Expedia's profits send ebookers' fur flying

Travel site Expedia has continued the upbeat trend in online travel with positive fourth quarter results, exceeding analysts' expectations.

The former Microsoft prodigy reported fourth quarter earnings, before non-cash expenses, of $15m, or 25 cents per share. In the same period last year the company had reported a loss of $13.1m or 30 cents a share before expenses.

Travel bookings rose 78 per cent year-on-year, compared with the previous quarter, to $802m. Revenue rose 112 per cent year-on-year and 37 per cent sequentially to $78m.

The Expedia results follow a powerful second quarter performance from European rival ebookers. While the UK firm may lack the financial clout of Expedia, yesterday it reported narrowed losses and announced a 100 per cent year-on-year increase in bookings.

However, a positive outlook is where the similarity ends, according to Expedia's UK MD James Vaile.

Speaking to silicon.com he said Expedia was profitable because it was more successful than ebookers at the merchant model - negotiating discounts with hotel chains and airlines that can be passed directly on to the consumer as package deals.

Vaile said: "You're not really comparing apples with apples. Ebookers are a more regional player than us. They don't have access to the same merchant network and they don't have the technology to publish those discounts online."

Referring to Expedia's conversion rate for the quarter, which saw seven per cent of online window shoppers actually make a purchase, he questioned why ebookers had failed to provide such figures in its results.

Oliver Strong, investor relations manager with ebookers, dismissed the claims that ebookers could not compete with Expedia on the discount merchant model.

"ebookers has already said it has a merchant model. Negotiating the rates does take a long time to set up and for some companies that has been a problem. But for one company to say they are unique in that is interesting," he said.

He added: "Websites measure conversion figures in different ways. The only way to compare travel sites is to see who's buying on them. To us concrete financial transactions are more important."