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Online Travel Going Strong

Posted on Monday, Dec 8th 2014

According to a recent UNWTO report on international tourism, the number of tourists travelling internationally increased 5% over the year for the period January to August 2014. UNWTO estimates that during the eight month period, there were more than 781 million travelers.

Priceline’s Financials
Priceline’s (NASDAQ: PCLN) third quarter revenues grew 25% over the year to $2.84 billion. The Street was looking for revenues of $2.72 billion. Gross travel bookings for the quarter increased 28% to $13.8 billion. EPS of $22.16 was 28% higher than the previous year and surpassed the market expectations of $21.11.

Priceline has benefitted significantly from its international operations. During the quarter, they saw a 32% growth in international bookings. Globally, room nights booked grew 27% over the year with to 95 million. Booking.com maintained their strong inventory and ended the quarter with 540,000 hotels, reporting a 52% growth over the year. Rental car business reported an 18% growth in rental car days.

By segment, Agency revenues grew 33% over the year to $2 billion. Merchant revenues fell 1% to $613 million and other revenues improved 70% to $123 million.

For the current quarter, Priceline expects revenues to grow 11%-18% over the year, translating to a mid-point of $1.76 billion. The market was looking for revenues of $1.89 billion. Priceline forecast an EPS of $9.40-$10.10 compared with the Street’s forecast of $10.20. The weak forecast was attributed to the currency and travel fallout from the Ukraine crisis.

Priceline’s Acquisitions
Priceline has made several acquisitions for growth with the more recent one being the $1.8 billion acquisition of restaurant reservation service OpenTable. Priceline is now scouting for other acquisitions. Analysts believe that Priceline could look at acquiring vacation rentals site Home Away, which has seen strong financial performance. Additionally, they could acquire TripAdvisor which offers a good complementary business with its review site and accounts for more than 10% of all global internet traffic to travel-related websites.

Priceline’s stock is trading at $1,140.11 with a market capitalization of $59.7 billion. It touched a 52-week high of $1,378.96 in March this year.

TripAdvisor’s Financials
TripAdvisor’s (Nasdaq:TRIP) third quarter revenues grew 39% over the year to $354 million, ahead of the Street’s projected revenues of $346 million. EPS of $0.37 was significantly short of the market’s estimates of $0.51.

By segment, revenues from click-based advertising accounted for 70% of the quarter’s revenues. Subscription and transaction revenues improved 100% to $72 million. They reported more than 315 million average monthly unique visitors on their site.

TripAdvisor’s Product Upgrade
Recently, TripAdvisor announced the launch of personalized hotel recommendations. The new service leverages TripAdvisor’s massive trove of information on travel reviews and opinions and is able to offer ideal hotels to their travelers. The service will be available through a Just for You button that will use preferences such as travel style, location, price range, hotel class, amenities, and brand to offer customers a personalized hotel recommendation.

Their stock is trading at $77.22 with a market capitalization of $11 billion. It touched a 52-week high of $111.24 in June this year.

Expedia’s Financials
Expedia’s (Nasdaq: EXPE) third quarter revenues grew 22% over the year to $1.71 billion, ahead of the Street’s projections of $1.68 billion. EPS of $1.93 was also ahead of the market’s expected earnings of $1.75 for the quarter.

Gross bookings for the quarter grew 29% over the year to $13.47 billion with hotel room nights improving 24% over the year.

During the quarter, Expedia’s Leisure customers brought in 94% of revenues, reporting a 16% growth over the year. Corporate revenues for Egencia fell 6% over the year and accounted for 6% of the quarter’s revenues.

Merchant revenues increased 20% to bring in 64% of the quarter’s revenues. Agency revenues improved 12% to contribute 28% of the quarter’s revenues, and advertising and media revenues improved 29% over the year.

Expedia’s Expanding Offerings
Expedia continued to improve their offerings and recently released the Expedia Viewfinder Image Library which is a free online resource of over 40,000 images that can be used by media outlets, journalists, and other content creators to add to their content. The images are digitally tagged and include a short description of the image. These images can be displayed on third-party websites as well as shared through email and social media sites.

Last month, Expedia also tied up with Amadeus to offer their customers airline branded fares from next year. Using their service, passengers will be able to search for and buy branded fares from select airlines and choose fares from the range of options available to them. Branded fares include fare products that offer premium services such as confirmed seating, premium seating, checked bags, and in-flight services.

Expedia’s stock is trading at $89.55 with a market capitalization of $11.3 billion. It touched a 52-week high of $90.45 last week.

Orbitz’s Financials
Orbitz’s (Nasdaq: OWW) third quarter revenues grew 26% over the year to $253.14 million, marginally ahead of the Street’s projections of $252.99 million. EPS of $0.08 was short of the Street’s forecast of $0.14.

During the quarter, room nights improved 19% and gross bookings improved 14% over the year to $3.15 billion. Overall revenues from hotels improved 26% to $104.9 million and revenues from air bookings improved 6% to $62.8 million. Vacation package revenues increased 5% to $39.4 million. Advertising revenues increased 4% to $14.5 million and other revenues grew 17% to $31.6 million.

Orbitz expects to end the current year with revenues growing 9%-10% over the year.

Orbitz’s Partner Network Expansion
During the quarter, Orbitz Partner Network entered into several strategic tie-ups. They tied up with Bank of America that will enable Orbitz Partner Network to provide several services to the bank. Orbitz will be able to power the travel rewards program of Bank of America with their technology and will enable the bank’s customers to use cash and rewards points to make air, hotel, and car bookings.

They also entered into an agreement with Hyatt Hotels to power dynamic packaging on the hotel vacation package website HyattTravel.com. Orbitz will package Hyatt hotels with air and car travel products and services that will be available to Hyatt customers through a customized site hosted on Orbitz. They entered into a similar agreement with RIU Hotels & Resorts for their properties in Mexico, Central America, and the Caribbean.

Orbitz’s stock is trading at $8.08 with a market capitalization of $894.5 million. It touched a 52-week high of $9.96 in February this year.

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