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Expedia Inc reported its second quarter earnings today and one metric stood out to investors for its sluggish pace, namely, the pace of room night growth.
In the second quarter, the dollar volume of room nights booked through Expedia Inc brands grew only 12%, compared with a growth of 35% in the same period a year earlier.
The company chalked up some of the sluggishness to a falloff in bookings because of the recent terrorism attacks in Europe.
But some investors were concerned about whether some of the slowed pace was due to hotels launching marketing campaigns in favour of direct bookings, cutting out middlemen agencies and underpricing direct channels.
One investment analyst, Kevin Kopelman of Cowen and Company, estimates the typical discounts to be 2%-20% off the rates available on the OTAs.
A second self-inflicted wound was that digesting all of its recent acquisitions has slowed the pace of the company’s test-and-learn approach to user interfaces, which has slowed the pace of gains in conversion.
Earlier this year, Expedia argued that publicly available loyalty rates may be bad for hotel owners.
On the homefront, Expedia is reducing the size of planned construction on its 40-acre campus on Seattle’s waterfront, to save hundreds of millions in construction costs. The company will start with only the space it expects to need in the near future, building additional units as needed. The company intends to relocate downtown from a tower in Bellevue.