Company Reports

Shares of leading online travel agency companies Airbnb, Booking, and Expedia have declined about 10% during the last few trading sessions on fears that wide-moat Meta's AI agent, Muse, will disintermediate the platforms.

While geopolitical conflict is presenting some near-term headwinds to travel demand in the Middle East, Expedia's migration during 2020-24 to a unified platform, which shares marketing, data, supply, and loyalty (One Key) across its brands, versus the previous siloed structure, has supported its network advantage, the source of our narrow moat rating. This investment was funded in part by cost efficiencies during 2020-21, where Expedia achieved the removal of $700 million-$750 million in annualized run-rate fixed costs, as well as $200 million in variable costs.

Expedia's second-quarter revenue increased 14%, ahead of its 9%-11% guidance. Adjusted EBITDA margin expanded 196 basis points, beating its 75-basis-point outlook. The firm raised its 2026 sales growth target for 2026 to 9%-10% from 6%-9% with a 150- to 175-basis-point margin increase.

While geopolitical conflict is presenting some near-term headwinds to travel demand in the Middle East, Expedia's migration during 2020-24 to a unified platform, which shares marketing, data, supply, and loyalty (One Key) across its brands, versus the previous siloed structure, has supported its network advantage, the source of our narrow moat rating. This investment was funded in part by cost efficiencies during 2020-21, where Expedia achieved the removal of $700 million-$750 million in annualized run-rate fixed costs, as well as $200 million in variable costs.

Despite a 2-percentage-point headwind from the Iran war and Mexico, Expedia's first-quarter bookings grew 13%, above its 10%-12% guidance. Adjusted EBITDA expanded by 591 basis points to 15.8%, its highest first-quarter mark in 15 years, on AI-led marketing and customer service efficiencies.

Expedia's migration during 2020-24 to a unified platform, which shares marketing, data, supply, and loyalty (One Key) across its brands, versus the previous siloed structure, is supporting the company's network advantage, the source of our narrow moat rating. This investment was funded in part by cost efficiencies during 2020-21, where Expedia achieved the removal of $700 million-$750 million in annualized run-rate fixed costs, as well as $200 million in variable costs.

Expedia's fourth-quarter sales increased 11%, above the 6%-8% guidance. Adjusted EBITDA margin expanded 328 basis points (versus guidance of 200 basis points) to 23.9%. The firm expects revenue growth of 6%-8% and EBITDA margin expansion of 1-1.25 percentage points in 2026.

Shares of online travel agency companies were down meaningfully during Feb. 3 trading, as news of Anthropic's legal tool raised concern that many existing software and applications would eventually be displaced by artificial intelligence.

Although softer US consumer sentiment is a near-term headwind to demand in the region (about 60%% of Expedia's point of sale revenue), Expedia's migration during 2020-24 to a unified platform, which shares marketing, data, supply, and loyalty (One Key) across its brands, versus the previous siloed structure, is supporting the company's network advantage, the source of our narrow moat rating.

Expedia shares rose 15% during Nov. 6 after-hours trading, as third-quarter bookings growth accelerated to 12% from 5% last quarter and as its EBITDA margin expanded 208 basis points to 32.9%. For 2025, guidance for growth in bookings is 7% (3%-5% prior) and in margin is 2 points (1 point).

Although softer US consumer sentiment is a near-term headwind to demand in the region (61% of Expedia's second-quarter point of sale revenue), Expedia's migration during 2020-24 to a unified platform, which shares marketing, data, supply, and loyalty (One Key) across its brands, versus the previous siloed structure, is supporting the company's network advantage, the source of our narrow moat rating.

Expedia's second-quarter bookings grew 5%, beating our 3.5% forecast and improving from last quarter's 4.3%. The EBITDA margin expanded 190 basis points to 24% on lower technology and general and administrative costs. The firm increased 2025 booking growth guidance to 3%-5% from 2%-4%.

Although waning US consumer sentiment is a near-term headwind to demand in the region (61% of Expedia's first-quarter point of sale revenue), Expedia's migration during 2020-24 to a unified platform, which shares marketing, data, supply, and loyalty (One Key) across its brands, versus the previous siloed structure, is supporting the company's network advantage, the source of our narrow moat rating.

Expedia's first-quarter bookings grew by 4.3%, just missing our 4.7% forecast and coming in at the low end of the firm's prior 4%-6% target. EBITDA margins expanded 105 basis points to 9.9% on lower technology and general administrative expenses.

Although waning US consumer sentiment is a near-term headwind, Expedia's migration during 2020-24 to a unified platform, which shares marketing, data, supply, and loyalty (One Key) across its brands, versus the previous siloed structure, is buoying the company's network advantage, the source of our narrow moat rating. Evidence of this was bookings growth acceleration to 8% in the business-to-consumer division in the fourth quarter, up from a 3% lift in the previous quarter.

Shares of our online travel coverage dropped 5%-9% on April 3 after President Donald Trump announced a 10% baseline tariff on all imports, with select countries facing higher tariffs.

Expedia's migration during 2020-24 to a unified platform, which shares marketing, data, supply, and loyalty (One Key) across its brands, versus the previous siloed structure, is buoying the company's network advantage, the source of our narrow moat rating. Evidence of this was the bookings growth acceleration to 8% in the business-to-consumer division in the fourth quarter, up from a 3% lift in the previous quarter, showing that the platform is increasingly resonating with travelers.

Expedia shares rose 10% during after-hours trading on Feb. 6, as investors cheered fourth-quarter bookings growth acceleration and strong EBITDA margin expansion. We plan to increase our $191 per share fair value estimate by a high-single-digit percentage to account for the stronger fourth-quarter results, as well as higher gross margins over our 10-year forecast. While shares were trading in 4-star territory throughout 2022-24, as Expedia faced near-term headwinds during its technology migration, shares have increased about 60% the last six months, as our long-standing view that its prudent investments would yield improving results comes to fruition. We see shares as slightly undervalued.

Expedia's migration during 2020-23 to a unified platform, which shares marketing, data, supply, and loyalty (One Key) across its brands, versus the previous siloed structure, stands to support the company's network advantage, the source of our narrow moat rating. Evidence of this was the bookings growth acceleration to 3% in the business-to-consumer division in the third quarter, up from a 1% lift in the previous quarter, showing that the platform is increasingly resonating with travelers.

Expedia shares moved 5% higher in after-hours trading on Nov. 7, as the company showed more signs that its past investments to a unified platform are now bearing results. We plan to increase our $180 per share fair value estimate by a mid-single-digit percentage on incremental cost savings but now view shares as appropriately valued after their 60% rise since early August.