Expedia Group (NASDAQ: EXPE) has been one of the companies hardest hit by the coronavirus pandemic and has only very recently seen a respite in its gross orders and earnings. In February 2021, the company’s revenue fell by 57% due to international travel restrictions and quarantine. The stock did well, turning back towards positive profits, and made significant gains on the top and bottom lines. Expedia is currently down 29.44% YTD and trading 38% lower MarketBeat consensus target price. As travel restrictions continue to ease through fiscal 2022, Expedia looks set to recover sharply to a new 52-week high.
Restoration of Expedia in the travel industry
In the first quarter of 2022, Expedia reported a significant improvement in all of its financials compared to the first quarter of 2021, with strong revenue growth and a significant reduction in net and operating profit losses. Executives said Omicron impacted orders early in the quarter before disappearing and returning to new highs since the start of Covid. Travel to Europe has also been affected by Russia’s invasion of Ukraine, but that number has risen to new recent highs as well. For the remainder of the year, the company expects an increase in summer tourist travel, as well as an increase in urban, business and international travel.
Expedia reported growth in gross orders and revenue. Gross orders increased by 58% from $15 billion in Q1 2021 to $24 billion in Q1 2022. The company’s revenue jumped sharply from $1.2 billion to $2.2 billion, an 81% increase. Shareholders would also be pleased to see its loss drop 80% over the same time period from $606 million to $122 million.
Looking at the company’s segments, you can see how far the recovery of Expedia and the travel industry as a whole has come. Expedia recorded the largest revenue growth in its B2B travel segment, up 135% to $432 million. The retail travel segment continued to see strong year-over-year growth, growing 70% to $1.7 billion. One explanation for why retail is currently lagging behind B2B is that many international travel destinations popular with tourists, such as France and Japan, remain closed. However, obtaining a business visa to these countries is possible for investors and heads of foreign companies. As countries ease their border restrictions, retail travel will rebound sharply, with 81% of US travelers in 2022 reporting they are excited about traveling abroad.
Rising Expedia Costs
Despite a significant improvement in macroeconomic and financial performance, Expedia did suffer from significantly higher costs compared to 2021. The largest increase in the company’s expenses was due to sales and marketing expenses. They increased by 102% and 105% respectively. The reason for the increase in these direct costs was due to the fact that…