Booking.com parent Priceline reports improved first quarter trading while advertising costs rise

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.

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