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Longer Hotel Stays and More Traveling by Air Boost Expedia

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Gross bookings grow

Gross bookings is the metric used to measure the total value of all travel services purchased by consumers. Gross bookings grew by 32% in 1Q16, driven by strong growth in the core OTA (online travel agency) business. Segment-wise, core OTA grew by 33% to $17.2 billion and the Egencia business grew by 21% to $1.7 billion.

Gross bookings growth has been on an increasing trend. For 2015, gross bookings grew by 24%, for 2014 by 28%, and by 16% for the two years before that. On a constant dollar basis, the growth would be much higher.

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Room nights grow, revenue per room night declines

Hotels accounted for 58% of Expedia’s (EXPE) revenues in 1Q16. Room nights continue to grow at a strong pace driven by both brands—Expedia and Hotels.com. Expedia’s hotels revenues grew by 25% year-over-year (or YoY) during 1Q16. This growth came in as a result of growth in room nights, which grew by a stronger 37% YoY.

However, revenue per room nights was down by 9% YoY, driven by a 3% decline in average daily rates. Acquisitions (OWW) contributed to 13% growth in both room nights and revenues.

Air tickets grow, revenue per ticket declines

Sales of online air tickets has also grown in the last few quarters. Air travel accounts for 11% of Expedia’s revenue. EXPE’s revenue per ticket grew by 1% in 1Q16.

Ticket volumes registered a strong growth of 52% YoY, as acquisitions contributed to ~38% growth. The overall air ticket revenue was up by a strong 54% YoY, as acquisitions contributed to ~47% growth.

Advertising and media

Advertising is currently EXPE’s fastest-growing business. However, it accounts for only 9% of its revenues. The acquisitions of Trivago and Orbitz benefit Expedia as its advertising revenues have grown by 44% YoY in 1Q16.

The First Trust Dow Jones Internet Index ETF (FDN) holds ~2.9% in Expedia. It also holds ~2.1% in rival TripAdvisor (TRIP). However, it does not hold EXPE’s rival Priceline (PCLN) and Chinese OTA player Ctrip.com (CTRP).

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