According to a report by the International Air Transport Association, global airline traffic grew 6.2% over the year in June 2012. But the agency expects traffic to slow in the coming quarters owing to the continuing European crisis. The depressed European market has hurt several online travel companies, which have lowered their outlooks for the current quarter.
Priceline’s (NASDAQ:PCLN) Q3 revenues grew 27% over the year to $1.33 billion, in line with the market expectations. EPS of $3.54 fell from $5.02 reported a quarter ago, but was ahead of market projections of $3.51.
Merchant revenues grew 4% over the year, while the agency business grew 36% during the year. International revenues reported growth of 33.1% over the year, while domestic revenues grew a more modest 5.3% over the year.
The market was disappointed by the lowering of the company’s earnings outlook. For the current quarter, Priceline revised down its EPS forecast from $12.82 to $11.10-$12.10. Revenue projections for the quarter came in at $1.6 billion-$1.7 billion. The Street was expecting revenues of $1.80 billion and EPS of $12.80 for the quarter.
Priceline’s International Expansion
Priceline is growing its international footprint and recently added significant inventory to its Booking.com site across North and South America. It also tied up with CTRIP.com, China’s leading online travel booking service. As part of the agreement, Ctrip.com will offer Booking.com’s hotel inventories in addition to its existing inventory, thus growing Priceline’s reach in the region.
Priceline Launches Express Deals
During the quarter, Priceline also placed less focus on its Name Your Own Price initiative. It fired its deal icon, William Shatner, a.k.a Captain Kirk, and instead launched the Express Deals feature. The Name Your Own Price feature was facing increased competition and was also troubled by the limited air ticket supply because of declining air capacity. Express Deals lets users book hotels through last-minute offers. The company claims that the inventory is priced at discounts of up to 45%. Users can see the name of the hotel and view amenities, neighborhood and other details, most of which was kept secret in the Name Your Own Price feature.
Priceline’s stock is trading at $562, with a market capitalization of $28 billion. It touched a ten-year high of $774.96 in April 2012.
Expedia’s (Nasdaq:EXPE) Q2 revenues grew 14% over the year to $1.04 billion, significantly ahead of the market’s expected revenues of $988.7 million. EPS recorded growth of 24% over the year to $0.89, also surpassing market projections of $0.72.
By segment, leisure customers contributed 93% revenues during the quarter and grew 26% over the year. Corporate customers for the company’s Egencia business reported strong growth at 43.4% and brought in the balance of revenues.
Sixteen percent revenue growth from the Hotel segment was driven by a 22% increase in room nights. But the higher number of stay nights was impacted by a 1% decline in the average daily rate. Airline revenues grew 8% over the year despite an 11% decline in revenue per ticket. This growth was accounted by a 3% rise in ticket volumes and 5% growth in airfare rates.
Expedia’s domestic revenues grew 14% over the year and brought in 58% of the quarter’s revenues. The international business grew 13% over the past year.
Expedia’s International Expansion
As part of its international growth plan, Expedia is focusing on the Asian markets. In India, it recently announced a partnership with online bus ticket booking portal redBus.in to sell bus tickets on Expedia’s Indian website. The partnership will help Expedia add more than 180,000 bus services to its inventory.
The stock is trading at $53.83 with a market capitalization of $7.31 billion. It touched a 52-week high of $61.88 in September 2012.
Orbitz’s (Nasdaq:OWW) Q2 revenues were flat over the year to $201 million, falling short of the Street’s target of $208 million. There was a 5% decline in the number of transactions served by Orbitz during the quarter. During the quarter, Orbitz saw international revenues fall 7% over the year, while domestic markets grew 2%.
For the current quarter, Orbitz projected revenues of $197 million-$203 million with an adjusted EBITDA of $32 million-$38 million. The Street was expecting revenues of $216 million. For the current year, Orbitz now expects revenues to grow 2%-4% compared with 4%-8% projections given earlier. Adjusted EBITDA projections were also revised down to grow 0%-5%, compared with 7%-12% growth projected a quarter ago.
Orbitz’s Mobile Offering
During the quarter, Orbitz relaunched its popular Orbitz Flights, Hotels, Cars for iPhone and Android apps. The new version features increased speed, an enhanced sort and filtering capabilities, and new mapping tools. In addition, the app offers exclusive, mobile-only hotel discounts.
Their stock is trading at $3.22 with a market capitalization of $337.27 million. It touched a 52-week high of $4.75 earlier this month.
Finally, the long-waited IPO in the travel segment for Kayak came in last quarter on the Nasdaq under the ticker KYAK. Unlike Priceline, Expedia, and Orbitz, Kayak earns its revenues from affiliate marketing and advertising. Through its comparison search platform, Kayak directs users to Priceline like sites and earns a share of revenues for sales made through such references. But the larger portion of its revenues comes from advertising. Analysts estimate that for every 1,000 transaction queries on Kayak’s website last year, the company earned more than $160 in advertising revenues and $61 in referral revenues. Surely, its revenue model is to some extent secure from the troubling European conditions.
In its S-1 filing, Kayak reported revenue growth of 36% over the year to $109.4 million for the six-month period ending June 2011. In the period, it reported adjusted EBITDA of $19.3 million, up 52% over the year. Kayak’s transactions processed during the six months grew 49% over the year to 443 million user queries.
For the quarter ended March 2012, Kayak’s revenue grew 39% over the year to $73.3 million of and reported adjusted EBITDA of $13.2M. It is expected to report June quarter revenues in the range of $74.5 million-$76.0 million, with income from operations projected to grow 150% to $13.4 million-$14.4 million.
Kayak is especially strong in the mobile device segment. Today, the company is the most downloaded mobile travel app on both iPhone and Android systems in the U.S. It claims to be the second-biggest travel app on tablet devices.
Kayak’s stock is trading at $29.37, with a market capitalization of $1.11 billion. It touched a high of $35.35 at the end of July, soon after listing. It had priced its IPO at $26.00.