In what may be one of the clearest signs yet that the travel
industry is emerging from the dark days of the COVID-19 pandemic, Expedia Group is
reporting figures for net income and adjusted EBITDA for the third quarter of
this year that nearly match the figures from the same quarter in 2019 – when
the industry was untouched by coronavirus.
Net income in Q3 of this year was $362 million – close to the $409
million in Q3 2019, and many multiples better than last year’s Q3 loss of $221
million.
Adjusted EBITDA in the third quarter was $855 million – the
second quarter in a row of positive adjusted EBITDA - compared to $912
million in the same period of 2019 and an improvement of 181% over last year’s
Q3 figure of $304 million.
“We are very pleased with the quarter we had in Q3, nearly
matching our adjusted net income and EBITDA from 2019. But for [the coronavirus Delta variant], this would
have been our most profitable quarter ever,” says Peter Kern, vice chairman and
CEO of Expedia Group in a call with analysts to discuss the results.
“I think it’s a tremendous milestone for the company to be
here while we are still in the throes of COVID, and still coming out. It’s a testament
really to the work we’ve done to simplify company, to focus on technology and
to run the business more efficiently.”
Expedia Group revenue in Q3 was $2.96 billion, nearly double
last year’s Q3 figure of $1.5 billion and close to the 2019 Q3 figure of $3.55
billion.
Gross bookings – the total retail value of transactions booked including taxes
and fees and adjusted for cancellations and refunds - totaled $18.7 billion in
the quarter, compared to $26.9 billion in Q3 2019.
Kern says the company is seeing recovery across all
segments, including corporate and international travel, but it is still led by
leisure and domestic travel and particularly Expedia Group-owned home-sharing platform Vrbo.
“About half our [Vrbo] customers so far in 2021 – more than
half – have been new customers,” he says.
“We expect to book in excess of $2 billion in earnings for
new Vrbo hosts who came on the platform this year. And looking ahead we’re already
seeing better bookings for next summer than we saw this time last year. So the
trends continue to be quite strong there.”
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As a percentage of total revenue in the third quarter of
2021, lodging accounted for 78%, advertising and media accounted for 7%, air
accounted for 2% and all other revenues accounted for the remaining 13%.
Stayed room nights in Q3 were still down 33% compared to the
same period of 2019. When asked about those results – and why Expedia Group is
lagging behind room night data reported by
Booking Holdings on Wednesday, Kern says: “You have to remember that they report
on booked, we report on stayed, so it’s sometimes challenging to compare. ... They’ve
always been better in smaller markets, long-tail markets. We’ve always been really
strong in big cities.
"We are less focused on room nights than room dollars, if
you will. We could book a million more one-star hotel nights, and it wouldn’t
mean much to our [profit and loss statement], and we could book 100,000 five-star hotels and it
would mean a lot. You have to take it all in balance, but we are feeling good
about the recovery, and in general our numbers domestically are running ahead
in lodging of where we were two years ago.”
Regarding the sale
of Egencia to American Express Global Business Travel, which closed on Monday,
Kern says the deal is “emblematic ... of our desire to power more of the
industry.”
“We want to power Amex GBT with our Expedia Partner
Solutions business, with our technology, with our supply, and that is something
we will continue to build on as the months and years unfold.”
In September Expedia Group also announced plans
to unify its loyalty programs into a single program spanning all global brands
and products.
“We think it will be the most powerful loyalty program in
the industry, and we are really excited about bringing that extra usability and
added value to our customers through that loyalty plan,” Kern says.
“You should expect to see us do more of that. We will be
looking for more ways to unify our brands.”
Kern says part of that unification will come through marketing.
In the third quarter of 2021, selling and marketing expenses increased 150% year-over-year
to $1.3 billion. Kern says the company has been improving its marketing
capabilities and now, as the recovery picks up, it will become “much more
aggressive.”
“We intend to go on the offense with all the new tools we
have in our arsenal in our marketing group. And we expect to ... expand share across
the world,” he says.