Despite reporting weak business travel spending, Expedia Inc. executives told financial analysts that corporate travel arm Egencia saw corporate bookings increase regardless in the first quarter of 2016.
“Egencia transaction growth accelerated in Q1 compared to Q4, although we saw signs of corporate travel spend tightening in the form of lower average booking values per transaction,” said Expedia CEO Dara Khosrowshahi. “Going forward through 2016, we expect overall room night growth to be moderate.”
Expedia CFO Mark Okerstrom reflected on average rates and room nights trending downward to begin the year, especially in Europe, saying there’s evidence of business travelers looking for better deals. The good news, it seems, is that business travelers are still hitting the road despite the bargain hunting.
“We think some of this was essentially trade down activity, particularly we saw this in Europe so people are still taking their trips [but] they are just looking for a more cost-effective way to do it,” said Okerstrom. “We certainly do look at the corporate travel business as a leading indicator of what is happening in the overall economy. So it’s something that we’re watching very closely. That said, we don’t see any real impact of any softening of the economy in our leisure business at this point, beyond what’s happening more broadly with pricing in the market.”
Overall the integration of Orbitz for Business into Egencia continues apace, according to Khasrowshahi.
Expedia plans on continuing to offer separate Orbitz for Business service and white-labeled products to current clients, while Egencia continues to grow its share among small and mid-size businesses looking to embrace online corporate travel booking tools.
“The Egencia team has consistently been executing and gaining share in the corporate travel marketplace over a number of years,” said Khasrowshahi. “We have always been very strong in the small and medium business segment. That makes us quite attractive to our supply partners because the big chains and some of the airlines have a hard time reaching into the small and medium businesses. But as Egencia has build out a more robust toolset for CFOs on the cost side, on the care side. You have some very big businesses such as [Proctor & Gamble] using its toolset. The volume goes online, consumer love it compared to the traditional players out there. And it’s a win-win. It’s a cost win, it’s a consumer win and just kind of Egencia continues to march along.”