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Booking, Expedia results show travel demand remains strong
May 5, 2023 Updated Fri., May 5, 2023 at 1:47 p.m.
Booking and Expedia both reported double-digit increases in gross bookings in the first quarter, signaling strong demand for travel despite high rates of inflation and a cloudy economic outlook.
At Norwalk, Connecticut-based Booking, whose properties include restaurant reservation platform OpenTable and discounted flight website Priceline, gross bookings were up 44% to $39.4 billion, the “highest quarterly levels ever,” Chief Executive Officer Glenn Fogel said in a statement.The company reported net income of $266 million, compared with a loss of $700 million in the same period a year earlier.
For Seattle-based Expedia, which provides pricing and availability information for airlines, hotels and car rentals and also owns Vrbo home-rental site, revenue was up 18% to $2.67 billion.Gross bookings, which include all travel service booked net of cancellations were up 20% to $29.4 billion.Expedia shares gained 4.7% in New York on Friday.
“There’s been a structural change in how consumers are thinking of spending and travel is at the top of the list,” Expedia Chief Executive Officer Peter Kern said in an interview Friday on Bloomberg TV.“There are still things people can do now that they haven’t been able to do in the past three years.” Kern said travel demand is strong and he doesn’t see “any real letting up of that.”
Despite a high rate of inflation, people have proved a willingness to spend on services and experiences even if they’re paring back on physical goods.Uber earlier this week showed resilience in its Uber Eats unit, where delivery bookings rose 8% and DoorDash reported revenue rose 40% in the first quarter.Royal Caribbean Cruises raised its full-year profit forecast past Wall Street estimates on the strength of travel demand.
Airbnb Chief Executive Officer Brian Chesky has said he expects a busy summer travel season as people prioritize vacations despite higher prices.Airbnb reports results next week.
But concerns about a potential economic slowdown could prompt consumers to pull back.Chesky acknowledged in an interview earlier this week that expensive airline tickets could put a damper on travel trends.So far, most travel companies, including Hilton Worldwide, have been able to raise prices aggressively and consumers seem willing to pay.
Booking Chief Financial Officer David Gould said the company “continued to see strong travel demand” in April “with room night growth versus 2019 that was slightly higher than the 26% growth we saw in the first quarter and with all our major regions growing at similar rates.”
But Booking’s shares slipped 3% in extended trading after the company reported adjusted earnings before interest, taxes, depreciation and amortization that missed estimates.Gould said adjusted Ebitda of $586 million was lower than the company’s expectations due to higher marketing expenses from trips booked for future dates.
The shares were down 1.7% Friday afternoon.
“While travel booking trends have remained robust, we recognize that there is uncertainty regarding the path of the global economy,” said Booking’s Fogel.“However, we believe we are well positioned to navigate any potential near-term economic uncertainty.”
In an interview with Bloomberg TV on Friday, Fogel said he sees the advances in artificial intelligence as “one of the most transformational experiences in our lifetime.” The company is already using a plug in with OpenTable and flight aggregator Kayak, and he said he wants to use AI to recreate the human travel agent.
Expedia said the company’s results were boosted by “accelerating deployment” of artificial intelligence and machine learning, “including our recent integration of ChatGPT into our iOS experience.” Kern said the technology is “in the early days, but people are definitely interested in it.”
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