Expedia growth driven by markets outside Europe

Expedia Inc’s international operations continue to account for a higher percentage of its overall business than Europe, with the biggest growth coming from Asia Pacific and Latin America.

Releasing its first quarter results today, Expedia said its total gross bookings across the business came in at $6.6 billion, 27% ahead of the same quarter last year. Revenues this quarter of $718m were 13% ahead, with its resulting net income 21% ahead at $112m.

Talking to Wall Street analysts, chief executive Dara Khosrowshahi explained: “Most of the acceleration you see is from APAC, Latin American and Canada…Europe is stable and doing well but there is more potential there which hopefully we’ll execute on.”

Gross bookings from outside the US came in at $2.37bn or 36% of the total compared with 32% in Q1 09. Revenues were also up – this quarter’s $250m was 35% of overall revenues, compared with the same quarter last year when international accounted for 30%.

Expedia’s hotel room supply now stands at more than 123,000 bookable properties worldwide, a 24% year-on-year increase. It has direct contracts with 66,000 hotels using the merchant model and 22,000 on an agency basis.

Khosrowshahi added that more than 20,000 hotels have signed up for its Easy Manage agency model initiative. “We’re starting to see volumes move through Easy Manage, which is encouraging,” he said. “Especially smaller hotels in secondary and tertiary markets that we have had difficulty getting to.”

By product category, hotels are by far the biggest revenue generator,  pulling in 58% of overall revenues. Air tickets, advertising,  media and others each accounted for 14%.

CFO Michael Adler was asked about the impact of the volcano, and said that there would be “several points of OIBA degredation” as a result of the impact on gross bookings for hotels and air during the crisis. However, he added that it was “a short-term thing which doesn’t impact the business long-term.”

Elsewhere, Khosrowshahi said that he expected “a nicely profitable year in 2010” for its standalone corporate travel brand Egencia.

He was also asked about any implications for Expedia Inc if rumours that Google was planning to buy ITA Software came to fruition. He said that Expedia had developed an in-house version of ITA’s air search and pricing product, “so we don’t feel too exposed”.

However, he added: “If I was another OTA, for example Orbitz, which depends on ITA for its pricing, you become awfully dependent on Google, not only for your leads but also for the pricing of those leads.”

He suggested that the Google/ITA rumours had been in the market “for a while”. The only specific mention of the UK market came within the “content and innovation” section of the results: “Expedia Media Solutions cost-per-click advertising product for hotels was extended to the UK  in January, where during the first week participating hotels achieved an average 40% lift in transaction volumes.”


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