Expedia Finds Nice Customer Engagement Lift from HomeAway

Last week Expedia implemented some significant changes at HomeAway to accelerate the transition of the platform from advertising to transactions, according to Expedia CEO Dara Khosrowshahi.

“In the U.S., we’re moving to a single and simple subscription model of $349 annual for listings that are online bookable and $409 for those that aren’t,” Khosrowshahi said during the April 28 first-quarter earnings call, according to Seeking Alpha. “This will allow us to begin to optimize the sort and the properties consumer see by matching their unique travel preferences with the right listings while driving booking volume for owner and manager communities. With booked transactional revenue up 170% year-over-year in the quarter, we took the opportunity to more than double our direct marketing investment in order to drive more traffic to our sites and partners, while also offsetting some weakness that we’re seeing in Google SEL volumes for some of our brands.”

Khosrowshahi said these model changes and marketing increases, along with investments and product and technology talent, will pave the way for an improved strategic and operational footprint in the category “that’s becoming more and more popular with travelers all around the world. We are also seeing encouraging volume trends in the alternative lodging category for Brand Expedia and Hotels.com, which bodes well for a future state when we fully interweave supply and demand across all product categories within our global lodging marketplaces.”

Khosrowshahi is excited about Expedia’s fiscal start to 2016.

“We are off to a solid start in 2016 with our financial performance coming in a bit better than expected pretty much across the board,” he said. “This was underscored by continued strong momentum in the unit growth with global room nights up 37%, air tickets up 52%, car days up 48%, and advertising and media revenue growing 44%. Results were strong in Q1 across all of our major brands , resulting in organic room night growth of 24%, consistent with last quarter despite about 500 basis point harder comp. Brand Expedia and Hotels.com each saw healthy room night growth across all regions with Hotels.com accelerating in Q1 versus Q4.”

Khosrowshahi believes that, going forward this year, overall room night growth will moderate due to harder comps and law of large numbers, largely offset by a decrease in headwinds on revenue per room night.
“The Orbitz integration is going well with Orbitz.com and CheapTickets now on the Brand Expedia platform,” he added. “We are particularly pleased with hotel conversion and room night production on both Web sites, which are benefitting from the upgrade of technology platform along with a depth and breadth of our hotel inventory. We have completed the move of hotel club traffic and customers over the Hotels.com and we expect the eBooker’s migration to be complete this summer. Integration affords for Orbitz for Business and Orbitz Partner Network are on track that will take us through 2016 and beyond in certain cases.”

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