Expedia says firms spending cautiously

NEW YORK (Reuters) - Corporate travel demand is up after a painful recession, but companies likely will curb travel expenses and steer employees away from costly first-class accommodations, the chief executive of Expedia Inc (EXPE.O) said on Monday.

"The phones are ringing again, from what the partners tell us," Dara Khosrowshahi said at the Reuters Travel and Leisure Summit. "Again, it is off of a very low base, but we do see some encouraging signs from our hotel partners."

He said that while demand is improving, U.S. companies remain conservative in their travel spending and are adhering more closely to internal travel policies that may have been neglected in recent years.

The travel industry has been hit in the last year by an economic downturn that eroded travel demand. Travel companies responded by slashing fees and offering promotions to bolster bookings.

Expedia, the largest U.S. online travel agency, this month posted a fourth-quarter profit that topped expectations on a 26 percent gain in travel bookings.

Khosrowshahi said Expedia, which aims to expand in the Asia-Pacific region and Latin America, hopes its non-U.S. bookings will account for 50 percent of its total business within five years, up from the current 37 percent.

He also told the summit, held at the Reuters offices in New York, that Expedia will unveil a much more substantial iPhone application in a couple of weeks. The new feature will have the ability to book hotel rooms and flights, an upgrade from its current application, which only offers information about a booked trip.

Expedia shares were up 8 cents at $22.67 in morning trading on Nasdaq.

(Reporting by Kyle Peterson; additional reporting by Deepa Seetharaman and Karen Jacobs; editing by Derek Caney and John Wallace)