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Expedia, Inc. announced financial results for our fourth quarter and year ended December 31, 2011. Total room night growth of 19% in the fourth quarter 2011 represented accelerated growth compared to 17% room night growth reported for the third quarter 2011 as a result of faster growth in both the APAC and Americas regions. Free cash flow increased 32% to $618 million for the year due to strength in our merchant hotel business. During the quarter, we repurchased 3.1 million shares on a pre-reverse split basis for $83 million. For the year, we repurchased 10.6 million shares on a pre-reverse split basis for $283 million. On December 20, 2011, we completed the spin-off of TripAdvisor, Inc. to Expedia stockholders. TripAdvisor consists of the domestic and international operations previously associated with Expedia’s TripAdvisor Media Group and is now a separately traded public company, trading under the symbol “TRIP” on The Nasdaq Global Select Market.
Gross Bookings, Revenue & Revenue Margins
Gross bookings increased 10% (10% excluding foreign exchange) for the fourth quarter of 2011 compared with the fourth quarter of 2010, primarily driven by 19% growth in hotel room nights through strong performances at Hotels.com brands, Expedia Affiliate Network, Hotwire and Egencia. Average daily room rates grew 2% for the quarter. Average airfares for the fourth quarter of 2011 were up 10% year-over-year which was almost entirely offset by an 8% decline in tickets sold. Domestic bookings increased 7% and international bookings increased 15% (15% excluding foreign exchange) for the fourth quarter of 2011. International bookings totaled $2.5 billion for the fourth quarter of 2011, accounting for 39% of worldwide bookings compared to 38% in the prior year.
Gross bookings increased 12% (10% excluding foreign exchange) for the year primarily driven by 18% growth in hotel room nights and 5% growth in hotel average daily rates. Average airfares for the year were up 11% versus 2010 which was offset by an 8% decline in tickets sold. Domestic bookings increased 6% and international bookings increased 23% (18% excluding foreign exchange) for the year. International bookings totaled $11 billion for 2011, accounting for 39% of worldwide bookings compared to 36% in the prior year.
Revenue increased 7% (8% excluding foreign exchange) for the fourth quarter of 2011, primarily driven by an increase in hotel room nights stayed partially offset by a decrease in revenue per room night. Domestic revenue increased 4% while international revenue increased 10% (14% excluding foreign exchange) for the quarter. International revenue equaled $333 million for the fourth quarter of 2011, representing 42% of worldwide revenue compared to 41% in the prior year.
Revenue increased 14% (11% excluding foreign exchange) for the year, primarily driven by an increase in hotel room nights stayed partially offset by a decline in air tickets sold. Domestic revenue increased 7% while international revenue increased 25% (20% excluding foreign exchange) for the year. International revenue equaled $1.5 billion for the year, representing 42% of worldwide revenue compared to 38% in the prior year.
Revenue as a percentage of gross bookings (“revenue margin”) was 12.5% for the fourth quarter, a decrease of 34 basis points compared to the fourth quarter of 2010. The primary drivers were rising average air ticket prices (as our remuneration generally does not vary with the price of the ticket), changes in our hotel product mix as well as competitive pricing actions and lower net air supplier economics partially offset by growth in our higher margin hotel business. Revenue margin was 11.8% for the year, essentially flat compared to 2010.
Product & Services Detail – Fourth Quarter 2011
As a percentage of total worldwide revenue in the fourth quarter of 2011, hotel accounted for 73%, air accounted for 9% and all other revenue sources accounted for the remaining 18%.
Worldwide hotel revenue increased 12% for the fourth quarter driven by a 19% increase in room nights stayed partially offset by a 5% decrease in revenue per room night. Revenue per room night decreased primarily due to competitive pricing actions on hotel rooms and changes in our hotel product mix, impacts of foreign currency and accruals for loyalty programs at Expedia and Hotels.com partially offset by a 2% increase in average daily hotel rates.
Worldwide air revenue decreased 19% for the fourth quarter due to an 11% decrease in revenue per ticket and an 8% decrease in air tickets sold. The decrease in ticket volume was partially due to a 10% increase in average air ticket prices.
Revenue per ticket declined due to lower net supplier economics and the acceleration of merchant air revenue in fourth quarter 2010 partially offset by certain regional and interline consumer booking fees.
All other revenue (primarily car rentals, advertising revenue from our transaction websites, destination services and fees related to our corporate travel business) increased 2% for the fourth quarter.
Product & Services Detail – Full Year 2011
As a percentage of total worldwide revenue for 2011, hotel accounted for 72%, air accounted for 11% and all other revenue sources accounted for the remaining 17%. Worldwide hotel revenue increased 18% for the year driven by an 18% increase in room nights stayed. Revenue per room night was essentially flat for the year.
Worldwide air revenue decreased 4% for the year due to an 8% decrease in air tickets sold partially offset by a 4% increase in revenue per ticket. The decrease in ticket volume was partially due to an 11% increase in average air ticket prices. Revenue per ticket increased for the year due to certain regional and interline consumer booking fees and performance-based incentives partially offset by lower net supplier economics.
All other revenue (primarily car rentals, advertising revenue from our transaction websites, destination services and fees related to our corporate travel business) increased 8% for the year.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
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