Orbitz Q1 results: Ebookers sees growth, but hotelclub struggles

Orbitz Worldwide’s European OTA ebookers has recorded a strong start to 2010 and is likely to end the year in profit, according to chief financial officer Marsha Williams.

However Orbitz’s other international business, Australian-based accommodation-only brand hotelclub, continues to struggle in terms of overall performance, despite a good showing in APAC.

Talking to Wall Street analysts on Orbitz’ Q1 2010 earnings conference call, Williams said: “When we talk about profit we talk about adjusted EBITDA.

The improvements at ebookers have offset some of the softness in hotelclub, but in general our international businesses, on an adjusted EBITDA basis, will contribute to the bottom-line this year.”

During the first three months of the year, ebookers improved its stayed room nights by 80% year-on-year. Across the entire Orbitz business room nights, were 13% ahead.

Ebookers’ total transactions were up by 39%, with net revenues up 43%.

CEO Barney Harford claimed the turnaround was being driven by the technology platform ebookers now operates on, by improved hotel content and by its streamlined organisational structure in Europe.

“We believe we are positioned to compete aggressively in the European OTA market,” he said.

Williams added that the dynamic packaging capabilities of the platform were behind the “extremely strong growth in dynamic packaging numbers”at ebookers, which she said were high double-digit increases.

Williams and Harford were asked about the effect of the ash cloud on the business. Williams said that the impact “would not be material” although she said that there were “significantly higher customer service costs in [our] European call centres and we do expect to have an impact which company-wide will be in the $1m-$2m range.”

On previous calls, Harford has said that ebookers will be positioned as a full-service OTA with hotelclub as its international accommodation brand.

When asked whether the improvement at ebookers and continued weakness at hotelclub was prompting a rethink, Harford said only that “the standalone hotel model is interesting to us as a way to enter new high growth markets such as the Middle East and Latin America.” 

He said that the hotelclub moving forward would focus on its strength in Asia Pacific.

Overall, Orbitz Worldwide reported gross bookings for the quarter of $3bn, 24% ahead of Q1 09’s return of $2.4bn. Revenues were down 1% at $187m, with the end result a net loss of $5.3m.

In Q1 09 the net loss was $336m, although this included a $331.5m one-off impairment charge. Adjusted EBITDA this quarter was $30.6m, up from $27.4m.

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