Expedia Reports Strong Q2 Earnings Amid Softening Travel Demand

In her first earnings call since assuming the role of Expedia Group CEO in May, Ariane Gorin highlighted a positive quarter for the company, boasting a 6% increase in both gross bookings and revenue compared to the same period last year.

This growth, which exceeded the company's earlier forecasts, marks a notable rebound from the first quarter of 2024. Gorin credited the robust travel environment of Q2 for this success, noting significant increases in nights booked across different regions: mid-single digits in the U.S., low double digits in Europe, and high teens globally.

However, the upbeat tone of the report was tempered by Gorin's caution about emerging challenges. She reported a "softening in travel demand" that has prompted Expedia to revise its expectations for the remainder of the year. Chief Financial Officer Julie Whalen elaborated on this trend, pointing out a slowdown in travel demand that aligns with industry-wide observations. Factors such as consumers opting for less expensive properties and lower air ticket prices have contributed to this shift, leading the company to anticipate a 3-5% growth in gross bookings and revenue for the third quarter.

Despite the uncertain outlook, Gorin expressed optimism about Expedia's future prospects. She highlighted the company's strong consumer brands, diverse supply, and advanced technology platform as key assets that will drive growth. "We believe we have a lot of opportunity ahead," Gorin said, emphasizing the company's commitment to leveraging these strengths to navigate the evolving market conditions.

A focal point of the call was VRBO, which has faced challenges in recent quarters. Gorin reported that VRBO showed significant improvement from its low point in Q1 and ended the quarter with modest growth. The company's strategy to streamline operations and focus on its internal systems had previously led to reduced marketing efforts, impacting VRBO's performance. However, Expedia's increased marketing spend in Q2, which saw a 13.6% rise in sales and marketing costs, is expected to bolster VRBO's long-term prospects.

The company's overall performance in Q2 was solid, with gross bookings reaching $28.8 billion and revenue at $3.6 billion. The lodging sector saw an 8% increase in gross bookings, with hotels leading the charge at 11% growth. Notably, room nights booked grew by 10%, with Expedia brand experiencing a 20% increase. The B2B segment, previously led by Gorin, also saw impressive gains, with revenue up by $1 billion or 22% year over year.

Gorin, reflecting on her transition from B2B to CEO, emphasized the importance of having a combination of technology, sales prowess, and strong partner relationships to excel in the sector. She highlighted the vast potential of the travel industry, noting that Expedia's innovations could benefit other players in the field. "Our own brand has a small part of it," Gorin said, "and so we can really look to what all the innovation we have in our company that can help power all of the other travel players out there."

As Expedia navigates these mixed signals in the travel market, Gorin's leadership and strategic focus will be crucial in steering the company towards sustained growth and resilience in a shifting industry landscape.