Net profit fell 32% to USD71.5 million at Expedia, the online travel conglomerate, for the second quarter despite a strong rise (16%) in revenue. CEO Dara Khosrowshahi cited increased marketing spend (+33%), tougher competition and the “negative impact” of TripAdvisor’s new meta-search engine as major factors.
“We continue to face a challenging competitive environment, especially in the U.S., with 3 major travel players entering the brand marketing space: Booking.com, TripAdvisor going forward and our very own trivago,” he said.
“This translated into weaker growth in Q2 for some of our highly profitable direct channels.
“The impact was more pronounced for Hotels.com and Hotwire, since Brand Expedia was able to offset the impact with strong performance in variable channels as its conversion rate continued to improve.
“We saw a broad negative impact of TripAdvisor, one of our largest marketing channels, moving to the metasearch model globally, impacting traffic, revenue and profitability.
“The transition has been difficult, and the environment is quite dynamic relative to our past history with them.
“We continue to work with TripAdvisor and are beginning to see signs of improvement in the channel relative to early results.
“They haven’t gotten to the same levels that we were with in TripAdvisor earlier in the year last year, but the results have been improving on a week-on-week basis.
“And we don’t anticipate any reason for that to change”.