QUOTE AND NEWS
TheStreet.com  Oct 3  Comment 
NEW YORK (TheStreet) -- Shares of Expediaa are slightly higher by 0.04% to $83.40 in pre-market trading Friday after the online travel company had its price target raised to $100 from $95 at FBR Capital. The firm cited theaacquisition of...
SeekingAlpha  Oct 2  Comment 
By Mitchell Warren: Expedia (NASDAQ:EXPE), an $11B online travel company, reported Q2 EPS of $1.03 vs. the $0.76 consensus Wall Street estimate and revenue of $1.49B vs. the $1.44B estimate on July 31st. This was a year-over-year increase in...
newratings.com  Oct 2  Comment 
BELLEVUE (dpa-AFX) - The Australian Competition and Consumer Commission or ACCC said Thursday that it will not oppose the proposed acquisition of Australian online travel company Wotif.com Holdings Ltd (WTF.AX) by U.S.-based Expedia, Inc. (EXPE),...
Reuters  Oct 1  Comment 
Australia's antitrust regulator on Thursday cleared online travel giant Expedia Inc to buy local rival Wotif.com Holdings Ltd, saying it did not expect the A$699 million ($610...
The Australian  Oct 1  Comment 
THE ACCC has rejected concerns of local hotels by today clearing the $703 million Expedia takeover of Wotif.
SeekingAlpha  Sep 29  Comment 
By Doug Young: A new management shake-up in the top ranks of eLong (NASDAQ:LONG) didn't excite investors too much, but hints that something is happening behind the scenes at this online travel laggard controlled by US giant Expedia (NASDAQ:EXPE)....
SeekingAlpha  Sep 26  Comment 
By ARK Investment Management: by Elizabeth Hamilton, ARK Analyst Until cryptocurrencies surfaced seemingly out of nowhere, merchants and consumers seemed resigned to a 2.5-3% transaction toll with each credit or debit card purchase, while...
Motley Fool  Sep 23  Comment 
When considering financial performance, opportunities for growth and valuation levels, it looks like it may be the right time to buy Expedia stock for the long term
Forbes  Sep 23  Comment 
While the partnership will give HomeAway vacation rental owners and property managers exposure to more than 13.4 million monthly visitors on Expedia, Expedia users will get the benefit of being able to bundle home rentals with flights, cars and...
SeekingAlpha  Sep 21  Comment 
By WestEnd511: HomeAway (NASDAQ:AWAY) announced that it has expanded its current partnership with Expedia (NASDAQ:EXPE) that allows AWAY's rental listings to be distributed on EXPE's US website. Under this new agreement, EXPE will expand the...




 
TOP CONTRIBUTORS

Expedia (NASDAQ: EXPE) is the world's largest online travel company by transaction volume. Through its portfolio of travel websites, including includes: Expedia.com® , hotels.com®, Hotwire.comTM, TripAdvisor Media Network (Expedia spun off TripAdvisor in December 2011), Expedia Affiliate Network (formerly “Worldwide Travel Exchange” and “Interactive Affiliate Network”), Classic Vacations®, Expedia Local ExpertTM, Expedia® CruiseShipCenters®, Egencia TM, eLongTM, Inc. (“eLong”) and VenereTM Net SpA (“Venere”), the company allows travelers to book plane tickets, hotel rooms and customized vacation packages.[1] Expedia makes money by either charging a fee per transaction or by purchasing the travel inventory(plane tickets/hotel stays) from the travel provider at a discounted price and charging the customer a premium on top the original price.

In recent years, major U.S. airlines have struggled to remain profitable in the face of surging fuel prices and increased competition from discount airlines. As their economic outlooks have worsened, major airlines have become less willing to sell travel inventory to Expedia at highly discounted prices. The company has been able to maintain positive revenue growth by exploiting other healthier segments of the travel industry, like hotels, but the company could see a significant drop in demand for its services, if economic conditions continue to worsen throughout 2010. The company should benefit, however, from its expansion into the still relatively underpenetrated European and Asian online travel markets.

Company Overview

Business Financials

Total revenues have remained relatively flat, as Expedia earned $2.96 billion in 2009, compared to $2.94 billion in 2008.[2] However, there was a vast difference in net income, as Expedia has a net income of $300 million in 2009 as opposed to a net loss of $2.5 billion in 2008. The huge loss in 2008 was due to a one time charge associated with goodwill impairments.

