Booking.com Rises While Expedia Plummets: The Full Story Unfolds Here

Published on May 3, 2024

By: Rana Pratap

Booking.com rises while Expedia plummets. Explore the travel industry’s shift and its pivotal choices in this unfolding saga.

Expedia Group Inc.’s stock plummeted to its lowest value since November, following a lackluster performance in first-quarter bookings and a downward revision of its annual projections. The setback was attributed primarily to a sluggish rebound in its vacation rental segment.

On Friday, in New York, the stock price nosedived by up to 14% to $116.50. This followed a downgrade by analysts at Piper Sandler from ‘overweight’ to ‘neutral’, citing deteriorating growth in bookings and elusive margin gains despite technological advancements.

The sluggish pace of recovery at Vrbo, a significant factor in the group’s underwhelming gross bookings, was highlighted by Expedia’s CEO Peter Kern during an earnings call on Thursday. Kern noted that Vrbo had ceded market share to competitors like Airbnb Inc. and Booking Holdings Inc., which manages several well-known brands including Kayak and Priceline. He also mentioned a substantial and costly technical overhaul completed late last year that consolidated Expedia.com and Hotels.com onto a unified platform.

Amidst these challenges, Expedia has committed to a record marketing expenditure this year to compete more fiercely in the vacation rentals market against Airbnb, following its extensive tech update. However, the shift in traveler preferences from rural retreats and resorts—Vrbo’s stronghold—to urban centers due to easing travel restrictions has compounded the company’s difficulties. Unlike Airbnb, Vrbo does not engage in the shared-home sector. Conversely, Expedia experienced gains in its urban-centric hotel business.

Despite these setbacks, the travel sector is anticipated to contribute a historic $11.1 trillion to the global economy this year, outpacing pre-pandemic levels. Nevertheless, online travel firms remain cautious, aware of the challenges in surpassing the robust early 2023 season.

The global market’s recovery has been patchy, with stagnant growth in the US contrasting with stronger persistence in Europe and Asia Pacific, as reported by Jefferies analysts. This uneven recovery has disproportionately affected Expedia, which primarily operates in the US, unlike Booking, which has a larger footprint in Europe.

On a brighter note, Booking reported surpassing expectations with its first-quarter room night reservations and gross bookings. Despite disappointing guidance for the second quarter due to Middle Eastern geopolitical tensions, Booking’s shares surged by nearly 8% on Friday, marking the largest one-day increase since the previous August.