Urban Escapees Provide Some Comfort to Travel Industry
May 21 2020 - 5:39PM
Dow Jones News
By Laura Forman
Expedia is giving new meaning to the term "cabin fever."
The global pandemic had reduced investors' expectations for
quarterly results to virtually zero. That explains why investors
reacted only mildly to Expedia's first-quarter report after the
closing bell Wednesday in which revenue fell 15% from a year
earlier.
While declining to give concrete guidance for the second
quarter, which investors largely expect to be the trough, the
company also dropped a small nugget of hope.
Expedia said business in May has been looking "considerably
better" than late March and early April, citing "really markedly
better" performance in its homestay business, Vrbo. The company
said this is likely driven by people looking to get out of densely
populated cities for the summer with their families.
This, of course, should benefit all alternative accommodation
players, including online travel agent Booking Holdings and Airbnb,
the latter of which boasts more than seven million listings
world-wide. But while smaller than Airbnb, Expedia's homestay
business may have a coronavirus upper hand: SunTrust analyst Naved
Khan notes that whole homes have been a historical focus for Vrbo,
many of which are in secondary and tertiary towns. While Airbnb
says the majority of its listings are also whole homes, it also has
a big focus on shared rooms and urban apartments, which may be less
on-trend at the moment.
In its first-quarter report, Expedia said it changed its segment
reporting such that it didn't break out revenues for Vrbo. As such,
it's difficult to know exactly how Vrbo's business has performed
amid the pandemic. As of the fourth quarter, Vrbo accounted for
just 9% of Expedia's overall sales.
While the business is small, it could offer some positive signs
of a more general travel recovery trend as the country opens back
up. Mr. Khan said property managers in the vacation rental space
with whom he spoke are seeing a bounce in bookings, particularly in
destinations to which travelers can drive rather than fly.
Investors should stay grounded as well. Expedia's gross bookings
in the first quarter were down 39% year-over-year, an indication
that travel in the next few months should continue to be light.
Time will tell just how desperate travelers are to flee the
coop. But it seems more clear that those who do leave are mainly
looking for another nest to inhabit.
Write to Laura Forman at laura.forman@wsj.com
(END) Dow Jones Newswires
May 21, 2020 17:24 ET (21:24 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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