Chicago, August 9, 2011 - Orbitz Worldwide, Inc. (NYSE: OWW) today announced results for the second quarter and six months ended June 30, 2011.
“Our financial results exceeded the top end of our guidance range during a challenging period in which we have been making major technology and product investments throughout our business," said Barney Harford, CEO of Orbitz Worldwide. "Among the highlights for the quarter, ebookers once again achieved strong performance, delivering 31 percent room night growth. In our private label distribution channel we launched important partnerships with Eurostar and more recently with Virgin Australia; looking forward we have an extremely strong pipeline for 2012."
Second Quarter 2011 Financial Highlights
The company reported net income of $8.9 million or $0.08 per diluted share for the second quarter 2011 compared with net income of $9.7 million or $0.09 per diluted share for the second quarter 2010. Adjusted EBITDA was $38.7 million for the second quarter 2011, a decrease of 19 percent year over year.
Gross Bookings and Net Revenue
Global gross bookings decreased three percent (five percent on a constant currency basis) year over year. This decrease was due primarily to lower volume for the company's domestic leisure brands. Higher volume for ebookers and higher air fares and average daily rates ("ADRs") for hotel rooms for the company's domestic leisure and Orbitz for Business brands partially offset this decrease. Global hotel gross bookings increased nine percent year over year driven primarily by ADR expansion.
Net revenue was $201.8 million for the second quarter 2011, an increase of four percent (flat on a constant currency basis) year over year. Net revenue increased due primarily to higher hotel, vacation package, car and advertising and media revenue, partially offset by lower air net revenue. Global hotel net revenue, including hotels booked on a standalone basis and as part of a vacation package, represented 36 percent of the company's total net revenue for the trailing twelve months ended June 30, 2011. Net revenue from ebookers represented 21 percent of the company's total net revenue on a trailing twelve month basis.
Air net revenue was $69.5 million in the second quarter 2011, down two percent (five percent on a constant currency basis) year over year. Air net revenue for the company's domestic leisure brands was down 12 percent year over year primarily due to lower air volume, partially offset by higher net revenue per airline ticket. The lower air volume was due primarily to actions taken by certain airlines to limit the forward distribution of their fares on meta-search sites, such as Kayak, fare structure changes implemented by a major airline, higher air fares and, to a lesser extent, the lack of American Airlines' content on the company's Orbitz.com site through June 1, 2011. The higher net revenue per airline ticket was due primarily to an increase in GDS incentive revenue and a shift in supplier mix towards airlines from which the company earns higher commissions. ebookers air net revenue increased 29 percent (13 percent on a constant currency basis) year over year due primarily to higher air volume. Hotel net revenue was $55.2 million in the second quarter 2011, up six percent (flat on a constant currency basis) year over year. Hotel net revenue for the company's domestic leisure brands increased due primarily to higher hotel ADRs, partially offset by lower volume. ebookers delivered another quarter of double digit growth in standalone room nights which also contributed to the increase in hotel net revenue. Lower hotel volume for HotelClub partially offset these increases.
Vacation package net revenue increased seven percent (four percent on a constant currency basis) in the quarter to $33.5 million. ebookers vacation package net revenue increased due primarily to higher volume as a result of new product offerings and the company's marketing efforts. Vacation package net revenue for the company's domestic leisure brands decreased in the quarter due to lower vacation package volume, partially offset by higher net revenue per transaction driven by higher hotel ADRs, higher air fares and fewer promotional coupons issued
by the company.
Advertising and media revenue increased ten percent (eight percent on a constant currency basis) year over year to $13.6 million due primarily to the company's ongoing efforts to monetize its websites globally.
Other net revenue, which is primarily comprised of car rental, cruise, destination services, travel insurance and airline hosting revenue, increased 11 percent (eight percent on a constant currency basis) year over year. This increase was due primarily to higher car revenue and higher travel insurance revenue for ebookers. The higher car revenue was driven by an increase in overrides and breakage. Higher air volume drove the increase in travel insurance revenue for ebookers.
