Post The Completion Of Its Integration Related Activities, Expedia Seems To Be Back On The Growth Track

October 28th, 2016 by Trefis Team
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Expedia released its Q3 2016 results on October 27th. The company reflected significant year-on-year growth in all its important parameters namely, gross bookings (21%), revenues (33%) and adjusted EBITDA (42%). Last quarter, Expedia’s results were dampened due to the integration issues of its acquired entities (mainly Orbitz) on its platform. However, the integration seemed to have been completed with the company’s focus back to the growth of its core OTA segment.

Though the room nights bookings didn’t reflect significant improvement in the third quarter, the trend seems to be promising primarily for brands such as Brand Expedia, Hotels.com, and Expedia Affiliate Network. For the full year, the company expects adjusted EBITDA to grow between 35% to 45%, however, profitability might be dampened to some extent by the increased marketing initiatives and the lag between room bookings and the realization of payments.

 Egencia Is Set To Finish The Year On A Healthy Note, Promising Of An Even Stronger Future

Egencia, Expedia’s corporate travel arm, is continuing to gain market share and witness profitability growth. The brand is undergoing an internal restructuring as a part of its 10 year growth plan. Egencia’s current goal is to double its gross bookings by 2020 through both organic and inorganic growth. Expedia’s CEO Dara Khosrowshahi had recently hinted that the company might be looking for acquisition targets in the corporate travel sector mentioning the existing opportunities of consolidation in the corporate travel sector.

Trivago’s Growth Story Continues

Expedia’s revenues from the advertising and media segment comes mainly from Trivago. Trivago is growing strong and even in the third quarter the revenues from this brand grew by 57% year-on-year. Industry experts expect Trivago’s adjusted EBITDA to rise by 142% from around $64 million in 2016 to around $155 million by 2018. Currently, it is on the lookout for an IPO though Expedia will continue managing its 63% stake in the company. The management had not divulged the progress with the IPO in the earnings calls.

HomeAway Continues With Its Transition 

HomeAway’s transition is ongoing and its revenues showed a 1% growth year-on-year. The brand’s service fee is expected to give a major boost to its revenues in the future. HomeAway’s Co-Founder and CEO Brian Sharples has currently resigned from his position and John Kim, a seasoned Expedia executive has taken up the President’s role. The management has high expectations from HomeAway expecting it to generate around $350 million in EBITDA in 2018. However, analysts claim that the figure could go much higher than that to reach up to $600 million by that time.

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