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Expedia Profit Declines

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2/9/2012 6:57 PM ET
(RTTNews) - Expedia Inc. (EXPE: News ), the world's largest online travel company, said Thursday after the markets closed that its fourth quarter profit declined slightly from last year, as higher costs and expenses offset a 7% increase in revenue. However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations, but is quarterly revenue fell short of analysts' forecast.

The Belllevue, Washington-based company reported net income for the fourth quarter of $70.3 million or $0.51 per share, compared to $71.3 million or $0.50 per share for the year-ago quarter.

Income from continuing operations for the fourth quarter was $59.7 million or $0.44 per share, compared to $63.4 million or $0.45 per share in the prior year quarter.

Excluding items, adjusted income from continuing operations was $0.58 per share in the fourth quarter, compared to $0.58 per share in the fourth quarter of last year.

On average, 16 analysts polled by Thomson Reuters expected the company to earn $0.54 per share for the fourth quarter. Analysts' estimates typically exclude special items.

Total costs and expenses for the quarter surged 12% to $664.4 million from $591.9 million a year ago. Expedia, which competes with Priceline.com Inc. (PCLN) and Orbitz Worldwide Inc. (OWW), said revenue for the fourth quarter rose 7% to $787.13 million from $737.59 million in the same quarter last year. Fifteen analysts had a consensus revenue estimate of $811.63 million for the fourth quarter.

Gross bookings for the fourth quarter increased 10% from a year earlier, mainly driven by 19% growth in hotel room nights through strong performances at Hotels.com brands, Expedia Affiliate Network, Hotwire and Egencia. Average daily room rates grew 2% for the quarter.

Average airfares for the fourth quarter were up 10% year-over-year , but was almost entirely offset by an 8% decline in tickets sold, the company said.

For the fourth quarter, domestic bookings increased 7% and international bookings rose 15%.

Hotel accounted for 73% of total worldwide revenue in the fourth quarter, while air accounted for 9% and all other revenue sources accounted for the remaining 18%.

Worldwide hotel revenue increased 12% for the fourth quarter driven by a 19% increase in room nights stayed partially offset by a 5% decrease in revenue per room night.

Worldwide air revenue fell 19% for the fourth quarter due to an 11% drop in revenue per ticket and an 8% decrease in air tickets sold.

In November, Expedia acquired China-based Renren Inc.'s (RENN) stake in Chinese online travel firm eLong Inc. (LONG), increasing its stake in eLong to 67%.