Consumers appetite for travel is reaching new heights after years of waning demand. Earnings this season have highlighted the recent trend with major hotel operators, airlines and cruise liners all reporting better-than-expected earnings. But that hasn't been the case for online travel agencies.
Last week, Expedia delivered disappointing results largely due to higher promotions, increased discounting, and falling demand in Europe. First-quarter results saw earnings decline 7 percent to 83 cents per share, 7 cents higher than the Estimize consensus data. But revenue missed forecasts by over $50 million, which caused the stock to tumble shortly after its report.
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Management stated that higher promotions and discounts led to a 5-percent decline in revenue per room night for the quarter. Travel demand to mainland Europe has tailed off significantly after the recent terror attacks in France, Belgium and Germany. Those trends could be echoed when peers TripAdvisor and Priceline report results this week.