Ariane Gorin
Chief Executive Officer at Expedia Group
Thanks, Harshit, and thank you all for joining us today. I've been CEO for about a quarter now and have spent most of my time in three areas. First, refocusing our team on the basics and execution to accelerate growth in our consumer business; second, sharpening our long-term strategy; and third, making sure we have the right leadership team in place, all with the goal of delivering better experiences to travelers and more value to our partners.
I'm really pleased to already see some signs of progress as demonstrated by our second quarter results. We grew room nights by 10% and grew gross bookings and revenue by 6% versus last year. This was at the high end of our expectations and was driven by substantial improvement in Vrbo as well as continued strength in Brand Expedia in our advertising business and in our B2B segment.
We also executed well in controlling our costs with cost of sales and overheads both declining year-over-year. The travel environment was healthy in the second quarter. And like the last few quarters, we saw stronger demand internationally relative to the U.S. Compared to last year, we grew room nights mid-single digits in the U.S. low double digits in Europe and in the high teens for the rest of the world. Prices held up for both hotel and vacation rentals, but we saw continued pricing pressure for air and car.
In terms of trends so far in the third quarter, we've seen some softness in demand and Julie will provide more details on this in a few minutes. But regardless of the market environment, we're focused on executing what's in our control and what we know will drive long-term value.
Now let me talk a little bit about the second quarter results themselves. In our Consumer business, we grew gross bookings by 1%, which was an improvement of nearly 400 basis points in the first quarter. Our focus on the basics, traffic, conversion, attach rates and marketing efficiency is showing solid early results. The traffic growth across our three core brands, which are Expedia, Hotels.com and Vrbo accelerated sequentially by roughly 500 basis points and conversion rates continue to improve. The percent of bookings through our apps also increased, up over 500 basis points year-on-year. And in terms of attach, multi-item trips grew by 9% compared to last year. And this is important because when travelers buy more than one product from us, they're getting more value, so they're more likely to repeat.
On marketing, excluding our investments in Vrbo and international markets, our consumer business showed some year-on-year marketing leverage in the second quarter. Brand Expedia continued its strong performance with booked room nights up nearly 20%, while Vrbo improved meaningfully from its Q1 low point and exited the quarter back to modest growth. Vrbo's recovery continued from higher marketing spend, better supply and Vrbo specific product releases.
Look, we certainly have more product work to do on Vrbo, in particular, on our app, but we're encouraged with our progress and the sequential improvement in the business. Vrbo also benefited from more cross shoppers from our One Key loyalty program. Nearly 30% of travelers that earned One Key Cash on either Brand Expedia or Hotels.com and then redeemed it on Vrbo were completely new to Vrbo. So One Key is a great source of new travelers for the brand. Also, One Key hit its first year anniversary in the U.S. this summer. We're super pleased to see our large growing member base enjoy the flexibility to earn and burn One Key Cash across our three core brands and get great tier member discounts. Customers who redeem One Key Cash or use a member discounts repeat more often. So this gives us a lot of confidence that the benefits of One Key will build further over time.
This summer, we're hitting two more milestones in the program. In July, we launched a co-branded credit card with Wells Fargo and MasterCard in the U.S. and expect this to reinforce the value proposition of One Key. We're also launching One Key in the U.K. in the third quarter. Like the U.S., the U.K. is a market where all three of our big consumer brands are present.
Beyond the U.K., though, we're pausing further international rollout of One Key. Most international markets have only either Brand Expedia or Hotels.com operating at scale with limited Vrbo presence. So we're going to take the time to tailor our value proposition for these markets. In addition, this should minimize further near-term disruption to Hotels.com, which was the brand most impacted by One Key's U.S. rollout. More importantly, and as a reminder, all our loyalty members worldwide on our Legacy Expedia and Hotels.com programs continue to benefit from the improved member discounts that we launched last summer.
Finally, we made good progress on our international expansion. As an example, in May, we launched Expedia appointment of sale in UAE and Saudi Arabia. Though it's early days, we've been pleased with the results so far. Turning to B2B. We had another strong quarter with bookings growing 20%, though like last quarter, this was a 200 basis point deceleration. All of our partner segments grew well. And as always, while we on-boarded new partners, a significant portion of the quarter's growth came from existing partners. A couple of highlights from the quarter were the renewal of our lodging deal with Trip.com and a new partnership with Cathay Pacific using our white label template.
Moving on to supply, which powers both our consumer and B2B segments, we continue to improve our offerings. For flights, we just signed a partnership with Ryanair and will soon add their supply to our marketplace. In Vacation Rentals, we grew our supply double digits while removing properties that weren't providing acceptable guest experiences, and we source more listings with flexible cancellation policies and discounts. All of this reinforces the Vrbo value proposition.
We're also investing in more powerful tools, what we call our visibility boosters to help our supply partners attract the travelers they want. More hotels are using these tools to fill the rooms, and our revenue from these products grew over 40% in the first half of this year, and that's a great win-win. Before I turn the call over to Julie to talk about our financial results and guidance, I want to touch on our path forward and where I'm focusing our teams.
Improving the performance of our consumer business remains our biggest priority. We're capitalizing on our tech investments for the last few years, while at the same time, digging into what product capabilities and configurations, we need to strengthen Vrbo and the Hotel.com brand. We're getting surgical and identifying drivers of repeat behavior in addition to loyalty and app usage, whether it's burning One Key Cash or adopting AI-enabled products like price predictions. We want all of our core brands, Expedia, Hotels.com and Vrbo to have clear value propositions and drive healthy growth, and we're making adjustments to ensure we have the right focus.
In B2B, after 12 quarters of over 20% booking growth, we expect continued normalization and we'll continue to invest in our technology, supply and partnerships to extend our lead [Phonetic] in this segment. Finally, we continue to execute with cost discipline everywhere. On cost of sales, we've reduced spend and improved gross margins substantially over the last several quarters. We're exploring additional opportunities to rationalize our marketing spend and on overhead, we're using technology and AI to further boost productivity.
In closing, I'm encouraged by our second quarter results, and I'm incredibly proud of and thankful to our employees who rallied together and are working tirelessly to deliver on our ambition to help travelers around the world experience great trips and create lifelong memories.
And with that, let me hand it over to Julie.
