Hotelclub and Ebookers struggle in early 2009 trading

Orbitz Worldwide has reported a poor start to the year for its international businesses Ebookers and Hotelclub.

Chief financial officer Marsha Williams told analysts on Orbitz Worldwides Q1 earnings call that Ebookers saw a decline in its net revenues on a year-on-year basis.

The economic climate in Europe has weakened since Q1 08, cancelling out any positive impact from the migration of all ebookers businesses onto the same platform.

HotelClub meanwhile experienced considerable weakness in the first quarter, according to new chief executive Barney Harford, with the annual daily rate declining in line with falls seen elsewhere.

Williams said that its international hotel business was the primary driver of the decline in international revenues.

The numbers for international businesses show that gross bookings dropped in dollar terms by more than one-third, coming in at $314 million this quarter compared with $488 million in Q1 08. In local currency, the gross bookings this time still fell by 20% year-on-year.

Harford was keen to tell analysts that hotels are a long-term focus for us and that resources were now available internally following the completion of the ebookers migration project.

As well as building up inventory, he said it is developing ways in which we are able to harness a low cost transaction sources be they CRM- or Search Engine Optimization-generated, transactions that the revenues for which will drop straight to the bottom-line.

One feature of Orbitz quarter was a big drop in marketing costs as a result of looking for greater efficiency. Harford said that Orbitz spend $21 million, or 24% less ,on marketing during Q1 09 and expected this to continue.

He said: “We made a strategic call early in the first quarter to rationalize our e-marketing strategy and to focus more on driving efficiency in the bottom-line.”

The earnings statement also said that Orbitz Worldwide is planning to introduce a number of “new media monetization initiatives on [its] websites”.

Harford declined to go into details when asked, but did say that concerns about potential cannibalisation of transactions were present whenever new media initiatives were launched.

He concluded however but concluded that there is incremental revenue to be made from the media model.

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