Expedia and eLong as well as a 7% increase in air tickets.
For the second quarter of 2013, average daily room rates and average airfares were essentially flat year-over-year. Air tickets sold grew by 7% year-over-year primarily due to strong growth at Egencia. Domestic bookings increased 7% and international bookings increased 23% (23% excluding foreign exchange) for the second quarter of 2013.
International bookings totaled $4.3 billion for the second quarter of 2013, accounting for 42% of worldwide bookings versus 39% in the prior year.
Revenue increased 16% (16% excluding foreign exchange) for the second quarter of 2013, primarily driven by an increase in hotel room nights stayed partially offset by a decrease in revenue per room night. The trivago® acquisition added approximately 4 percentage points to year-over-year revenue growth for the second quarter of 2013. Domestic revenue increased 10% and international revenue increased 24% (24% excluding foreign exchange) for the second quarter of 2013. International revenue equaled $555 million for the second quarter of 2013, representing 46% of worldwide revenue versus
43% in the prior year.
Revenue as a percentage of gross bookings (“revenue margin”) was 11.9% for the second quarter of 2013, an increase of 30 basis points compared to the second quarter of 2012. The increase primarily relates to a favorable mix shift to our higher margin products, including hotel as well as advertising and media revenue, partially offset by mix shifts within our hotel product.
Product & Services Detail
As a percentage of total worldwide revenue in the second quarter of 2013, hotel accounted for 72%, air accounted for 8% and all other revenue sources, including advertising and media revenue, accounted for the remaining 20%.
Worldwide hotel revenue increased 12% for the second quarter of 2013 driven by a 19% increase in room nights stayed due to continued momentum at Brand Expedia and eLong partially offset by a 6% decrease in revenue per room night. Revenue per room night decreased primarily due to changes in our hotel product mix, of which mix shift to Asia-Pacific remains a significant component. This decline was partially offset by higher average daily rates in other regions.
Worldwide air revenue increased 8% for the second quarter of 2013 due primarily to a 7% increase in air tickets sold. The increase in ticket volume primarily relates to strong growth in air ticket volumes at Egencia. Revenue per ticket increased 1% primarily due to a change in package refund policy partially offset by lower net supplier economics.
All other revenue (excluding hotel and air) increased 37% for the second quarter of 2013 through strong growth in advertising and media revenue generated by trivago as well as corporate travel fees.
Recent Highlights
Global Presence
• Egencia® signed agreements to power corporate travel management solutions for professional services and investment management firm specializing in real estate Jones Lang LaSalle; KOMET of America, Inc., the worldwide technology leader of innovative tool concepts; PW Power Systems, a global leader in energy solutions; global consumer and commercial products marketer Newell Rubbermaid; and Volvo Cars Corporation.
• Expedia, Inc. signed distribution agreements with a number of notable carriers, including major US carrier Delta Air Lines; leading European airlines Air France-KLM and Alitalia; Asia’s largest airline China Southern; Switzerland’s national airline SWISS; Turkish Airlines named Best Airline in Europe by Skytrax for three consecutive years; Warsawbased LOT Polish Airlines; and regional US airline Silver Airways.
• Expedia® Affiliate Network signed agreements to power online travel bookings for several international companies, including Muchoviaje, part of Grupo Planeta, the leading Spanish publishing and communications group; and NextJump, an ecommerce marketplace that powers rewards and loyalty programs for corporations.
• trivago® expanded its global footprint to 39 countries worldwide following the launch of localized hotel metasearch sites in Argentina, Chile, Colombia, India, Singapore and South Korea.
• Post the devastating tornadoes in Moore, Oklahoma, Expedia, Inc. donated $25,000 to the American Red Cross to help impacted families in the area.
Technology Platform Investment and Innovation
• As an enhancement to the existing automated process, Egencia introduced Egencia Autobook, helping business travel clients in the US and Canada reduce the risk of rate increases and loss of available inventory as they secure approval to travel.
• Hotels.com® rolled out a revamped homepage across its global sites, featuring a more intuitive, search-based user interface that allows consumers to quickly and easily locate the hotel information they need to book the perfect trip.
• Expedia® Media Solutions, the advertising sales division of Expedia, Inc., continues to show strong momentum by generating 25% year-over-year revenue growth in the second quarter of 2013.
Worldwide Hotel Portfolio
• At quarter end, Expedia, Inc. global websites, including eLong, featured approximately 220,000 bookable properties. Expedia, Inc. sites offer approximately 162,000 hotels in EMEA and APAC countries.
• The Expedia Traveler Preference program continues to gain momentum among lodging suppliers worldwide. To date, more than 30,000 hotels globally signed on to participate and of those signed up, more than 70% are currently transacting as part of the program on Brand Expedia and Hotels.com points of sale.
• Expedia Global Lodging Group signed a long-term partnership agreement with Starwood Hotels & Resorts, one of the world’s leading hotel and leisure companies; in addition to partnership agreements with several regional hotel brands including international luxury hotel brand Corinthia Hotels & Resorts, offering properties throughout Europe, the Mediterranean basin and Africa; and Intrawest, leader in experiential destination resorts.
New Distribution Channels
• Expedia extended mobile flight search and booking capability to iOS and Android app users in Austria, Australia, Belgium, Denmark, Ireland, Japan, Netherlands, New Zealand, Norway, Spain and Sweden.
• Hotwire® launched its first-ever iPad app featuring interactive maps and a simplified booking process that allows users in the US and Canada to essentially cut their travel booking time in half, when compared to the traditional desktop experience.
• Venere.com® rolled out a mobile-optimized Web site, allowing smartphone users to more easily search for and book their hotel stay from more than 120,000 properties available on Venere.com worldwide.
• Expedia Hotels & Flights was named the People’s Voice Travel App at the 17th annual Webby Awards, the leading international awards honoring excellence on the Internet; and was also selected by Google as the only travel app to be featured in its Beautiful Design Summer 2013 collection. Travel + Leisure recognized Expedia.com as the Best Online Travel Agency at its annual Social Media in Travel Tourism (SMITTY) awards for Expedia’s ‘Find Yours’Facebook and Twitter social media campaigns.
• Welcome Rewards®, the popular loyalty program from Hotels.com®, achieved a significant milestone by redeeming more than one million free room nights for consumers since the program launched in 2008.
