Travel demand was mixed in the third quarter for Expedia Group, starting slow and then gaining pace in the final two months.
Expedia Group CEO Ariane Gorin said the travel environment was healthy overall in the quarter, especially on the international side.
"International demand was stronger than the U.S., and compared to last year, booked room nights grew in the low single digits in the U.S., low double digits in Europe and high teens in the rest of the world," she said during the company's third-quarter earnings call.
Bookings growth for Expedia's consumer brands outside the U.S. were up by five points in the third quarter. Booked room nights for the company were up 9% in the quarter year over year, with total gross bookings up 7% year over year.
Prices held up for both hotels and vacation rentals, but the company noted continued pricing pressure on air and car travel, Gorin said. There was again positive momentum as the quarter went on, though, as air ticket prices increased in September for the first time all year.
Expedia's vacation rental company, Vrbo, had its first full quarter of bookings growth this year, she said. At the end of 2023, Expedia completed the final part of migrating Vrbo to its single front-end stack through the global launch of its new app in the U.S.
Expedia added about 1 million units to Vrbo's platform, skewing toward urban markets and shorter stays to appeal to a wider audience. Gorin said this led to a slow start to the brand this year, but they're confident its formula will lead to continued growth.
"As you think about Vrbo going forward, we need to continue that formula of continuing to improve the product, continue to expand the supply and having great marketing," she said.
Vrbos have traditionally been geared toward beach and mountain destinations, so there is room to grow as consumers become acclimated with the rise in urban supply.
"Ultimately, what we want to do is make sure that people know the Vrbo brand [and] they understand that when it comes to Vrbo, they're going to have whole homes and apartments. They won't have shared spaces," she said.
When asked about regulations against short-term vacation rentals in states such as California and Hawaii, Gorin said Expedia works with local government to ensure their properties are up to regulation.
"We believe there's a big market out there for alternative accommodations, just like there is for hotels and the like. That's not impacting our view of our growth potential," she said.
Gorin provided an update on OneKey, Expedia's rewards program that incorporates all of its major brands that launched in July 2023. She said the company has been "pleased with the results so far."
About 30% of the company's travelers are members, accounting for about 50% of its room nights. She said 30% of travelers who are redeeming OneKey cash on Vrbo after earning it on a different Expedia platform are new Vrbo customers.
The technology aspects of the rewards program has allowed Expedia to drive additional demand.
"The OneKey technology is giving us capabilities that we didn't have before, so things like gifting OneKey cash that has an expiry date, which allows us to be more promotional in order to drive purchases in a short window," she said.
Expedia didn't address the recent rumors that Uber was considering acquiring the company. In an appearance on CNBC on Monday, Expedia Chairman Barry Diller said an Uber deal was "just not going to happen."
Third-quarter performance
Expedia reported lodging gross bookings of $20 billion in the quarter, up 8% year over year, according to its third-quarter earnings release. Hotel bookings were up 10% compared to 2023.
It posted a revenue of $4.1 billion, up 3% from 2023. Its business-to-business revenue of $1.2 billion was an 18% increase year over year.
The company reported net income of $684 million in the quarter, a 61% increase over 2023 levels. Adjusted net income was $809 million, only a 4% increase year over year.
Adjusted earnings before interest, taxes, depreciation and amortization in the quarter was $1.3 billion, up 3% year over year.
Year to date, Expedia has repurchased approximately 12 million shares for $1.6 billion.