BKNG Booking Holdings Inc

By Laura Forman 

Expedia is giving new meaning to the term "cabin fever."

The global pandemic had reduced investors' expectations for quarterly results to virtually zero. That explains why investors reacted only mildly to Expedia's first-quarter report after the closing bell Wednesday in which revenue fell 15% from a year earlier.

While declining to give concrete guidance for the second quarter, which investors largely expect to be the trough, the company also dropped a small nugget of hope.

Expedia said business in May has been looking "considerably better" than late March and early April, citing "really markedly better" performance in its homestay business, Vrbo. The company said this is likely driven by people looking to get out of densely populated cities for the summer with their families.

This, of course, should benefit all alternative accommodation players, including online travel agent Booking Holdings and Airbnb, the latter of which boasts more than seven million listings world-wide. But while smaller than Airbnb, Expedia's homestay business may have a coronavirus upper hand: SunTrust analyst Naved Khan notes that whole homes have been a historical focus for Vrbo, many of which are in secondary and tertiary towns. While Airbnb says the majority of its listings are also whole homes, it also has a big focus on shared rooms and urban apartments, which may be less on-trend at the moment.

In its first-quarter report, Expedia said it changed its segment reporting such that it didn't break out revenues for Vrbo. As such, it's difficult to know exactly how Vrbo's business has performed amid the pandemic. As of the fourth quarter, Vrbo accounted for just 9% of Expedia's overall sales.

While the business is small, it could offer some positive signs of a more general travel recovery trend as the country opens back up. Mr. Khan said property managers in the vacation rental space with whom he spoke are seeing a bounce in bookings, particularly in destinations to which travelers can drive rather than fly.

Investors should stay grounded as well. Expedia's gross bookings in the first quarter were down 39% year-over-year, an indication that travel in the next few months should continue to be light.

Time will tell just how desperate travelers are to flee the coop. But it seems more clear that those who do leave are mainly looking for another nest to inhabit.

Write to Laura Forman at laura.forman@wsj.com

(END) Dow Jones Newswires

May 21, 2020 17:24 ET (21:24 GMT)

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