Consecutive Quarterly Losses Recorded
Expedia sustained losses in each of the four quarters in 2020, following a profitable business in 2019. The travel company posted revenues of $920 million and a loss of $2.64 per share, to miss on the Street’s expectations of a revenue of $1.12 billion and a loss of $1.97 per share.
Peter Kern, Expedia’s chief executive, said that there are indications of a more positive future following vaccine breakthroughs; however, the resurgence in coronavirus cases and further travel restrictions continue to weigh on the company’s business.
“As a result, Q4 did not show any real sequential progress other than some signs of modest improvement around the holidays that carried into the early part of 2021,” Kern said.
In a response to the crisis, the travel business giant raised $3.2 billion in debt and equity in April last year and initiated further cutbacks, including layoffs and executive salary cuts. During that period, the company appointed Kern as the new CEO, who was previously a board member.
Kern and the company’s Chairman Barry Diller have been leading the company since the ouster of former chief executive Mark Okerstrom and CFO Alan Pickerill in December 2019.
Kern also said the company continues to battle the dual role Google plays as a rival in online travel as well as a key source of clients using search traffic and paid advertising.
“I think Google’s a problem — it’s a problem for everyone who sells something online, and we all have to struggle with that,” Kern said in an earlier interview.
Last year, travel spending in the United States (US) plunged by 42% to $679 billion, according to Tourism Economics. The sector started recovering after the easing of lockdown measures; however, it is still short of its pre-coronavirus levels. Similarly, hotels reportedly lost over $46 billion in revenue.
Shares of Expedia dropped slightly after the company missed revenue and profit expectations in the holiday quarter. Business analysts are also not expecting to see much upside in the Expedia stock in the near future.
“If you look at Expedia on the other hand, that uptrend still very much has positive momentum across time horizons and I’m not really one to fight that. But what I would say is that the risk reward is not great from a technical perspective,” Stockton said.
Expedia witnessed a 57% drop in business revenue to $5.2 billion for 2020 and a decline of 66% in gross bookings to $36.7 billion as the COVID-19 pandemic weighed heavily on the travel industry last year.