Booking.com parent Priceline group saw business transacted on its websites grow 21% to $16.7 billion in the first quarter of 2016, although its advertising costs rose to just under $1 billion.
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Booking.com parent Priceline reports improved first quarter trading while advertising costs rise
Booking.com parent Priceline group saw business transacted on its websites grow 21% to $16.7 billion in the first quarter of 2016, although its advertising costs rose to just under $1 billion.
The travel giant’s accounts for the three months to the end of March, reveal advertising and sales and marketing costs rose from $788 million to $942 million year on year for the period.
This helped the firm record the highest quarterly room night reservations in its history, up 31%.
The firm reported gross profit for the quarter of $2 billion, up 21% on the prior year and operating income of $550 million, up from $433 million.
A breakdown of Priceline’s advertising expenses reveals ‘performance advertising’ costs were $780 million, up from $633 while ‘brand advertising’ expenditure reduced from $73.25 million to $69.85 million.
Expenditure on brand advertising in the US will be ramped up in the next quarter as Booking.com looks to keep pace with rivals.
Sales and marketing expenses increased to $92.32 million from $81.94 million for the three-month period. Total operating expenses were $1.47 billion for the three months, up from $1.24 billion.
International operations (outside of the US) contributed gross profit of $1.7 billion, a 23% increase year on year.
Net income was $532 million but when accounted for under US auditing principles it came in at $374 million, up from $333 million. Adjusted EBITDA was $676 million, up 27%.
Jeffrey Boyd, chairman and interim chief executive, said: “The Priceline Group delivered strong top line growth and attractive margins in the first quarter.
“Growth in room night reservations of 31% reflects continued solid execution in the market for global travel.
“The Group is looking forward to continued investments in product, service and branding that will drive long-term growth for our leading brands.”
Looking forward to the second quarter, Priceline forecast a further increase in room night booked of 15% to 22%.
It also expects to see an increase in total gross travel bookings of 11% to 18% and increase in revenue of 7% to 14% and gross profit of 9% to 16%.
Boyd delivered his first trading update since the shock departure of chief executive Darren Huston following revelations of a personal relationship with a member of staff.
He said no timescale has been placed on finding a successor.
