Priceline.com and Orbitz Worldwide have both posted better than expected quarterly profits, pointing to solid demand for travel.
Priceline and Orbitz post better-than-expected quarterly results
Priceline.com and Orbitz Worldwide have both posted better than expected quarterly profits, pointing to solid demand for travel.
Rising bookings for car rental and hotels bolstered Priceline, which has the highest market capitalisation among online travel agencies, while Orbitz benefited from an increase in bookings of higher-margin hotel and holiday packages.
Shares of Orbitz jumped more than 36% in the US to a new high this year of $12.62. Priceline, which reported results after markets closed, gained more than 5% to $984.50 in extended trading.
Net income at Priceline was $437.4 million in the second quarter, up from $352.3 million a year earlier. Gross bookings rose 38% to $10.1 billion in the second quarter.
Quarterly revenue at Priceline grew around 27% to $1.68 billion. Hotel room nights booked increased 38%, while rental car days booked rose 46%.
Priceline owes much of its success to international bookings on its Booking.com travel site, which has a relatively high concentration in Europe, although trading remained challenging in this market.
It is now investing in TV advertising in the US to increase awareness of Booking.com, its biggest brand. It also recently acquired meta-search site Kayak to increase traffic.
“The advertising campaign is having a positive effect on the growth that Booking.com is experiencing in the United States,” Priceline chief executive Jeffery Boyd said.
“The most differentiated feature about this market is how highly competitive it is.”
Orbitz gross bookings rose 4% to about $3.1 billion in the second quarter while revenue rose 12% to $225.8 million.
The company expects revenue of $840 million to $850 million for the full year, which would represent growth of nearly 9% over 2012.
For the third quarter, Orbitz said it expected revenue of $214 million to $220 million. The strength in its hotel business was continuing into the current quarter.
Chief executive Barney Harford said that “there’s still so much opportunity in this market” as consumers increasingly book travel on mobile devices.
“We continue to invest very aggressively in this area to take advantage of this transformational shift,” he added.
