Expedia’s sales and marketing costs continue to blow out with the online travel giant on track to spend around US$2 billion in this area in 2013. In the March quarter Expedia spent US$492 million on pushing product. That’s almost half of every dollar it brings in – 48.6% of revenue, an increase of almost 3% on 2012.
It was one reason Expedia reported a net loss of US$104.2 million for the quarter despite increasing revenue 24% to just over US$1 billion. Investors have reacted badly sending the stock down 14% over the past few days.
They were also concerned by the Expedia reducing its outlook for organic earnings primarily due primarily to weakness in its Hotwire business. Expedia however claimed this would be offset by the strong performed of its newly-acquired travel search engine Trivago. The company is forecasting pre-tax profit growth for 2013 in the low double digits.