The cost of doing business is today’s ultra-competitive global Online Travel Agency marketplace has hurt Expedia Inc, as has the transition to a new technology platform, known as E3. Overall costs increased 12% led by a blow out of 29% in technology expenses in the three months to December 31. Selling and marketing expenses grew 11%, cost of revenue 5%, and general and admin 19% over that period.
Expedia also reported its full-year results for 2011 where a similar pattern emerged with total costs and expenses up 18%. This offset healthy growth in global hotel revenue, which also increased 18% compared with 2010. However, airevenue fell 4%. As a results its annual results were flat. Adjusted earnings before interest, taxes, depreciation and amortisation grew just 1% in 2011 to US710m, while operating income fell 4% to US$479.6m.
Tnooz reports CEO Dara Khosrowshahi told financial analysts that Hotels.com and the Expedia hotel product have been migrated to the new tech platform, the air product will be on board by the end of the first quarter, but vacation packages aren’t expected to be transitioned “until the back half of 2012”.
See Tnzoo analysis.