Triple whammy trips up Expedia UK

Expedia Inc has reported a slowdown in the growth of its UK businesses in the first three months of the year, with chief executive Dara Khosrowshahi admitting this “wasn’t entirely down to the macro environment”.

Talking through Expedia Incs’ Q1s yesterday, Khosrowshahi told Wall Street analysts that a 34% growth in bookings from Europe compared with Q1 07 was ahead of the overall industry.

However, this 34% represented a “de-acceleration” of European growth. The UK he said was responsible  for half the slowdown on Q4 07, when Europe bookings were 47% up year-on-year.

Three factors were highlighted in the briefing: “Reduced brand spend, the economy and a reduced tailwind from foreign exchange.”

Chief financial officer Michael Adler explained: “Q1 was fairly unique, in that the pound lost ground to both the euro and the dollar, negatively impacting our UK-to-US and UK-to-Europe businesses.

“Fortunately we have meaningful traffic between continental Europe and the UK and US, which gives us a natural hedge, but this dynamic is something to be aware of.”

In terms of the reduced brand spend. Khosrowshahi admitted elsewhere in the call that “keyword inflation on Google, etc, in Europe is double-digit”, although no connection was made with its UK search spend.

However, he added that “[The UK] is a more competitive marketplace and we proactively took some marketing back in the UK in Q1.

“We will market a bit more aggressively in Q2 when we’re seeing  decent volumes.”

Finally, Expedia Inc’s take on the UK economy is that “it’s going to be a bit more like [the US]” where Khosrowshahi expects consumers will still want to travel. “But if they are hurting in the pocketbook they are going to spend a bit less on that trip than they did last year or the year before that,” he warned.

However, he is optimistic that the UK will turn round in the short term. “On a year on year basis, for the balance of the full year, the UK should be better. We’ve made some adjustments there so we should see a better performance in the back half of the year versus the front half.”

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