Expedia’s Q2 ended on a strong note. All the divisions performed well with Trivago, its metasearch engine (where it has a majority stake), crossed $1 billion in trailing 12-month revenues for the first time in its history. While Expedia invested in SilverRail technology in May, it announced a further investment yesterday in Indonesian OTA leader, Traveloka. This move might help the company to gain a stronger hold in Asia which it has been currently striving towards. Expedia enjoys around 75% of the online travel market in the U.S., however, its position in the emerging markets isn’t so strong. Investments in rail ticket booking and Asian OTAs might be its way to gain a bigger part of those markets.
In Q2, Expedia’s gross bookings rose by 12%, while its revenues, adjusted EBITDA, and room nights grew by 18%, 19%, and 21% respectively. The company’s direct sales and marketing expense grew by 25% to $1.44 billion in Q2, the major chunk of which was spent on the Expedia brand and on Trivago. Expedia’s acquired brands in the other segments, though a smaller part of the overall business currently, are growing significantly and showing signs of becoming major drivers of growth for the company in the future. The company aims to double its gross bookings through both organic and inorganic growth by 2020. Let’s explore some of the performance highlights for the company in Q2:
The core OTA segment grew solidly due to a faster room night growth in all the important markets. The aggressive marketing campaigns seem to be driving the demand for the global brands. The transition for the HomeAway brand continues as planned. The brand witnessed 45% growth in gross bookings with a 31% revenue rise in the second quarter. The online booking experience is being enhanced with more properties being brought into the digital platform. Around 1.5 million properties are currently available online on HomeAway and they account for over 85% of HomeAway’s total inventory. The number of integrated properties is expected to rise further with the progress of this year.
Egencia
On the basis of its revenues, Egencia, Expedia’s corporate travel arm, currently became the fourth largest travel management company in the world. The brand experienced a growth in gross bookings and revenues to the tune of 5% and 8%, respectively. Egencia is currently hiring more people to capitalize on a large global opportunity in the near future. Earlier, Egencia’s management had hinted at searching for acquisition targets, so this might be the opportunity that the brand is looking forward to.
Trivago
Trivago (Expedia’s metasearch arm where it has a majority stake) is one of the fastest growing metasearch platforms. After going public last year, in Q1 2017, Trivago registered a 62% Y-o-Y growth in its revenues to $286 million while its EBITDA soared by a whopping 169% to $21 million. In Q2, Trivago’s revenues grew by 64% to $328 million. It exceeded $1 billion in revenue in the trailing 12 months for the first time in its history. Because of its aggressive pursuit of growth which is coming through its TV and other advertising, Trivago’s adjusted EBITDA fell by 78% to $2 million.
Recent Investments
In May, the company entered into an agreement to acquire the London-based rail service distributor, SilverRail Technologies. Last year, Expedia had started a distribution partnership with the same company. The move can pay off well for Expedia’s long term growth as rail travel is one of the most important modes of transport in Europe and Asia. Expedia’s investment in the online booking sector for rail would imply more innovative and expanded offerings. Currently, SilverRail witnesses over 1 billion online searches for rail and around 25 million bookings, annually. It distributes tickets for more than 35 rail providers and carriers and handles over 1,500 corporate customers globally.
The company announced yet another investment yesterday. This time, a $350 million minority investment in Traveloka, the leading OTA in Indonesia and which is expanding in Southeast Asia. The two entities will coordinate on the supply of hotels in the Asian markets. Expedia is focusing on Asia owing to the fact that over 50% of the world’s millennials, known for being tech-savvy, reside in the continent. According to Euromonitor International, the Asia-Pacific market is currently the fastest growing region for online travel agents.
Editor’s Note: We care deeply about your inputs, and want to ensure our content is increasingly more useful to you. Please let us know what/why you liked or disliked in this article, and importantly, alternative analyses you want to see. Drop us a line at content@trefis.com
Notes:
1) The purpose of these analyses is to help readers focus on a few important things. We hope such communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to
our complete analysis for ExpediaSee More at Trefis | View Interactive Institutional Research (Powered by Trefis)
Get Trefis Technology
