That depends on whether Expedia was an agent or merchant for the room, i.e. if they took a principal position on selling the room. If they're acting as a merchant then any loss is Expedia's.

Meanwhile if Expedia were acting as an agent, they'd have to get the hotel's permission to refund such a reservation, and I can tell you that hotels do not nearly always say yes!

However at peak times, like now, it is not hard to resell a hotel room in a prime location (such as London) so neither Expedia nor the hotel would be taking much risk in refunding this one.

It's good customer service to do this, and it's not a big risk for either Expedia or Hotel, but what risk there is may well be with Expedia.

(I work in the online travel biz, though not for Expedia)