Expedia Group followed its peers in the online travel industry in witnessing a staggering decline in business since the spread of the novel coronavirus, with total gross bookings down 39% in the first quarter.
The Seattle-based company reported total gross bookings of $17.89 billion, including a decline of as much as 90% in the second half of March as the pandemic took hold. Revenue fell 15% to $2.21 billion, its first quarterly drop in eight years. The adjusted loss before interest, taxes, depreciation and amortization was $76 million, or $1.83 a share, compared with a loss of 27 cents a year earlier. Analysts had projected a loss of $1.45 a share on $2.11 billion in sales.
“Like all travel companies, Expedia Group suffered a major reduction in business since the onset of Covid-19,” Chief Executive Officer Peter Kern said in a statement. “Fortunately, we were ahead of the game having implemented cost savings measures earlier this year, and with the added pressure from Covid-19 we accelerated and expanded our ambition on improving our long-term cost structure.”
The shares were up about 3.8% in extended trading in New York after closing at $79.58. They have fallen 26% this year, compared with an 8% decline of the S&P 500.
Expedia withdrew its full-year forecast in March as lockdowns began to halt flights and travel around the world. The company had already been struggling, cutting 3,000 jobs in February to simplify what had become a “bloated organization,” as it faced increasing pressure from Google in advertising and nimble startups such as Airbnb.
As part of the company revamp, Kern took over as chief executive officer in April. At the same time, Expedia announced it was raising $3.2 billion as the impact of the coronavirus began to weigh on the industry. In addition, Expedia made a “significant reduction” in costs for marketing and discretionary expenses and deferred certain capital expenditures, it said in the earnings report.
As the pandemic raged in March, Expedia saw “unprecedented” cancellation volume and moved to build self-service options for customers to cancel lodging and air bookings without speaking to an agent. As a result, cancellation inquiries for air travel managed without an agent increased to more than 95% in April from 65% in February.
“If there was an industry on the front lines bearing the full impact of coronavirus, I would say it’s travel,” said Naved Khan, an analyst at SunTrust Robinson Humphrey. “It is one of the sectors that has been hurt the most and is likely to lag during the recovery because until there is a vaccine people will limit their travel activities.”
Airbnb and TripAdvisor cut a quarter of their workforces, and Booking Holdings has been forced to apply for government aid.
Still, Kern said Expedia has seen cancellations stabilize and growth return in May. “What we’ve seen is green shoots in the areas you would expect, places where movement has become possible and people can start to think about their summer holidays,” Kern said on a call with analysts.