Gross bookings in 2009 was $21.8 billion, a slight increase from the previous year's $21.3 billion.[3] Revenue margin, defined as revenue as a percentage of gross bookings, have decreased due to a spike in worldwide air fares. Unlike hotel booking transactions, Expedia does not gain revenues proportionally to air ticket prices. The increase in air fares caused a downturn in the number of travelers, which then translated to lower revenues per booking.

Business Segments

Expedia makes money in 3 ways: Merchant sales, agent sales and advertising.

Merchant model

Under the merchant model, travelers pay Expedia for hotel, plane ticket, and other reservations before traveling, and Expedia then pays the service provider a predetermined wholesale rate when the traveler uses the service.

Agent Model

Under the agent model, Expedia acts as a travel agent for the various services that can be purchased through its portfolio of websites.

Advertising

Expedia also sells advertising on its site. Companies can either pay-per-click or pay a flat fee over the advertising period.


Trends and Forces

Consumer demand for travel services

Consumer demand for traveling is a huge factor that determines Expedia's business outlook. Expedia relies on businesses' and individuals' willingness to travel for its revenue. Consumer demand on a global scale is affected by several economic and political conditions, including the following:

Higher Fuel prices lower consumer demand for travel

It is estimated that for every increase of $10 a barrel of crude oil, airlines must generate an additional $18 of revenue per customer.[4] In order to remain financially solvent, airlines are forced scale back amenities while charging higher ticket prices. This may reduce consumer demand for travel and consequently Expedia's revenue.

Threat of terrorism lowers willingness to travel

After the September 11 terrorist attacks, long-distance travel declined by 11%.[5] Unpredictable events may also cause travelers to cancel their plans at the last minute. Not only does this decrease Expedia’s revenues, since Expedia does not record revenues until the traveler uses the service purchased, it may incur Expedia additional costs if Expedia does not charge cancellation fees or refunds reservations to travelers affected by political instability.

Weaker dollar makes international travel expensive for Americans

Since most of Expedia’s customers are located in the United States, a weakened dollar may reduce the amount that American customers are willing to spend on travel services. This is because each dollar translates into fewer units of a foreign currency, making everything more costly for travelers. Less travelers translates to less revenues for Expedia.

Industry Demand for Expedia Services

Expedia depends on airlines, hotels and other travel service providers for the travel inventory that it sells to its customers. Several factors including fuel prices can affect the price at which Expedia can purchase airline tickets, hotel rooms and other travel services, as well as the overall availability of travel inventory.

Discount airlines book travel through their own websites

Airlines such as JetBlue Airways (JBLU) and Ryanair Holdings (RYAAY) often cut out the middle man and sell tickets through their own websites. As these these airlines have stolen market share from their larger competitors, it has also impacted online travel vendors like Expedia.

Competition

Expedia faces intense competition including airlines and hotels that sell services exclusively through their own websites. Because they have greater control over pricing, these companies are able to offer loyalty programs and discounts which can make them more attractive than an Expedia-owned website. There are also many other online travel agencies similar to Expedia, such as Travelocity and Priceline.com (PCLN), the latter of which recently eliminated booking fees. This strategic move may force Expedia to do the same.

Since Expedia is currently the largest and most diversified online travel agency in terms of gross bookings, or the value of travel services purchased, it enjoys certain competitive advantages. It is better able to negotiate with participating merchants and partners. Expedia also has the advantage of owning a number of websites that cater to many different market segments ranging from families with children to luxury travelers. Unlike Orbitz, for instance, the impact of troubles in the airline industry have been limited due to its strong hotel-booking business. By expanding the breadth of its travel service searches and the variety of packages it puts together, Expedia can take advantage of its brand name recognition and tap into a rapidly developing online travel industry.

Notes

  1. EXPE 10-K 2009 Item 1 Pg. 2
  2. EXPE 10-K 2009 Item 6 Pg. 38
  3. EXPE 10-K 2009 Item 7 Pg. 47
  4. "Oil Prices Push Airline Tickets Up," TIME Magazine
  5. Bureau of Transportation Statistics
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki