In Line With 2016, Expedia’s Robust Growth Is Expected To Continue In Q1 2017 Driven By Its Strong Brands

by Trefis Team
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Expedia is about to release its Q1 2017 results on April 27th. After delivering a strong 2016 where its top line grew by 32% y-o-y to around $9 billion, and its EBITDA grew by 39% to $1.6 billion, the company has decided to boost its product and marketing spends this year in order to generate further growth. Expedia’s Orbitz integration, which was facing initial hiccups has been completed with all its consumer as well as business brands coming under the Expedia umbrella. The company is strengthening the marketing plans for some of its brands such as Travelocity, Orbitz, Hotwire, and Wotif. Along with Expedia’s strong core OTA growth, all the other divisions of the company are also performing well. By 2020, Expedia aims to double its gross bookings through both organic and inorganic growth.

Expedia’s Acquired Brands Are Showing Signs Of Promising Growth

  • In 2016, Expedia’s vacation rental acquisition, HomeAway,  witnessed more than $15 billion worth of annual offline transactions. The parent company is trying to grow the brand’s presence on the online platform with investments towards aggressive online marketing and the enhancement of the products and technology. The platform generated its planned $163 million adjusted EBITDA in 2016 and targets on reaching $350 million EBITDA by 2018.
  • Expedia has a 62% stake in the metasearch company, Trivago which is the most important contributor to its advertisement and media revenues. Last year Trivago raised an initial public offering of $184 million in net proceeds and is currently listed on the NASDAQ with the ticker symbol, ‘TRVG.’  Trivago’s revenues grew by 53% y-o-y to reach $836 million in 2016 and we expect the robust growth to continue in the first quarter as well.

  • Expedia’s corporate travel arm, Egencia, witnessed around $6.5 billion gross annual bookings on its platform last year and it plans on doubling this figure over the next 4 years. Egencia is rumored to be currently looking for acquisition targets in the corporate travel sphere.

Expedia’s Focus Areas

  • Currently only one-third of Expedia’s bookings come from outside its domestic market, the U.S., and hence the company wants to increase its global footprints. It is focusing on the Asia Pacific markets, such as Taiwan, China, and South Korea. It plans on doubling its investments in India where it estimates that there is a market for over one billion outbound travelers.
  • The company is keen on growing its Expedia Affiliate Network and towards that end it is offering better perks to hotel suppliers. It is also improving its PartnerCentral tool, the tool through which hoteliers can compare the pricing and space availability on Expedia’s sites versus other rival OTA websites.
  • Expedia is digitally advancing itself to create a better experience for its users and its suppliers. Last year it announced voice activated searches on its platform through Amazon Alexa. The company is about to introduce a feature that will let users enter the hotel rooms (that they want to book from its website) and experience the interiors with the help of virtual reality. Expedia has not yet announced the date of release for this feature. Last year, it spent over $1 billion in technology and is one of the top most players when it comes to launching digital upgrades for its users.
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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Expedia

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