Travel sites such as Expedia (EXPE), TripAdvisor (TRIP), Orbitz (OWW), and Priceline (PCLN) have gained substantial market dominance in the past decade or so due to the ease of use and availability of cheaper offers. EXPE forms 0.52% of the Consumer Discretionary Select Sector SPDR (XLY). Hotels and airlines welcomed or at least learned to live with these service providers in order to boost their bookings. Online service providers command high commissions on bookings made through their network brands.
The company has seen substantial growth in its gross bookings for the past few years, primarily driven by better hotel bookings. Hotel bookings saw strength, leading to a 26% growth in hotel room nights, also accompanied by a 28% growth increase in air tickets.
The leisure business has seen better growth than the corporate bookings business, Egencia. The company’s leisure bookings grew by 30% year-over-year for 2013–2014. This was better than the 14% year-over-year growth in Egencia. The total bookings grew by 28% year-over-year for that timeframe.
Better revenues and margins
The growth in bookings also converted into a parallel growth in revenues. The company’s revenues also grew by 21% year-over-year for 2013 to 2014. The company made key acquisitions that added to this performance while it also saw hotel and advertising and media revenue growth. The company saw some pressure on unit revenues, but they were offset by strong demand.
The company also recorded higher margins primarily due to the acquisition of Trivago, which doesn’t have gross bookings but is included in the revenue used to calculate total revenue margin. The company saw stronger growth in its agency model business, which drove the total revenues up by 21% year-over-year for 2014.