- Integration led to network downtime, which hurt sales
- Travel to France down year over year because of terrorism
Expedia Inc. fell as much as 12 percent after the company revealed that some issues with its integration of Orbitz.com led to slower growth in the number of hotel nights being booked on its websites.
When Expedia moved Orbitz, which it bought last year for $1.3 billion, to its own back-end technology platform, it caused some network downtime, Chief Financial Officer Mark Okerstrom said on a conference call. That, and moving employees from focusing on sales to helping with the integration, led to a year over year decrease in the all-important room night growth metric, he said.
- Revenue in the quarter was $2.2 billion, compared with the average estimate of $2.24 billion.
- Room night growth was 20 percent year over year, compared with growth of 35 percent in the same quarter last year.
- Second-quarter earnings per share, excluding some items, were 83 cents, compared with the average analyst estimate of 75 cents.
- Expedia said it will explore the “feasibility” of an initial public offering of Trivago.
- The shares plunged to as low as $105 in trading after the market closed Thursday, before .
The Big Picture
Expedia is working to integrate its acquisitions of Orbitz.com and HomeAway, additions which have helped boost its revenue and defend against Airbnb Inc.’s encroachment on the accommodation market. Still, the travel giant is facing numerous challenges, with terrorist attacks in Europe making tourists fearful, hotel consolidation making it harder to charge high percentages of booking fees, and the possibility of new players like Google stepping up their presence in the market.
- “What we have seen is a significant impact to the areas that have been hit by these attacks,” Okerstrom said in a phone interview. Travel to France was down from a year earlier, he said, cautioning that travelers aren’t canceling their plans completely, with destinations in Spain and Ireland becoming more popular.
- Still, the frequency of attacks has changed things and might have a more lasting impact on the travel industry, Okerstrom said.
- “The pace of this has got us into unchartered territory,” he said.