Expedia’s Second Quarter Growth Was Undermined By Integration Issues Of Its Acquired Entities
Though Expedia’s Q2 2016 results beat analyst estimates in terms of profit, the company’s revenues fell short of expectations which was mostly a result of the room night decline to 20% (as against 35% in Q2 2015). Expedia’s network infrastructure problems hurt room night conversions. Expedia’s host of acquisitions last year are now being integrated into the company’s platform and though a lot of it is completed, these integration issues had led to network problems. However, the integration of entities such as HomeAway and Orbitz.com is definitely gearing up the company as a formidable player against emerging competitors such as Airbnb Inc.
On the flip side, being a travel company, Expedia keeps facing the backlash of political unrest and terrorist attacks in several international markets which resulted in a decline in travel demand and adversely impacted the company’s earnings. Expedia and its metasearch arm, Trivago, have agreed on exploring for an initial public offering and they aim to complete it by the end of 2016. The IPO might give Trivago the credibility among investors as a standalone company, though Expedia doesn’t plan on selling off its stake in Trivago. Trivago’s revenues grew by over $200 million in the second quarter and over $600 million on a trailing 12-month basis. HomeAway has also been a good performer in the quarter with revenues growing by 36% y-o-y on a pro-forma basis. HomeAway’s growth is expected to accelerate in the second half of 2016. Finally, Expedia might currently look into acquisition targets in the corporate travel sector. To conclude, Expedia is on track for long-term growth as the technical glitches seem to be a temporary setback.
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Have more questions on Expedia? See the links below.
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