Expedia soars past expectations as holiday travel and AI drive growth

Expedia Group ended 2024 on a high note, surpassing analyst forecasts with record-breaking holiday travel demand, AI-driven innovation, and a rebound in key segments like B2B and advertising. The company reported Q4 gross bookings of USD 24.4 billion, exceeding the expected USD 23.3 billion, while 86.4 million nights were booked across its platforms, including Expedia.com, Hotels.com, and Vrbo.

Following the strong performance, Expedia’s stock surged 9% in after-hours trading, recovering from a 7.4% decline earlier in the year. In a move signaling confidence in future growth, the company reinstated its quarterly dividend at 40 cents per share, effective March 2025.

Expedia’s B2B and Advertising Boom

Expedia’s Q4 revenue hit USD 3.1 billion, marking a 10% year-over-year increase. The growth was fueled by a 21% rise in B2B revenue and a 25% increase in advertising revenue. Lodging gross bookings surged 12%, with hotel bookings alone growing 14%.

CEO Ariane Gorin, who took the helm in May 2024, credited the company’s strong finish to a focused investment strategy and emphasized three key priorities for 2025: expanding value for travelers, investing in high-growth business segments, and driving operational efficiency to boost margins.

AI at the Heart of Expedia’s Future Strategy

Artificial intelligence is playing an increasingly central role in Expedia’s vision for 2025. Gorin outlined three ways the company plans to leverage AI to maintain its competitive edge. First, AI will be used to enhance user experience, ensuring travelers and partners have a seamless, personalized booking journey. Second, as travel search behaviors evolve, Expedia is investing in AI-native search platforms, ensuring its brands appear where future travelers are looking. Finally, the company is exploring partnerships with AI-driven travel startups to expand its supply network.

Expedia has remained tight-lipped about Romie, its AI-powered travel assistant launched last year, but Gorin emphasized that AI-powered recommendations and search will be a game-changer in travel booking in the coming years.

Vrbo and Hotels.com Bounce Back

After facing challenges in recent years due to a tech migration and changes to OneKey, Vrbo and Hotels.com showed strong growth in Q4. Gorin credited this success to improved product offerings, enhanced marketing strategies, and a massive expansion in supply, with Vrbo adding one million new units, primarily in urban areas.

Looking ahead, Expedia is planning a major reinvigoration of the Hotels.com brand in 2025. With new strategies in place, the company is betting on Hotels.com and Vrbo to play an even bigger role in its growth story.

Challenges and 2025 Outlook

Despite a strong quarter, Expedia expects bookings to grow between 4% and 6% in 2025, slightly below the 6.8% average forecast. One key challenge is the strong U.S. dollar, which could make international travel more expensive for American travelers. However, this could also create opportunities, as U.S. travelers seek better deals abroad.

International demand remains a strong driver of growth, with booked room nights growing in the high single digits in the U.S., low double digits in Europe, and high teens in the rest of the world. The company’s B2B division is also benefiting from strong international demand, particularly in the Asia-Pacific region.

A Travel Giant Poised for Continued Growth

With record holiday travel numbers, a resurgent B2B and advertising business, and major AI investments, Expedia is well-positioned to maintain its leadership in the global travel industry. As the company looks ahead to 2025, its ability to capitalize on AI advancements, expand its brand offerings, and navigate economic headwinds will determine how far it can ride this wave of momentum.