The Travel Ban Has Had Limited Impact On Expedia

“Our checks show that, as of mid-March, global search interest growth in brands Expedia and Hotels.com is tracking in line with our expectations, with a slight sequential deceleration likely due to the Easter shift into April,” Cantor Fitzgerald’s Naved Khan said in a note.

Khan maintained an Overweight rating on Expedia Inc EXPE, with a $175 price target.

The analyst believes the company has been able to hold onto conversion gains that Expedia garnered over the last 6-8 months.

Rising Demand

“Our checks and third-party data also indicate that hotel room rates (ADRs) and demand had steady growth in the U.S. in Jan./Feb. and that European Hotel demand strengthened over this period,” Khan mentioned, while adding if these trends persist, Expedia's Q1 performance would be positive.

U.S. travel demand has been seeing steady growth quarter-to-date, with room rates and occupancy rising in January and February, as compared to Q4.

European demand also seems to be improving, with occupancy rising in January, while room rates remained flat year on year in January and February.

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Muted Impact

In addition, year-on-year growth in search query interest for both of Expedia’s brands have been tracking in line with expectations, with both Expedia and Hotels.com decelerating 200 bps quarter-on-quarter in Q1 from the Q4 levels.

Moreover, global search interest in Trivago rose 32 percent year-on-year quarter-to-date in Q1, “showing little slowdown sequentially and suggesting that this business continues to have outsized growth,” the analyst noted.

While international air bookings declined 6.5 percent in the U.S. in the week following the initial travel ban, Khan expects any impact on OTAs (online travel agencies) to be “relatively muted,” with domestic travel and bookings to alternative destinations picking up while offsetting some of the potential impact.