Shares of online travelling services providers jumped sharply on Friday supported by Internet travel portal Expedia Inc’s (NASDAQ:EXPE) shares rose sharply on Thursday its second quarter profit beat analyst expectations with a surge in hotel bookings, a lower tax pay-out rate, higher corporate travel fees and advertising revenues.
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Expedia’s net income fell 25 percent to $105.2 million or 76 cents a share, surpassing analyst estimates of 71 cents. Its shares gained $1.46, or 3.3 percent, to close at $45.71 in regular trading and then jumped $6.13, or 13.4 percent, to $51.84 in after-trading hours. Revenue rose 14 percent to $1.04 billion from $913.6 million, topping analyst forecasts of $987.3 million.
Hotel bookings account for bulk of the company’s revenues and that business saw a 16 percent growth with overnight bookings seeing a 22 percent rise. The global travel industry is in a decline with rising airfares crimping demand and Expedia saw an 8 percent dip in revenues from air-ticket sales, as average realisation per ticket fell 11 percent.
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With more of its revenues coming from outside the U.S. the company’s margins were boosted by a lower tax pay-out rate at 21.3 percent compared with 27.3 percent a year ago.
The company said that while booking had risen, revenue per room had dropped 5 percent due to discounting and lower-priced rooms partly due to more lower-priced rooms and discounting by the company's Hotwire brand.
Average airfares rose 5 percent, but lower payments from airlines resulted in Expedia getting 11 percent less per ticket.
Shares of EXPE soared 20.56% to $55.11 on high volume. Other stocks within the sector are following the same trend with Priceline.com Inc(NASDAQ:PCLN) is up 4.72%, Tripadvisor Inc(NASDAQ:TRIP) climbed over 3% and Orbitz Worldwide, Inc.(NYSE:OWW) added 2.86%.