By Doyinsola Oladipo and Shivansh Tiwary
(Reuters) -Online travel booking company Expedia (NASDAQ:EXPE) Group Inc missed Wall Street estimates for fourth-quarter profit on Thursday, hit by a spike in cancellations and bad weather near the end of the quarter.
Travel demand has generally been strong throughout last year despite recession and inflation fears. However, harsh December winter snarled airport operations around the United States, hurting travel booking companies.
The company posted revenue of $2.62 billion, missing Wall Street estimates of $2.7 billion. Shares fell as much as 8% after the closing bell, but pared those losses to trade 1.5% lower.
Chief Executive Peter Kern said "political issues" and "unique rules" are contributing to the ongoing challenges in the revival of China outbound travel, including the ability for airlines to fly direct in and out of China, as well as access to Russia airspace.
"It's going to take a little while to work itself out, but interest is very high," he added.
The company's quarterly adjusted profit was $1.26 per share, short of analysts' expectations of $1.67 per share, according to Refinitiv data.
Total gross bookings across travel products rose 17% from the year-earlier period to $20.5 billion.
"We are pleased to see strong lodging demand continue, including total lodging bookings for stays expected to occur in the first half of 2023, continuing to meaningfully outpace 2019 and 2022 levels," Expedia Chief Financial Officer Julie Whalen told investors on a call.
The company said it has seen an increase in direct costs related to partner commissions and increased marketing spends in retail channels.
Morningstar Inc senior analyst Dan Wasiolek said investors are watching Expedia's return on investment (ROI) on marketing as the company worked over the past few years to unify their technology platform and attract long-term customers.
"They said last quarter that they're seeing evidence that they're getting better marketing ROI-wise, but it's not coming through in the numbers for us," he added.