Expedia first-quarter growth held back by ‘US slowdown’

An Expedia trading update last week provided confirmation that US government policies under President Trump are having an impact on travel.

 

Reporting results for the three months to March, Expedia chief executive Ariane Gorin noted “weaker-than-expected travel demand in the US and into the US” despite a 4% growth in bookings overall year on year and 3% growth in revenue in the quarter.

 

However, while consumer bookings were up just 1% on the previous year, B2B bookings, recorded mainly outside the US, rose 14%.

 

Gorin said: “US demand was soft, driven by declining consumer sentiment, which was a headwind given two-thirds of our business comes from the US point of sale, and we saw pressure on key inbound US corridors.

 

“We also noticed softness in demand for inbound travel into the US, which was down 7%. Inbound bookings from Canada fell nearly 30%.”

 

She reported “a slowdown in the quarter, both US domestic and inbound” and said: “April was somewhat softer than March, especially in the US.”

 

Easter fell in April this year but March last year, making the slowdown in April even more striking.

 

Gorin added: “We’re continuing to see pressure on travel into the US, but we’ve also seen some rebalancing. Europeans are travelling less to the US but more to Latin America.”

 

She said: “We’re also starting to see a shift to lower rate plans – travellers going from refundable rates to non-refundable rates – and starting to see hotel partners providing more discounts.

 

“Some of what we’re guiding is also related to pricing. We saw ADRs [average daily rates] go negative in the first quarter. We saw air ticket prices go down.”

Expedia’s losses in the quarter rose by half on the previous year to $200 million.

 

The company reported quarterly revenue of almost $3 billion on gross bookings worth more than $31 billion, with a 4% increase in air bookings year on year to 14.8 million, although its air revenue was down 7%, and close to 108 million booked room nights. The OTA took $13 billion in bookings as an agent and $18 billion as a merchant or principal.

 

US sales accounted for 61% of Expedia revenue, and direct-to-consumer sales 65%.