Analyzing Expedia’s Key Metrics in Q4

Room night growth

Lodging accounted for 69% of Expedia’s (EXPE) fourth-quarter revenues. Lodging is still the most important contributor to the company’s top line. Expedia’s lodging revenues rose 10% YoY (year-over-year) in the fourth quarter due to an 11% YoY increase in room nights. The increase was partially offset by a 1% fall in the revenues per room night.

Analyzing Expedia’s Key Metrics in Q4

During the fourth quarter, Expedia added 35,000 properties to its core lodging platform, which brought its total property count to 630,000 (excluding HomeAway). The figure is ~43% higher than the number of properties at the end of the fourth quarter of 2017. In 2018, the company had added over 190,000 properties to its core lodging platform. Including 370,000 HomeAway listings, Expedia’s total properties available on its core lodging platform exceed one million.

Air travel accounts for 8% of Expedia’s revenues. The company registered 10% YoY growth in the ticket volume and a 2% increase in airfare in the fourth quarter. The company’s revenues per ticket rose 7%.

Advertising and media account for 9% of Expedia’s revenues. The segment’s revenues rose 9% due to strong growth at Expedia Group Media Solutions. The growth was partially offset by a 13% fall in Trivago’s (TRVG) revenues.

What’s ahead?

Expedia’s sustained focus on enhancing its product portfolio, mobile-centric product designs, and marketing initiatives will likely continue to drive its user base. The continuous shift in travel booking through online and mobile devices is expected to benefit the company in the long run. The company’s management has decided to focus on increasing the room revenues per night and the number of nights stayed—a critical business metric.

The online travel industry is expected to grow significantly in the next few years. The improving US economy will likely continue to drive the demand in the global travel industry.

Investors could gain exposure to Expedia by investing in the Amplify Online Retail ETF (IBUY), which has allocated 3.3% of its fund in Expedia. IBUY also holds 3.3% in TripAdvisor (TRIP), 3.1% in Booking Holdings (BKNG), and 1.4% in Ctrip.com International (CTRP).