A surge in vacation rental bookings is helping boost revenue for Expedia Group as the travel giant continues to weather the ongoing COVID-19 storm.
Seattle-based Expedia reported Monday that gross bookings on its vacation rental platform Vrbo “increased significantly” in May and June compared to last year. The company said “drive-to destinations” has been one of the first segments of travel to recover from the global health crisis that has restricted travel worldwide.
Expedia said its total gross bookings, or the total retail value of transactions conducted through its platform, were down about 45% in June, an improvement from an 85% dip in the second half of March and in April as COVID-19 began spreading across the globe.
Cancellation rates have moderated as well, but are still higher than pre-COVID levels.
“Despite the recent improvement in booking trends, it remains difficult to predict the duration of the impact from the virus going forward, and there continues to be ongoing risk, including if there is a reacceleration in COVID-19 cases that leads to further travel restrictions,” Expedia said in a SEC filing.
The company also said that it 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 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. Vrbo released new cleanliness guidelines for homeowners and added a cleanliness search filter to its site in May.
Wedbush analyst James Hardiman said in a new report that with its Vrbo unit, “Expedia has the highest exposure to the hottest part of the market right now, and significantly less exposure to less desirable apartment and condo supply.”
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 Peter 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.
Expedia’s first quarter revenue was down 15% to $2.2 billion.
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 is up about 70% in the past three months. Shares were up more than 4% on Monday.
Expedia last week shut down Trover, a photo-sharing hub it acquired in 2016.
Expedia Group includes brands and sites such as Vrbo, Travelocity, Orbitz, and many others, in addition to the flagship Expedia.com.
