BELLEVUE, WA – Expedia, Inc. announced financial results for the fourth quarter and full year ended December 31, 2014.
- Room night growth accelerated to 28% year-over-year in the fourth quarter, with international and domestic room night growth accelerating to 30% and 25% year-over-year, respectively. Fourth quarter gross bookings increased 24% and revenue increased 18% year-over-year.
- Strong performance in the core business drove growth in Expedia (excluding eLong) Adjusted EBITDA(1) of 13% in the fourth quarter and 18% for the full year, with consolidated (including eLong) Adjusted EBITDA(1) growth of 3% and 17% for the fourth quarter and full year 2014, respectively.
- Trivago completed 2014 with standalone revenue growth of 68% year-over-year on continued global expansion.
- During November 2014 Expedia, Inc. completed the acquisition of Wotif Group for total cash consideration of A$703 million ($612 million based on November 13, 2014 exchange rates).
- Subsequent to year end, Expedia, Inc. completed the acquisition of the Travelocity brand and related assets for $280 million.
- In 2014, Expedia, Inc. repurchased 7.0 million shares of its common stock for approximately $537 million excluding transaction costs.
?Discussion of Results
The results include Brand Expedia (Expedia.com®), Hotels.com®, Hotwire.com®, Expedia® Affiliate Network, Classic
Vacations®, Expedia Local Expert®, Expedia® CruiseShipCenters®, Egencia®, eLong™, Venere® Net SpA, trivago GmbH, Wotif Group, Travelocity® and CarRentals.com™, in addition to the related international points of sale.
Expedia and AirAsia™ formed a joint venture on July 1, 2011, which is 50% owned by Expedia; therefore, results do not include the Brand Expedia websites in the Asia Pacific region that were contributed to the joint venture.
The results include trivago GmbH (“trivago”) following acquisition of a controlling interest during March 2013, results from the strategic marketing agreement with Travelocity launched during the fourth quarter of 2013, as well as results of Wotif Group following the acquisition by Expedia, Inc. during November 2014. Unless otherwise noted, all comparisons below are versus the fourth quarter of 2013.
Gross Bookings, Revenue & Revenue Margins
For the fourth quarter of 2014, gross bookings increased 24% (27% excluding foreign exchange) primarily driven by room night and air ticket growth. Room night growth was driven by Hotels.com, Brand Expedia and Travelocity. Air ticket growth was driven by Brand Expedia and Travelocity.
Acquisitions added approximately 1 percentage point of inorganic bookings growth for the quarter. eLong did not have a meaningful impact on gross bookings growth in the fourth quarter of 2014.
For the fourth quarter of 2014, domestic gross bookings increased 29% and international gross bookings increased 18% (25% excluding foreign exchange). International bookings totaled $4.9 billion, accounting for 43% of worldwide bookings versus 45% in the fourth quarter of 2013.
For 2014, gross bookings increased 28% (29% excluding foreign exchange) primarily driven by room night and air ticket growth. Acquisitions and eLong each did not have a meaningful impact on gross bookings growth for the full year 2014. Domestic bookings increased 34% and international bookings increased 20% (22% excluding foreign exchange). International bookings totaled $20.8 billion, accounting for 41% of worldwide bookings versus 44% in the prior year. The decrease in international gross bookings mix in the fourth quarter and full year 2014 was primarily due to the inclusion of the Travelocity-branded websites, which bolstered domestic gross bookings.
For the fourth quarter of 2014, revenue increased 18% (22% excluding foreign exchange) primarily driven by growth in hotel and advertising and media revenue. Acquisitions added approximately 1 percentage point of inorganic revenue growth for the quarter. Excluding eLong, revenue increased 19% for the quarter. Domestic revenue increased 24% and international revenue increased 11% (20% excluding foreign exchange). International revenue equaled $628 million, representing 46% of worldwide revenue versus 49% in the fourth quarter of 2013.
For 2014, revenue increased 21% (21% excluding foreign exchange) primarily driven by growth in hotel and advertising and media revenue. Acquisitions added approximately 1 percentage point of inorganic revenue growth for the year. eLong did not have a meaningful impact on revenue growth for the full year 2014. Domestic revenue increased 21% and international revenue increased 20% (21% excluding foreign exchange). International revenue equaled $2.7 billion, representing 47% of worldwide revenue, consistent with the prior year.
Revenue as a percentage of gross bookings (“revenue margin”) was 12.0% for the fourth quarter of 2014, a decrease of 66 basis points compared to the fourth quarter of 2013, primarily due to lower revenue per room night. For 2014, revenue margin totaled 11.4%, a decrease of 67 basis points compared to the prior year, primarily due to lower revenue per room night, partially offset by the growth in advertising and media revenue.
Product & Services Detail – Fourth Quarter 2014
As a percentage of total worldwide revenue in the fourth quarter of 2014, hotel accounted for 69%, advertising and media accounted for 9%, air accounted for 8% and all other revenues accounted for the remaining 14%.
Hotel revenue increased 15% in the fourth quarter of 2014 on a 28% increase in room nights stayed driven by Hotels.com, Brand Expedia and Travelocity, partially offset by a 10% decrease in revenue per room night. Revenue per room night decreased primarily due to the efforts to expand the size and availability of the global hotel supply portfolio, promotional activities such as growing loyalty programs, as well as unfavorable book-to-stay foreign currency impact. Revenue per room night is expected to continue to decrease in 2015. Average daily room rates (“ADRs”) were flat year-over-year for the quarter, as the positive impacts from a generally improving travel environment and a favorable geographic mix shift were offset by an unfavorable foreign exchange translation impact. ADRs are expected to be negative year-over-year in 2015 primarily due to foreign exchange.
Air revenue increased 18% in the fourth quarter of 2014 due to a 26% increase in air tickets sold, partially offset by a 6% decrease in revenue per ticket. Advertising and media revenue increased 38% in the fourth quarter of 2014 due to continued strong growth in trivago® and Expedia® Media Solutions. All other revenue increased 23% in the fourth quarter of 2014 primarily on growth in travel insurance and car rental products.
Product & Services Detail – Full Year 2014
As a percentage of total worldwide annual revenue, hotel accounted for 70%, advertising and media accounted for 8%, air accounted for 8% and all other revenues accounted for the remaining 14%.
Hotel revenue increased 18% in 2014 on a 26% increase in room nights stayed driven by Brand Expedia and Hotels.com, partially offset by a 6% decrease in revenue per room night. Revenue per room night decreased primarily due to the efforts to expand the size and availability of the global hotel supply portfolio as well as promotional activities such as growing loyalty programs. This decline was partially offset by a 2% increase in average daily rates for the year.
Air revenue increased 22% in 2014 due to a 28% increase in air tickets sold, partially offset by a 5% decrease in revenue per ticket. Advertising and media revenue increased 50% in 2014 due to strong growth in trivago and Expedia Media Solutions. All other revenue increased 19% in 2014 primarily on growth in travel insurance and car rental products.