Seattle-based Expedia Group was the best-performing stock in the S&P 500 Friday, leading online travel shares higher after delivering better-than-expected third-quarter results and upbeat commentary on the rest of the year.
Shares of Expedia advanced 19%, the biggest jump in three years, and closed the week with a gain of 21%. Airbnb and Bookings Holdings also rose, closing up 6.2% and 0.7% respectively.
The travel companies said on conference calls that consumers continue to spend on leisure travel despite inflationary pressure. They posted better-than-expected third-quarter results, buoyed by the strong summer travel season.
Asia Pacific showed a strong recovery and recorded relatively faster growth than other regions as the last of the pandemic-related global travel restrictions have come down, allowing consumers to travel across borders and return to high-density urban destinations.
Expedia announced a new $5 billion share buyback authorization, along with its upbeat results, and reiterated its full-year outlook for double-digit revenue growth with margin expansion.
Expedia’s executives also signaled confidence in further benefits from a years-long technical upgrade and a new loyalty program. That’s despite missing on a bookings metric due to the fires in Maui, Hawaii.
For the fourth quarter, Expedia expects gross bookings growth to be relatively in line with third-quarter levels. The company sees modest acceleration in revenue growth, taking into account the uncertain geopolitical environment.
Airbnb gave a disappointing outlook that indicated further deceleration in revenue growth and nights booked. It will be monitoring macro and geopolitical factors that could reduce travel demand as it saw early volatility and broad softness in the period.
Still, the shares finished up 7.5% for the week.
Bookings Holdings, which has relatively bigger exposure to markets outside the US and especially the Middle East compared to peers, reported cancellations in Israel and a drop in bookings outside the country in October as people around the world absorbed the news about the Israel-Hamas conflict.
The company, the parent of Priceline and Kayak, said room night growth recovered toward the end of the month and its fourth-quarter outlook for that metric was slightly ahead of estimates.
Travel Resilience
The companies remain upbeat about travel demand for the year ahead and the long term. Certain parts of the industry, such as air travel, haven’t fully recovered to pre-pandemic levels.
“People are catching up with all things they didn’t get to do during those three years,” Glenn Fogel, chief executive officer of Booking Holdings, said in an interview. “In the summer, we saw a big shift that Americans want to go to Europe. And we’re still seeing that too.”
Travel in the US and Europe has surpassed pre-pandemic levels, and Fogel said China is one of the last holdouts.
“Everyone is well aware that outbound China has not yet recovered anywhere near where it was pre-pandemic,” he said. “It’s coming along, but there’s still a lot more to come there.”
