Booking.com bucks US agency trend with currency-driven growth

Priceline.com’s international hotel business – primarily booking.com – accounted for more than a billion-dollars worth of gross bookings in the first three months of the year despite a big drop in average daily rates.

This equates to a 36% increase on a local currency basis compared with Q1 08. In dollar terms, this quarter’s billion dollars is flat with Q1 08.

CFO Jeffery Boyd told analysts: “International gross bookings benefited from geographic expansion, growth in hotel inventory, and growth in new markets.”

Its APAC bedbank agoda.com is still a small business compared with booking.com.

The Q1 09 result do not separate out the two but in the last three months of last year, agoda.com accounted for $37.5m-worth of gross bookings out of a total of $792 million.

It has driven the growth in Europe by increasing “spend in online channel, driving demand growth with reasonable efficiency.” Expedia Inc and Orbitz Worldwide have recently reported scaling back their marketing spend in Europe.

Priceline is confident that Europe will continue to perform well. “Our view is that the room night growth that we expect to see outside of the United States in Q2 is going to be very strong and market leading.”

Its US business has also performed well, with the focus on opaque channel. Its domestic competitors have followed Priceline’s lead and cut booking fees on seats and beds. Priceline expects its rivals bottom-line to take “a material hit” as a result, whereas Priceline “has been living with this fee structure for over a year and will not experience the same hit since our domestic P&L is not substantially dependent on fee income from retail services.”

Priceline Incs results beat not only Wall Street but its own expectations. It’s pro forma EBITDA for the quarter came in at $64 million compared with a prediction $50-$55 million.

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