Expedia Reports Rise in Profits, Bookings

Expedia reported a 27 percent growth in air tickets and room nights booked for the third quarter 2009. The company said it earned $117 million, or 40 cents a share, in the three-month period that ended Sept. 30.

That’s up from earnings of $94.8 million, or 33 cents a share, a year earlier. These results come after Expedia permanently eliminated fees for booking flights or for changing or canceling reservations. Expedia also has sought to cut costs by consolidating call centers.

Expedia’s gross bookings increased 9 percent (12 percent excluding the estimated negative impact from foreign exchange) in the third quarter compared with the third quarter of 2008, driven primarily by 26 percent growth in transactions, partially offset by lower prices for airline tickets and hotel room nights.

Domestic bookings increased 8 percent and international bookings increased 11 percent (16 percent, excluding foreign exchange). Revenue increased 2 percent (3 percent, excluding foreign exchange) for the third quarter, primarily driven by an increase in hotel and car rental revenues, partially offset by a reduction in air revenues.

Domestic revenue decreased 2 percent while international revenue increased 10 percent (11 percent, excluding foreign exchange). Domestic revenue growth trailed international growth primarily due to a greater impact from Expedia’s fee reductions and eliminations.

Revenue as a percentage of gross bookings (revenue margin) was 14.4 percent for the third quarter, a decrease of 98 basis points compared to the third quarter of 2008. Domestic revenue margin decreased 149 basis points to 13.8 percent while international revenue margin decreased seven basis points to 15.6 percent.

Expedia said the decrease in worldwide and domestic revenue margins was primarily due to the impact of its fee actions, loyalty programs and a greater mix of lower margin hotels, partially offset by lower air ticket prices and a reduction in the mix of lower margin air product. Worldwide revenue margin was also impacted by lower margin bookings from an entity it began consolidating late in the second quarter.