Online travel agency Expedia Inc (EXPE.O) warned of a lower full-year profit from its discount travel website Hotwire due to higher car rental rates and increased competition.
Expedia shares, which rose 5 percent in extended trading after it reported a higher-than-expected first-quarter adjusted profit, reversed course when the company talked about challenges at its Hotwire business on a post-earnings conference call.
Expedia reduced its forecast for growth in organic earnings before interest, taxes, depreciation, and amortization (EBITDA) by $20 million-$30 million, citing weakness at Hotwire.
The company, however, reaffirmed its overall 2013 forecast for adjusted EBITDA of growth in the low double digits due to strong performance at trivago - a German travel site in which it acquired a majority stake earlier this year.
Expedia said troubles at Hotwire began with superstorm Sandy in October.
The recent consolidation in the car rental industry made matters worse as it drove up rental rates, discouraging its price-sensitive customers, Expedia said on the call.
Hertz Global Holdings Inc (HTZ.N) bought smaller rival Dollar Thrifty last year for $2.6 billion, leaving just three players to control about 95 percent of the U.S. car rental market.
"There certainly was incremental weakness in the first quarter (at Hotwire)," Chief Financial Officer Mark Okerstrom said on the call.
"With respect to the full year impact, we are basically forecasting that we do not see any material change from what we have seen to date. We have no reason to believe that things will get better."
He said Hotwire was also hurt by heavy advertising by its competitor. Expedia's rivals include Priceline.com Inc (PCLN.O) and Orbitz Worldwide Inc (OWW.N).
Expedia's adjusted net income fell to $35.3 million, or 25 cents per share, in the quarter ended March 31 from $36.9 million, or 26 cents per share, a year earlier. (link.reuters.com/qep67t)
Revenue jumped 24 percent to $1.01 billion.
Analysts on average had expected earnings of 23 cents per share on revenue of $967.7 million, according to Thomson Reuters I/B/E/S.
The profit beat was due to strong growth in hotel bookings.
Gross bookings increased 16 percent. Bookings for hotel rooms rose 28 percent, while those for air tickets increased 9 percent.
Expedia stock, which has more than doubled since the beginning of 2012, fell 5 percent to $61.77 in after-hours trading. The shares closed at $64.97 on the Nasdaq on Thursday.
(Reporting by A. Ananthalakshmi in Bangalore; Editing by Don Sebastian, Maju Samuel)