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Online Travel Companies Seek Growth in International

Posted on Wednesday, May 21st 2014

According to an eMarketer report, growth in online travel sales will be driven by the increasing adoption of digital tools by emerging markets. The researcher expects only three countries to see double digit growth in online travel sales by 2017. China is expected to lead the market with 20% growth in 2017 followed by Italy’s 11.5% and India’s 11.1%. In the mature market of the U.S., online travel sales are projected to grow 5.9% annually over the period 2012 through 2017. Online travel sites are thus focusing their presence in international markets.

Priceline’s Financials

Priceline’s (NASDAQ: PCLN) Q1 revenues grew 26% over the year to $1.64 billion, ahead of the market’s projections of $1.56 billion. EPS of $7.81 grew 36% over previous year’s earnings and managed to exceed the Street’s projections of $6.92.

Gross bookings for the quarter grew 34% to $12.28 billion with international bookings growing 36.8% over the year compared with a 20% growth in domestic bookings.

By segment, agency revenues grew 35% to $1.04 billion while merchant revenues remained flat at $0.53 billion. Kayak’s acquisition has helped grow advertising and other revenues to $73.7 million.

For the current quarter, Priceline expects revenues to grow 19%-29%, falling short of the Street’s projections of 25.6% growth for the quarter. The company projected an EPS of $11.22-$12.02 for the quarter falling short of the Street’s projections of $12.27.

Priceline’s Unstoppable Growth

Priceline’s strong growth continues to be driven by their international operations. They reported a growth of 54% over the year to inventory for Booking.com which now has more than 455,000 properties across 200 countries. A PhoCusWright report estimates that Booking.com now accounts for 30% of Europe’s Online Travel Agency market. Priceline is also pleased with their rental car and Agoda.com segments. During the quarter, their UK acquisition of TravelJigsaw, now called Rentalcars.com saw rental car days grow 25% over the year.

Meanwhile, Priceline continues to work on expanding their mobile presence. Recently, they tied up with GM to build a Priceline app for Chevrolet owners that will enable these car users to locate, map, compare and book hotels through Priceline’s site.

Priceline’s stock is trading at $1,157.50 with a market capitalization of $60.69 billion. It touched a year high of $1,378.96 in March this year.

Expedia’s Financials

Competitor, Expedia’s (Nasdaq: EXPE) Q1 revenues grew 19% over the year to $1.2 billion, marginally ahead of the Street’s projections of $1.18 billion. EPS of $0.16 was also ahead of the market’s expected earnings of $0.14 per share.

Gross bookings for the quarter reported a growth of 29% to $12.6 billion driven by a 35% growth in domestic bookings and a 21% growth in international bookings.

Among key metrics, room nights booked on Expedia grew 24% over the year, helping grow hotel revenues by 12%. Air revenues grew 28% driven by a 30% increase in air tickets sold and advertising revenues grew 116% over the year due to the acquisition of Trivago in March this year.

Expedia’s International Growth

As part of their international focus, Expedia rolled out their Expedia Traveler Preference (ETP) program globally. ETP allows travelers to either pay at the time of booking or at the time of arrival at their destination. ETP has helped Expedia improve their presence in the hotel segment as the program tends to attract more room night booking. But the program is based on the agency revenue model and thus generates lower margins. The program was launched in 2012 and by the end of last year had enrolled over 45,000 programs for the offer. Expedia now plans to release ETP to global markets.

Expedia’s stock is trading at $70.22 with a market capitalization of $9.12 billion. It touched a year high of $81.78 earlier this year.

Orbitz’s Financials

Orbitz’s (Nasdaq: OWW) Q1 revenues grew 4% to $210.3 million, ahead of the Street’s projections of $206.5 million. For the quarter, Orbitz reported a loss of $0.05 per share compared with earnings of $1.34 per share a year ago and a loss of $0.02 per share expected by the market.

For the quarter, revenues from their hotel segment improved 7% to $67.2 million and airline ticket sales helped grow revenues 1% to $70.2 million. Revenues from sales of vacation packages grew 4% to $32.9 million. Advertising and media revenues reported the strongest growth at 12% to $14.6 million.

For the current year, Orbitz projected revenues of $239-$245 million compared with the Street’s projections of $233.3 million.

Orbitz’s Growth Plans

Last quarter, Orbitz announced the acquisition of certain assets and contracts from Travelocity Partner Network (TPN). TPN’s assets helped provide private label travel technology solutions for bank loyalty programs and online commerce sites. Orbitz had released a travel loyalty program last year which now has over 2 million members. The acquisition has helped Orbitz by complementing the program with the release of an Orbitz Rewards Visa Card, a credit card that allows users to earn an additional 5% in Orbitz Rewards when purchasing travel on Orbitz.com.

Meanwhile, like others, Orbitz too remains focused on international markets. Last year, Orbitz saw 27% of their revenues come from international operations. During the recently ended quarter, they continued to see growth in these markets driven by ebookers and HotelsClub offerings which have been enhanced by investing in localized products, services and content. These investments have resulted in a 38% improvement in hotels booked in Asia.

Orbitz’s stock is trading at $7.58 with a market capitalization of $828.1 million. It touched a year high of $13.26 in November last year.

TripAdvisor’s Financials

TripAdvisor’s (Nasdaq:TRIP) Q1 revenues grew 32% over the year to $281.0 million, falling marginally short of the Street’s projected revenues of $282.9 million. EPS of $0.54 was also short of the market’s expected earnings of $0.55.

By segment, revenue from Click-based advertising grew 16% over the year to $207.9 million. Display based advertising revenues grew 28% to $32.0 million and subscription and transaction revenues grew 62% to $42.0 million.

Americas accounted for 52% of their quarter’s revenues and grew 20% to $146 million. EMEA markets grew 27% to $90 million and APAC’s revenues increased 30% to $35 million.

TripAdvisor’s Acquisitions

TripAdvisor seems to be on a buying spree and recently announced the -acquisition of France-based LaFourchette. LaFourchette is an online restaurant booking website with an inventory of over 12,000 restaurants in Europe. They also have strong capability in providing software solutions and API offerings to help restaurants improve their online presence. Terms of the deal were not known.

In another international acquisition this year, they acquired London-based Tripbod for an undisclosed sum. Tripbod helps connect experts with travelers to provide useful recommendations. Additionally, TripAdvisor also acquired Massachusetts-based vacation rentals website, Vacation Home Rentals. Vacation Home Rentals has an inventory of over 14,000 homes worldwide. The acquisition will complement TripAdvisor’s last year vacation rentals acquisition of Spain based Niumba. The acquisition has helped TripAdvisor increase their vacation rentals inventory to over 550,000 properties worldwide.

Their stock is trading at $86.37, with a market capitalization of $12.32 billion. It touched a year high of $109.79 in March this year.

 

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