Expedia Group Accelerates Its Spending Faster Than It Grows Revenue

Expedia Group‘s days of torrid growth may be behind it. The company is having to spend more every quarter without enjoying the jumps in revenue that used to follow that investment.

Expedia said Thursday in reporting first quarter earnings that it focused its spending on tuning up its operations, especially in its vacation rental unit HomeAway.

Most of the company’s hiring was to expand the team at its lodging supply unit as well as in the sales team at Egencia, its corporate travel management agency — which saw its first-quarter reference rise 28 percent.

Overall, the company expects the pace of investment to outpace revenue growth this year.

Expedia Group’s inventory of hotels and alternative accommodations increased to more than 665,000 properties by the end of March, up 74 percent year-over-year. The company wants to add 180,000 properties this year.

The context of the strategy is that the online travel group has found that the more inventory there is in a market for consumers, the greater the percentage of consumers window-shopping go ahead and book.

Overall, Expedia reported a loss of $137 million for the first quarter of 2018, compared with a loss of $86.1 million in the same period a year earlier.

Revenue rose 15 percent to $2.5 billion — well short of the approximately 30 percent revenue increases Expedia used to routinely quarter-after-quarter up until about a year ago.

Excluding HomeAway, revenue per hotel booking was flat, year-on-year. HomeAway is currently operating at a loss as the company invests in its modernization, such as by moving its platform from servers to the cloud.

Expedia’s results included Trivago’s poor results on Wednesday, and the company said Trivago’s sluggishness would be a headwind.

On Trivago, Expedia Group CEO Mark Okerstrom said, “Booking.com does appear to be pulling back” on its advertising on the website and mobile app. And “it’s an auction, so the auction adjusts,” meaning that Expedia doesn’t have to spend as much to acquire customers.

“That said, Trivago is adjusting its marketing spend as well,” Okerstrom said. “So volume isn’t growing as quickly as it has in the past. It’s not really an us versus them [Booking Holdings].”