Expedia reported first-quarter revenue that jumped 80%, in line with analysts’ estimates, and signaled a strong summer season after two years of pent-up demand.
Revenue was $2.25 billion in the first three months of the year, according to a statement from the Seattle-based company. Expedia, which hosts traditional accommodation bookings like hotels and short-term rentals on its Vrbo platform, and provides access to rates from airlines, hotels and car rental companies, saw gross bookings of $24.4 billion, compared to $24.5 billion according to analysts’ forecasts.
“As we’ve seen repeatedly during COVID, this quarter has been a tale of two stories,” CEO Peter Kern said. “There was an early impact of remaining omicron from late last year, which faded as the demand recovery reached new highs since the onset of COVID. As the war in Ukraine has slowed some of the recovery in Europe, there too we are seeing trips to new highs since the start of the pandemic.
Travel executives are betting this summer will be one of the busiest yet, as consumers excited to leave home will splurge on vacation – potentially going farther afield and venturing to the hotspots of the tourists. Some signs of strong demand are already appearing in the industry, with airlines such as United increasing capacity for transatlantic flights and Southwest saying it expects to be profitable for the last three quarters of the year, even with oil prices well above $100 a barrel.
“Pent-up demand appears to be outweighing anything the market can throw at it and we’re very pleased with a summer rally that should be very robust,” Kern said on a call with analysts after the results.
The shares jumped around 4.2% in extended trading after closing at $174.81 in New York. They are down about 3.3% this year, compared to an 8.2% drop for Airbnb and 8.6% for bookings.
The vision of one of the best summers on record was hazy at the start of the year – with the spread of the omicron variant peaking in January and the outbreak of war in Ukraine a month later. Still, Kern said in a February interview that the highly contagious variant of the coronavirus was “burning bright and fast” and that society had been able to adapt to new virus-related challenges. Other travel executives said the war in Ukraine has not changed consumer behavior outside that region, a positive sign that tourism in Western Europe will remain strong this summer. Expedia derives three-quarters of its revenue from the United States and has limited exposure to Russia and Ukraine.
The company has benefited from the offer of hotel accommodation as well as alternative accommodation through its Vrbo site, as people who can work from anywhere fled to remote short-term rentals during the pandemic. Now, tourists are starting to return to traditional vacation spots like New York.
Expedia does not detail Vrbo’s performance, but Kern said demand remains above 2019 levels. Supply in prime locations is already selling out, he added. Vrbo, which specializes in whole-home rentals, has no plans to expand into the urban market, where rival Airbnb is stronger. “We stick to our core product line here and what we know works,” he said.
Vacation homes continue to emerge as the most popular type of accommodation after hotels, according to an April survey by Cowen analyst Kevin Kopelman.
Expedia reported a loss of 47 cents per share, excluding certain costs, while analysts had expected a loss of 43 cents.