How Is Expedia Likely To Grow In The Next 2 Years?
Expedia (NASDAQ: EXPE) has seen impressive growth in recent years, with revenue growing by 23% in 2017. With travel bookings continuing to shift from offline to online, the company’s strong position in terms of global gross bookings, a target of doubling its gross booking in 2018 in comparison to the previous year, and increased investments to cater to international markets should help it continue its strong growth in the near term.
Expedia generated $10.1 billion in revenues for 2017 and we expect its revenues to increase by around 18% annually over the next two years. We have created an interactive dashboard which shows our forecasts for the company’s revenues. You can modify the different revenue drivers to see how changes impact the company’s expected revenues.
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Expedia’s Segment Revenue Growth
Expedia generates revenue from four segments – Online Travel Agencies (OTA) revenue, HomeAway revenue, Egencia revenue, and Trivago revenue. The company generated $72.7 billion in OTA gross bookings, and we expect it to grow at 15% annually. The company has witnessed increased gross bookings over the past couple of years owing to bookings on websites such as Hotels.com, Hotwire, EAN and Expedia, as well as the company’s acquisitions such as Orbitz, Travelocity and CarRentals, which have furthered its international expansion. Despite a slight decline in average daily rates, significant growth across the night rooms booked led to increased revenue from lodging. Even air ticket revenues grew amid increased bookings. With a take rate of around 11%, which is similar to the figure for the past few years, we estimate Agency revenue to grow by over 15% annually going forward.
The company generated $2.2 billion in revenue from other segments, including HomeAway, Egencia, and Trivago, and we expect it to grow by around 25% annually in the near term. HomeAway, which was acquired by the company in December 2015, has seen over 46% growth in gross bookings in 2017 with over 500,000 of its properties listed on Expedia’s platforms. We anticipate steady growth in the near term, with increased property listings. We forecast Egencia, the company’s corporate travel arm, to grow at around its historical pace. Lastly, Trivago – the company’s meta-search platform – has grown phenomenally over the years, thus justifying increased investment in the business.