The latest results from US travel industry giants Expedia and Sabre Holdings do not make pretty reading for either investors or the online travel industry.
In short, sales are up but profits are down thanks to rapidly shrinking margins and increasing costs. 
Expedia’s profit of US$23 million for the first quarter was 51% less than a year before.
Sabre Holdings – which apart from the GDS, owns Travelocity (Zuji) – did slightly better. Its first quarter profit of US$32 million was only 34% under the weather.
Both stocks have been hammered as a result. Expedia shares fell around 30% in a day. Sabre’s share price has been on a slow descent, shedding around 25% of their value since January.
Headlines from the Expedia results include:
  • Bookings value up 14%, but revenue margin down by around 10%
  • Airline margins down 9%
  • Hotel margins down 7% (on a revenue per room basis)
  • Less Americans, in particular, are buying its holiday packages
  • Costs increased more than 10%, particularly in marketing
At Sabre:
  • Operating costs grew 26.5%
  • The operating margin fell more than 30% (to 9.2%)
  • Travelocity hotel room night sales were up 54% (probably due to recent acquisition
  • Total packaging revenue grew 38% (see above)
  • GDS revenue increased 7%
Interesting reading, don’t you think?
So what’s the take-out, takeaway, whatever?
Become a supplier and sell direct (ha, just kidding).
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