BELLEVUE, Wash.—April 26, 2012—Expedia, Inc. (NASDAQ: EXPE) today announced financial results for the first quarter ended March 31, 2012.
Room nights grew 24% year-over-year powered by 37% year-over-year growth in room nights at Hotels.com®. Room night growth accelerated across our leisure business in Europe, Asia-Pacific and the Americas compared to growth in the fourth quarter of 2011.
Adjusted EBITDA* increased 24% year-over-year driven by strong revenue performance and operating expenses growing slower than revenue. In addition, adjusted earnings per share increased 63% as compared to first quarter 2011.
Year-to-date, Expedia® repurchased 8.8 million common shares for a total of $291 million excluding transaction costs. The Executive Committee, acting on behalf of the Board of Directors, authorized an additional repurchase of up to 20 million shares of common stock.
Gross Bookings, Revenue & Revenue Margins
Gross bookings increased 15% (16% excluding foreign exchange) for the first quarter of 2012 compared with the first quarter of 2011, primarily driven by a 24% increase in hotel room nights through accelerated growth at all leisure brands except Expedia. For the first quarter of 2012, average daily room rates were flat, and average airfares grew 7% year-over year.
Air tickets sold grew by 5% year-over-year primarily due to availability of American Airlines tickets that were not available to leisure consumers for the duration of first quarter 2011. Domestic bookings increased 16% and international bookings increased 14% (16% excluding foreign exchange) for the first quarter of 2012. International bookings totaled $3.3 billion for the first quarter of 2012, accounting for 39% of worldwide bookings consistent with the prior year.
Revenue increased 12% (13% excluding foreign exchange) for the first quarter of 2012, primarily driven by an increase in hotel room nights stayed partially offset by a decrease in revenue per room night and revenue per ticket. Domestic revenue increased 11% and international revenue increased 14% (17% excluding foreign exchange) for the quarter. International revenue equaled $325 million for the first quarter of 2012, representing 40% of worldwide revenue compared to 39% in the prior year.
Revenue as a percentage of gross bookings (“revenue margin”) was 9.7% for the first quarter, a decrease of 28 basis points compared to the first quarter of 2011. The primary drivers included lower net air supplier economics, rising average air ticket prices (as our remuneration generally does not vary with the price of the ticket) and changes in our hotel product mix partially offset by growth in our higher margin hotel business.
Product & Services Detail
As a percentage of total worldwide revenue in the first quarter of 2012, hotel accounted for 70%, air accounted for 11% and all other revenue sources accounted for the remaining 19%. Worldwide hotel revenue increased 18% for the first quarter driven by a 24% increase in room nights stayed partially offset by a 6% decrease in revenue per room night. Revenue per room night decreased primarily due to changes in our hotel product mix, discounting at the Hotwire® brand, accruals for loyalty programs at Expedia and Hotels.com and impacts of foreign currency.
Worldwide air revenue decreased 17% for the first quarter due primarily to a 20% decrease in revenue per ticket partially offset by a 5% increase in air tickets sold. The increase in ticket volume was due to availability of American Airlines content for the duration of first quarter 2012 and was partially offset by a 7% increase in average air ticket prices.
Revenue per ticket declined due to lower net supplier economics partially offset by certain regional and interline consumer booking fees.
All other revenue (excluding hotel and air) increased 15% for the first quarter through strong growth in car rentals, advertising revenue and corporate travel fees.
Recent Highlights
Global Presence
Egencia announced its intent to acquire VIA Travel, the largest travel management company in the Nordics offering corporate, group, leisure and marine travel and meetings services. Together, the combined company will provide a global industry-leading corporate travel management solution.
Expedia Affiliate Network (EAN) signed agreements to power travel bookings for several online travel sites in Asia, including Macau.com, the leading online destination-marketing portal in Macau; and Japan-based OTA Tabi Capital.
Expedia, Inc. signed global partnership agreements with several major international air carriers, including Etihad Airways, the national airline of the United Arab Emirates; Virgin Australia, part of the Virgin Group, as well as agreements with Australia’s largest airline, Qantas; Air Astana, Kazakhstan’s principal carrier; Air Transport World’s Airline of the Year, Air New Zealand; and Mexico’s international airline, AeroMexico. Expedia also entered into an agreement to make Mexican low-cost carrier Volaris’ flight inventory available on Expedia sites in the US and Mexico.
Expedia launched its Travel Agent Affiliate Program (TAAP) in Thailand, providing local travel agents direct access to Expedia Inc.’s global inventory, and the opportunity to earn commissions on a range of travel products and services. TAAP currently partners with more than 4,000 travel agents throughout Asia Pacific.
Technology Platform Investment and Innovation
As part of its multi-GDS strategy, Expedia, Inc. announced signing a multi-year content and technology agreement with Amadeus, a leading travel technology provider and transaction processor for the global travel and tourism industry, covering North America. The agreement provides Expedia with Amadeus’ fare search technologies for air travel as well as access to global travel supplier content though the Amadeus system.
ByteLevel recognized Hotels.com as a Top 5 Best Global Website for 2012. The ByteLevel report card evaluates websites on global reach, global navigation, global / mobile architecture and localization and social efforts.
Advertising and media revenue grew 14% year-over-year for the first quarter of 2012 primarily driven by increased revenues at Expedia® Media Solutions. The Expedia Media Solutions team experienced a record generating revenue month in March 2012.
Worldwide Hotel Portfolio
At quarter end, Expedia global websites featured over 150,000 bookable properties. Expedia sites offer over 95,000 hotels in EMEA and APAC countries.
Expedia, Inc. signed distribution agreements with leading Spanish hospitality brand Iberostar; and Melia Hotels & Resorts, a leading hotel chain in Latin America and the Caribbean.
Hotels.com unveiled global branding featuring the new tagline “Finding you the perfect place is all we do™,” a new logo and a fully-integrated advertising campaign focused on helping travelers have the perfect hotel experience.
Expedia launched Verified Reviews, a revamped hotel reviews feature that enables travelers to sort by shared interest categories to find hotel reviews from like-minded travelers. The enhanced feature, which now incorporates reviews from Hotels.com sites, includes more than 7.5 million vetted and verified traveler reviews.
New Distribution Channels
Expedia, Inc.’s mobile initiatives marked significant milestones, with the Hotels.com booking app surpassing 5 million downloads across iOS and Android platforms since launch in April 2011, and the Expedia Hotels app exceeding more than 2 million downloads across platforms since introduction of the Mobiata®-designed app in March 2011.
Hotwire relaunched its mobile web platform offering opaque hotel inventory during the quarter.
Expedia, Inc. gained traction during the quarter in daily deals and social media through the successful roll-out of a refreshed Last Minute Deals page on Expedia.com®, which generated more gross bookings in four months than the old page did throughout the whole of 2011; Hotels.com doubled its Facebook fan base during the first quarter; and Expedia.com saw triple digit room night growth during the quarter through Expedia’s A Sudden Amazing Price (ASAP™) 12-hour flash sales offering.
