Expedia admits Ryanair spat has hit revenues

Expedia has acknowledged that losing Ryanair as a private-label partner has slowed down the growth in gross bookings within its international business.

The split, which led to an ongoing legal dispute in the UK, took place during the third quarter of last year. In the first three months of this year, gross bookings from international businesses were $1.66 billion, or 32% of worldwide bookings, similar to the same period last year when the Ryanair contract was live.

Expedia’s revenue this quarter was $190m, or 30% of the total, down from 32%.

Chief executive Dara Khosrowshahi, when asked about the levelling off in international growth, said; “There has been some transaction slowdown in Europe. The two countries looking weaker than the rest of them is the UK, which is no surprise, and Germany.

“Another driver in international transactions and gross bookings is the loss of Ryanair as a partner on the private label side. As we roll over the loss of Ryanair, those comparables should improve.”

One macro trend which emerged during the quarter is the during the quarter, he said, was an increase in the demand for US customers going into Europe, because of the strength of the dollar. “In Q4, even though the dollar was getting strong, there was no response in demand,” he said, “but there was a response in Q1.”

He added that “London, as a destination for us, is very, very strong.”

Most big US online agents have been reducing or eliminating booking fees in the battle for consumers. Khosrowshahi said that Expedia had changed its fee structure for hotel booking as it tried to address “why customers search our site and don’t book”.

He revealed that one-quarter of these lost customers ended up booking at another online travel agent, with three-quarters buying direct with the hotel chain.

The estimated cost of these initiatives is around $3 million a month for hotels and the same for air.

Wall Street has responded well to the results. The better-than-expected start to the year by the world’s biggest online travel agent continues the good start to the reporting season – deals publisher Travelzoo also saw a surge in its stock price last week after its Q1s also did better than expected.

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