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Expedia profit plunges 90 percent because of Hawaii tax dispute

By Associated Press

POSTED:
LAST UPDATED: 12:47 p.m. HST, Feb 05, 2013


BELLEVUE, Wash. >> Soaring hotel bookings pushed revenue higher at Expedia Inc., but the online travel agency’s fourth-quarter profit fell 90 percent because of money it set aside to appeal a tax dispute in Hawaii.

Nights booked for hotel stays jumped 33 percent as demand grew for a second straight quarter in Europe, Asia and the Americas. Room nights rose 19 percent in the U.S., the best gain in two years. The average room rate fell 3 percent.

Investors seemed to focus less on the bottom line and more on the strong hotel sales and surprising 24 percent jump in revenue. Expedia shares rose in after-hours trading, adding to gains during the regular session.

Expedia said that it earned $6.7 million, or 5 cents per share, down from $70.3 million, or 44 cents per share, in the fourth quarter of 2011.

The results included $111 million that Expedia expects to pay to appeal a ruling on the way that hotel-occupancy taxes are calculated in Hawaii. Expedia could get back some or all of the money if it wins on appeal. 

Hawaii officials are pursuing several online travel companies that they say owe the state $170 million in unpaid hotel room taxes. The officials say that excise taxes should be calculated on the full amount that consumers pay for the room, not the lower wholesale rate that the travel agencies paid before marking them up.

Expedia said that without the tax issue and other one-items, it would have earned 63 cents per share. Analysts surveyed by FactSet were expecting 65 cents per share.

Revenue rose to $974.9 million from $787.1 million, easily beating the $933.1 million forecast of analysts.

Expedia sold 12 percent more airline tickets than a year before, with the average fare 2 percent higher than a year earlier.

Bellevue-based Expedia operates several travel websites including Expedia.com, Hotels.com and Hotwire.

Expedia’s shares rose $2.34, or 3.6 percent, to $67.50 in regular trading, and were up another $2.92, or 4.3 percent, to $70.42, in extended trading after the report. 





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