Seattle-based travel booking site Expedia Group reported results on the low end of its first-quarter projections, which were a result of "weaker-than-expected travel demand in the U.S. and into the U.S.," said CEO Ariane Gorin.
Bookings for the company grew 4% year over year while revenue increased 3% to $2.9 billion compared to the same quarter last year. Expedia's business-to-business and advertising segments grew 14% and 20%, respectively.
"We remain focused on what's in our control, improving every day on the basics of our business and executing against our three strategic priorities. First, deliver more value for travelers. Second, invest where we see the greatest opportunity for growth; and third, drive operating efficiencies and expand margins," Gorin said on the company's first-quarter earnings call Thursday.
Opportunities for growth
Amid the uncertainty that has plagued Expedia and the rest of the travel industry with shorter booking windows and softer demand, Gorin reported positively on one new opportunity. In February, Expedia added Southwest Airlines flights to its bookable inventory — the first online travel agency to do that, she said.
"One-third of travelers booking Southwest tickets on Expedia are new customers to us, and our hotel partners are benefiting from this new demand, offering package rates and deals to bundle with Southwest," Gorin said. "This is a great example of our supply flywheel. When we add new supply in flights, we bring on better supply in hotel, both of which create more traveler value and translate into new customers."
She gave Ryanair as an example in Europe, saying 75% of Expedia's Ryanair bookers are new to the company.
Gorin also sees opportunities in artificial intelligence — both on Expedia's backend and with the consumers' experiences in mind. More travelers are looking to generative AI platforms to plan and book travel, and Expedia wants to appear among the results. Gorin said Expedia is partnering with AI search companies — OpenAI's operator and Microsoft's Copilot Actions — to ensure its brands show up across customer queries.
"AI is changing everything, and we see it as an accelerator across our business," Gorin said, comparing her excitement for AI to when mobile booking came online.
Recognizing the influence of social media on travelers, Gorin announced the platform's new Expedia Trip Matching, which allows Instagram users to build an itinerary based on a post they come across.
"What we realized is that people were watching [Instagram] Reels and then they wanted to share them or they wanted to figure out how to build an itinerary from it," Gorin said, explaining that Expedia worked directly with Instagram to create the tool. "In one click, we'll give people an itinerary. It'll give them recommendations and then allow them to book with us."
The tool allows users to send a post directly to Expedia's social media account, and, within a few minutes or less, an AI-generated response with experience descriptions and booking links arrives as a reply.
Regarding hotel business
Expedia's booked room nights grew 6% in the first quarter year over year to 107.7 million. Total lodging bookings reached 23 billion for the first quarter, representing 5% growth, while lodging revenue of $2.3 billion grew 3%, said Scott Schenkel, Expedia's chief financial officer.
Of Expedia's brands, Hotels.com posted the most disappointing first-quarter performance, slipping into negative numbers. Last month, Expedia rolled out new product capabilities — such as hotel price insights and alerts — and a "new visual identity" for the brand, Gorin said, adding that more is coming later this year. The redesign included the launch of a new mascot, Bellboy, an anthropomorphized hotel check-in bell, who has been made the star of the brand's social media platforms.
"On Hotels.com, I feel optimistic. I mean, I've always believed that this is a brand that travelers love. This is a brand that was heavily impacted from the period a couple years ago when we did a migration, and we changed the loyalty program and we've got a great leader in there," Gorin said.
She expects the redesign to buoy the brand, adding: "Am I happy that Hotels.com was not in growth in Q1? No. Do I feel good about the plan that the team has in place going forward? Yes."
By the numbers
Average daily rates booked for the first quarter fell 1% year over year to $213.90, according to Expedia's earnings release.
"We beat on bottom line with 16% EBITDA growth and 90% growth in earnings per share," Gorin said. "We delivered these results through solid execution and disciplined cost management while continuing to make progress on our strategic priorities."
The U.S. saw low single-digit growth of booked room nights, mid single-digit growth in Europe, and mid-teens growth in the rest of the world. Gorin credited the softer travel "driven by declining consumer sentiment."
"While in the last year, we've made strides in growing our consumer business outside the U.S. Our high U.S. mix resulted in 1% bookings growth for our consumer business," Gorin said. "In contrast, our B2B business, which has a heavy international presence, posted 14% bookings growth, another strong quarter of above industry performance. Similarly, our advertising business delivered a robust 20% revenue growth."
Looking forward, Schenkel set expectations for the second quarter and beyond.
"Given our performance to date in the continued macroeconomic uncertainty in the U.S. and into the U.S., we expect our second quarter to deliver gross bookings growth of 2% to 4% and revenue growth of 3% to 5% with approximately 75 to 100 points basis points of EBITDA margin expansion," he said.
The outlook takes into account a bump from Easter, which fell in April this year, foreign exchange headwinds and other factors.
"As we consider the same factors for the full year, we are revising our guidance for gross bookings and revenue. Our updated guidance is 2% to 4%," Schenkel said.
As of press time, Expedia's stock was trading at $168.99 per share, down 8.8% year to date. The NASDAQ Composite was down 7% for the same period.