Yahoo Finance Expedia Swings to Profit Even After Omicron Setbacks
(Bloomberg) -- Expedia Group Inc. reported fourth-quarter profit that topped analysts’ estimates, benefiting from a holiday travel season that proved resilient despite the onset of the omicron Covid-19 variant. Shares gained in extended trading.
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Net income was $276 million in the three months ended Dec. 31, compared with a loss of $412 million in the quarter a year earlier, the online travel company said Thursday in a statement. Earnings, excluding certain costs, were $1.06 a share. Revenue more than doubled to $2.28 billion, while analysts, on average, projected $2.29 billion.
“It burned bright and fast,” Expedia Chief Executive Officer Peter Kern said of omicron in an interview. “It was increasingly like a bad news, good news, story for us.”
Expedia, which hosts reservations for traditional lodging like hotels and offers short-term rentals through its platform Vrbo, has been buffeted by the ebb and flow of the pandemic. After being pummeled initially by a near-complete halt in travel as the virus set in two years ago, Expedia saw a resurgence last year as borders and businesses opened and travel picked up, at least in some markets.
Then, the omicron variant swooped in late last year, again shuttering businesses and prompting a massive disruption of flights and vacation plans. For the week ended Dec. 12, Expedia’s U.S. net room nights booked declined by 18% from 2019, according to market researcher YipitData. With infection rates receding, analysts expect travel will revive again this spring and summer. Those expectations have pushed Expedia shares to a record high.
Kern expects a continued travel recovery if the course of the virus stays the same. “People, to the extent that they want to get out and live their life and see things, they’re going to do it,” he said.
After the initial downturn in the early months of the pandemic, Expedia, like its rival Airbnb Inc., benefited as people took advantage of work-from-anywhere policies to explore other places. That strength is likely to continue this year, as short-term rental reservations across online travel agencies for the first half of 2022 are significantly higher than 2021, JMP Securities analyst Andrew Boone wrote in a note in late January.
“It was fortunate for us that we’re in that business and we clearly leaned into its moment as much as we could, and I think we’ve been really successful at that,” Kern said.
Expedia, based in Bellevue, Washington, said gross bookings, which represent the total retail value of transactions, including taxes and fees, were $17.5 billion in the fourth quarter, compared with estimates for $19.5 billion.
The stock gained about 5% in extended trading after closing at $197.52 in New York. So far this year, shares of Expedia have risen 9.3%, compared with a 9.6% gain from rival Booking Holdings Inc. and a 3.3% advance in shares of Airbnb.
(Updates with comments from CEO beginning in the third paragraph.)
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