Expedia Reports 57 Percent Drop in Quarterly Earnings

Expedia reported a sharp drop in its second-quarter profits, but still did better than expected; gross bookings were down, but hotel room nights and air transactions were up. Management said the results showed that Expedia has a business model that works no matter what the business environment is. The company earned $40.9 million in the second quarter, down 57 percent from $96.1 million for the same period a year earlier.

Gross bookings decreased 5 percent (down 1 percent excluding the estimated impact from foreign exchange) for the second quarter of 2009 compared with the second quarter of 2008, driven primarily by lower prices for hotel rooms and airline tickets, partially offset by an increase in transactions. Domestic bookings decreased 4 percent and international bookings decreased 8 percent (up 4 percent excluding foreign exchange).

Revenue decreased 3 percent (up 1 percent excluding foreign exchange) for the second quarter, primarily driven by lower domestic air revenue. Domestic revenue decreased 6 percent while international revenue increased 3 percent (up 14 percent excluding foreign exchange).

Worldwide hotel revenue decreased 1 percent for the second quarter primarily due to a 19 percent decrease in average daily rates (ADRs), partially offset by a 26 percent increase in room nights stayed, including rooms delivered as a component of packages and nights booked through Venere (which Expedia acquired in the third quarter of 2008).

Worldwide air revenue decreased 20 percent for the second quarter, primarily due to a 29 percent decrease in revenue per ticket, and partially offset by a 13 percent increase in ticket volume. Expedia.com eliminated consumer booking fees on air tickets beginning in March of 2009, which primarily drove the decline in revenue per ticket and the lift in ticket volume.

Advertising and media revenue, including net revenue from the TripAdvisor segment, increased 5 percent for the second quarter, accounting for 10 percent of worldwide revenue.

Worldwide revenue from other products and services (primarily revenue from car rentals and destination services) decreased 2 percent for the second quarter.