Expedia results beat market expectations on strong hotel revenue, shares up

Online travel agency Expedia Inc posted second-quarter results that beat market expectations on stronger worldwide hotel revenue, sending its shares up 13 per cent in after-hours trade.

Strong demand from business and leisure travelers are helping US hotels and airlines post solid revenue and profit growth, in turn benefitting companies such as Expedia.

Worldwide hotel revenue for the second quarter increased 16 per cent, driven by a 22 per cent rise in room nights stayed, while worldwide air revenue was down 8 per cent as revenue per ticket sold fell 11 per cent.

"Excellent results. The key in the quarter was third straight quarter of accelerating room nights growth," said Daniel Kurnos, an analyst with The Benchmark Co.

The company expects 2012 adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) to grow in high single digits to low double digit, up from its previous outlook of mid-single digit growth. It also raised its quarterly dividend to 13 cents per share.

Expedia, whose brands include Hotwire and Hotels.com, said average daily room rates fell 1 per cent, while average airfare gained 5 per cent.

However, rising air ticket prices and room rates is expected to impact Expedia's air and package products for the foreseeable future, it said on a conference call with analysts.

Expedia's hotel business accounts for 74 per cent of the total worldwide revenue, while air ticket business accounts for 9 per cent.

The company said not many Europeans were travelling to the United States and were mostly considering other European destinations, and there was some evidence of shortening lengths of stay.

Domestic revenue grew 14 per cent, while international revenue grew 13 per cent, the company said. U.S. makes up for about 58 per cent of total revenue.

Expedia said it will boost its selling and marketing expenditure in the third and fourth quarters, and invest more in the Asia Pacific and emerging markets.

Net income from continuing operations rose to $105.2 million, or 76 cents per share, from $87.7 million, or 63 cents per share, a year earlier.

Excluding items, the company earned 89 cents per share.

Revenue rose 14 per cent to $1.04 billion.

Analysts had expected earnings of 71 cents per share on revenue of $989.6 million, according to Thomson Reuters I/B/E/S.

Shares of the company, which have risen more than 40 per cent in the last three months, closed at $45.71 on Thursday on the Nasdaq.