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Expedia Group Inc EXPE

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Expedia’s Weaker Q3 Bookings More Than Offset by Strong Profits and an Improving Demand Outlook

Dan Wasiolek Senior Equity Analyst

Analyst Note

| Dan Wasiolek |

Although third-quarter bookings were disappointing, narrow-moat Expedia shares flew 10% higher on upbeat forward demand comments, as well as strong profitability in the period. Although we don’t expect a material change to our 2021 bookings forecast to reach (low-70% of 2019 levels), we plan to increase our $151 fair value estimate around 10% mostly to account for worker flexibility driving higher long-term travel demand, as well as stronger near-term profitability. Our constructive stance on remote working conditions is formed by higher income occupations (like computers, finance, legal, architecture) being the most likely industries to sustain such flexibility. We think Expedia shares reflect the improving demand outlook and management’s strong execution. We reiterate that investors interested in travel exposure should shift their focus from nonurban U.S. players that have led the travel recovery (like narrow-moat Choice and Wyndham) to those with a Europe and China presence (like narrow-moat Booking and Accor), which we believe will experience stronger relative demand improvement next year versus the former. Specifically, we highlight Accor, which trades at a 20% discount to our EUR 40 fair value estimate while offering 60% hotel exposure to Europe.

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Company Profile

Business Description

Expedia is the world's largest online travel agency by bookings, offering services for lodging (78% of total 2020 sales), air tickets (2%), rental cars, cruises, in-destination, and other (12%), and advertising revenue (8%). Expedia operates a number of branded travel booking sites, including,, Travelocity, Orbitz, Wotif, AirAsia, and Vrbo. It has also expanded into travel media with the acquisition of Trivago. Transaction fees for online bookings account for the bulk of sales and profits.

1111 Expedia Group Way W
Seattle, WA, 98119
T +1 206 481-7200
Sector Consumer Cyclical
Industry Travel Services
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 19,100