Expedia trades profit growth for increased revenue

During its Q3 earnings call, Expedia reported a 1.4-percent drop in profit for the quarter citing growing expenses, but contributions from its acquisition of home-sharing platform HomeAway were part of a net revenue increase of 33 percent, reaching $2.58 billion.

Mark Okerstrom, Expedia's CFO and EVP of operations, said that performance across the majority of the company's brands was better than expected, and served to offset weaknesses in Brand Expedia and Hotwire. Hotel revenue grew 15 percent in Q3, while gross bookings were up 21 percent, average daily rates rose around 1 percent and revenue per available room decreased less than 2 percent.

Okerstrom said technology and content expenses have been growing faster than revenue for Expedia due to the company's hiring of new tech teams in early 2016, as well as the integration of Orbitz into the Expedia system. However, he expects to see continued deceleration of technology and content expenses, as much as 20 to 30 percent, for Q4 and early 2017.

HomeAway is proving to be a major asset to Expedia, posting a 61 percent revenue increase, reaching $210 million. Expedia bet big on the sharing economy when it bought HomeAway for $3.9 billion, and spent a further $1.3 billion for its purchase of Orbitz, creating a reputation for the company as an acquisition engine. However, Dara Khosrowshahi, president and CEO of Expedia, said that acquisitions may slow down as a result of high asset prices. 

Khosrowshahi also called the company's weaker performance in Q2 "self inflicted," and a "lesson in humility," citing weak site stability and flawed experimentation.

"We had to get our own house in order. So I think it's difficult to compare our results and trends to macro trends because we went through a lot of changes this year," Khosrowshahi said. "As far as the re-acceleration in Q4... it's early. But we like the trends that we're seeing."