The pandemic crushed Expedia Group’s business during the second quarter as the travel giant saw revenue sink 82% year-over-year to $566 million.
Expedia missed expectations for Q2 revenue and earnings per share, which came in at -$4.09.
The Seattle company’s lodging revenue was down 78%; air tickets sold was down 85%; and advertising/media revenue dipped 91%.
Shares were down more than 3% in after-hours trading.
“The second quarter of 2020 represented likely the worst quarter the travel industry has seen in modern history and Expedia was of course not spared,” Expedia CEO Peter Kern said in a statement.
April was the “bottom of the trough,” Kern said, as cancellations exceeded new bookings.
Kern said gross bookings, which were down 90% in the second quarter, improved through May and June but are still down considerably year-over-year.
“It is clear though that it will be a bumpy and inconsistent recovery with virus numbers being volatile around the globe and country and region restrictions changing all the time,” Kern said in a statement.
This week RBC Capital said online travel is experiencing a “slightly faster recovery” than previously expected, though a resurgence in COVID-19 cases could slow that growth. The firm cited Expedia’s fast-growing international markets and has a 12-month stock price target of $105, up nearly 30% from today. Update: In a post-earnings report, RBC lowered its price target to $93. “Fundamental trends were very negative, but the worst is hopefully behind EXPE,” the firm noted.
Earlier this month Expedia gave a business update, noting a surge in bookings on its vacation rental platform Vrbo. The company cited “drive-to destinations” as one of the first segments of travel to recover from the global health crisis that has restricted travel worldwide since March.
Expedia said today that Vrbo has a higher revenue per room night than the rest of its lodging business.
“People have a real interest in the whole-home model and being able to have their families alone and not in a shared space,” Kern said on an earnings call. “Vrbo really led the way for us.”
Expedia last month announced that it was retiring its HomeAway brand and bringing its entire vacation rental portfolio under the Vrbo name. Expedia paid $3.9 billion in 2015 to acquire HomeAway, which bought Vrbo in 2005.
Vrbo competes with Airbnb and is live in 15 countries. Interest in vacation rentals and camping-related accommodations is up as Americans look for low-risk travel alternatives.
Expedia is exploring additional cost-cutting measures and expects to exceed $500 million in annual run-rate savings this year. Expedia previously said in February — before the pandemic — that it was targeting $300-to-$500 million in annual cost savings in an effort to “streamline and focus” the business. The company laid off about 3,000 employees earlier this year.
Expedia responded to the economic and health crisis by raising $3.2 billion in debt and equity in April. It also made additional cutbacks including employee furloughs and executive salary reductions, and named longtime board member Kern as its new CEO. Kern had been overseeing the company’s operations with Chairman Barry Diller since the ouster of former CEO Mark Okerstrom and CFO Alan Pickerill in December.
In addition to the COVID-19 crisis, Expedia also continues to deal with from Google’s dual role as a rival in online travel, and a key source of customers through search traffic and paid advertising.
Since nose-diving in March, Expedia’s stock has risen steadily and has nearly doubled over the past four months.
The company last year moved to a new 40-acre waterfront campus in Seattle.
Expedia Group includes brands and sites such as Vrbo, Travelocity, Orbitz, and many others, in addition to the flagship Expedia.com.
