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Hotel room night growth accelerates despite difficult global economy
Expedia, Inc. announced financial results for its first quarter ended March 31, 2009. "Despite the economic environment we all must cope with these days, Expedia is engaged in more forward looking initiatives than ever," said Barry Diller, Expedia, Inc.'s Chairman and Senior Executive. "The test for us will be not in maximizing profitability at the cost of improving our services, but instead in the ground we gain competitively over the next years, both in extending our leadership and making true gains in the customer experience. This will be what differentiates us from others and is the key mission of the company."

"Our results for the first quarter, especially the improved momentum in transaction and hotel room night volumes, prove that Expedia can successfully drive unit growth despite an undeniably difficult environment," said Dara Khosrowshahi, Expedia Inc.'s CEO and President. "We effectively managed our cost base, reducing marketing spend significantly even while taking unit share. Our global realignment of resources is well in motion, which we believe will only improve our operational effectiveness and efficiency over time."

Gross Bookings & Revenue
Gross bookings decreased 11% (down 7% excluding the estimated impact from foreign exchange) for the first quarter of 2009 compared with the first quarter of 2008, driven by a decrease in the leisure segment. Domestic bookings decreased 11% and international bookings decreased 13% (down 1% excluding the estimated impact from foreign exchange).

Revenue decreased 8% (down 3% excluding the estimated impact from foreign exchange) for the first quarter, primarily driven by lower package, hotel and air revenues in our leisure segment, partially offset by increases in advertising and media and car revenues. Domestic revenue decreased 5% while international revenue decreased 14% (flat year over year excluding the estimated impact from foreign exchange).

Worldwide hotel revenue decreased 10% for the first quarter due to a 20% decrease in revenue per room night, partially offset by a 13% increase in room nights stayed, including rooms delivered as a component of packages and nights booked through Venere. Revenue per room night decreased primarily due to an 18% decrease in worldwide average daily rates ("ADRs").

Worldwide air revenue decreased 17% for the first quarter, primarily due to a 14% decrease in revenue per ticket, driven by lower commissions and overrides (in part due to timing of receipts), a lower mix of merchant air tickets, the negative impact of foreign exchange and lower consumer booking fees. Ticket volumes declined 4% reflecting lower passenger volumes due to carrier capacity cuts and softening traveler demand, partially offset by ticket volume share gains driven in part by our booking fee promotion beginning in March.

Worldwide revenue from products and services other than hotel and air (primarily revenue from advertising and media, car rentals and destination services) increased 5% for the first quarter due primarily to increased advertising and media revenue and increased car revenue.

Advertising and media revenue, including revenue from our TripAdvisor segment, increased 15% for the first quarter, accounting for over 11% of worldwide revenue. Package revenue decreased 18% compared with the prior year period primarily due to lower ADRs.

Revenue as a percentage of gross bookings ("revenue margin") was 12.17% for the first quarter, an increase of 51 basis points. Domestic revenue margin increased 81 basis points to 12.51% while international revenue margin decreased 13 basis points to 11.42%. The increase in worldwide and domestic revenue margins was primarily due to an increased mix of advertising and media revenues as compared to first quarter 2008. The decline in international revenue margin was primarily due to lower hotel margins, in part as a result of the negative impact of foreign exchange.

Profitability
Gross profit for the first quarter of 2009 was $492 million, a decrease of 8% compared with the first quarter of 2008 primarily due to decreased revenue. OIBA for the first quarter increased 3% to $130 million and increased 212 basis points as a percentage of revenue to 20.4%, driven primarily by a decrease in sales and marketing expenses at a faster rate than the decrease in revenue. Operating income increased 3% for the same reasons OIBA increased, in addition to lower amortization of intangible assets, partially offset by a $9 million restructuring charge taken in the first quarter of 2009.

Adjusted net income for the first quarter decreased $8 million compared to the prior year period primarily due to a decrease in interest income and an increase in interest expense partially offset by higher OIBA. Net income decreased primarily due to the same factors impacting adjusted net income as well as the restructuring charge taken in the first quarter of 2009 partially offset by lower amortization of intangible assets. First quarter adjusted EPS and diluted EPS were $0.21 and $0.14, respectively. Adjusted EPS decreased 13% and diluted EPS decreased 18%, primarily as a result of lower adjusted income and net income, partially offset by lower net share counts. Vicky Karantzavelou - Tuesday, May 05, 2009