Expedia reports record quarter, cuts losses

The records keep falling in the online travel world. Expedia Inc. yesterday released its numbers for yet another record quarter for its business, one in which it almost broke through the profitability barrier.

Expedia's gross bookings rose to $467 million, up from $450 million in the previous quarter. Expedia, in Bellevue, Wash., lost its grip on the top spot for total bookings early this year when its chief rival, Travelocity.com, purchased Preview Travel (see story). Travelocity achieved $610 million in gross bookings for the quarter that ended Sept. 30 (see story).

Expedia's main gain was in how it shaved its net loss.

In a world where large Internet enterprises such as Amazon.com Inc., Priceline.com Inc. and the major online travel agencies routinely lose large sums of money, Expedia's net loss was only $1.6 million, or 4 cents per share. That number is down from a net loss of $13.1 million in the previous quarter.

In its financial release, Expedia attributed much of its success to the growth of its lodging sales. Hotel and vacation packages generally return a much higher margin of profit for middlemen than do airline tickets. Expedia has begun to purchase blocks of rooms from hotels and distribute them as a wholesaler rather than as an agency that takes a commission off the top of the sale.

Those lodging sales have helped Expedia maintain its advantage over Travelocity in revenue - $76 million for the most recent quarter to Travelocity's $53.4 million.

That Expedia and Travelocity continued to grow in the most recent quarter was particularly impressive because of summer-long traffic jams at U.S. airports caused by inclement weather and a labor action by pilots at United Air Lines Inc. Many other travel vendors reported a drop in profits for the quarter.

Travelocity also posted a relatively small loss of $3 million for the quarter, or 16 cents per share.

Both online travel agencies expect to turn a profit late next year, and Expedia warned that it will turn a greater loss next quarter as it makes a high-profile marketing push.

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