Operational Highlights
Consumer Brands
• In July 2011, Orbitz announced the launch of the Orbitz Hotels App, a native iPad application that gives customers an intuitive search-and-book experience designed specifically for iPad. The Orbitz Hotels App for iPad offers travelers the entire selection of Orbitz hotel properties, powerful comparison tools and secure booking in just three taps.
• In August 2011, Orbitz announced that its one-of-a-kind Price Assurance cash refund program hit the $10 million mark, and began airing a new Price Assurance television commercial. Since this program's inception in June 2008, more than 170,000 Price Assurance automatic refund checks have been issued to customers for a total of $10 million in refunds.
• During the second quarter, the company launched a keyword optimization and bidding engine, which is the first of many capabilities the company is building with its Math Engine and will enable the company to make more intelligent and faster adjustments to its paid search engine marketing for its global brands, ultimately improving e-marketing spend optimization. The Math Engine supports over ten million key words and millions of bid updates per day.
• In June 2011, Orbitz announced the launch of "Insider Steals," a weekly members-only flash sale that gives Orbitz members 50 percent or more off handpicked hotels in top destinations around the world including Las Vegas, New York, Orlando, Cancun and Hawaii. CheapTickets launched a similar program called “Member only prices.”
• In June 2011, the company successfully launched the first-ever mobile-web version of CheapTickets (m.cheaptickets.com). Over six percent of CheapTicket's hotel bookings now come from mobile.
• In May 2011, ebookers launched its inspirational iPad app, ebookersExplorer, which has had over 75,000 downloads since launch.
• During the second quarter, ebookers Region 1 markets (U.K., Ireland, France and Benelux) migrated to Orbitz Worldwide's global trigger-based email platform. Collectively, these markets experienced 18 percent year-over-year growth in email transactions as a result.
• During the second quarter, ebookers launched its pan European TV campaign successfully in four markets with over 3,000 advertising spots run over a period of ten weeks.
• In May 2011, Orbitz Worldwide completed the migration of its last minute hotel site RatesToGo.com to its global technology platform.
• In June 2011, Orbitz launched a 10th anniversary sale with up to 30 percent off thousands of hotels worldwide in summer's most popular destinations.
Private Label Distribution
• In May 2011, Orbitz Worldwide announced that Eurostar International has launched the Orbitz Worldwide Distribution private label solution to power hotel, vacation package, car and activities bookings on the Eurostar International website.
• In July 2011, Orbitz Worldwide Inc. announced a new partnership with Virgin Australia to power standalone hotel bookings on the Australian websites of Virgin Australia.
Corporate Travel
• In July 2011, Orbitz for Business announced the Business Advantage program, which offers discounted, fully refundable hotel rates and complimentary amenities for road warriors. The new Business Advantage rates and amenities are available in every major U.S. market and selected cities in Canada, Mexico and the United Kingdom. Since the pilot launch in January, participating Business Advantage hotels have seen a 62 percent year-over-year increase in bookings compared with a 20percent increase for non-participating properties.
Partner Services
• During the second quarter, Orbitz Worldwide reached agreements with a number of hotel partners, including Intercontinental Hotel Group, Melia Hotels International, Lagrange City Résidences, Disneyland Paris, Hospitality Management Holdings and Kerzner International. Orbitz Worldwide also signed an agreement with Paradores for exclusive access to over 90 luxury hotel properties throughout Spain.
• During the second quarter, the company signed partnership agreements with a number of air suppliers, including British Airways, Swiss Air and Air France-KLM-Delta.
• During the second quarter, Orbitz Worldwide signed partner marketing contracts with a number of destination marketing organizations, including Qatar Airways, Lufthansa Airlines, Capital One Financial, Kentucky Department of Travel, Tourism Quebec, Banff Lake Louise Tourism, Edmonton Tourism, Tourism Calgary, Tourism Jasper, Tourism Alberta, Saint Lucia Tourist Board, Tourism Victoria, Bloomington Convention and Visitor's Bureau, Bradenton Area Convention and Visitor's Bureau, Chelan County Tourism, Travel Michigan, Tourist Office of Spain, Lafayette Convention & Visitors Commission, Chicago Office of Tourism and the Moroccan National Tourist Office. Orbitz Worldwide now has partner marketing agreements with over 200 destination marketing organizations.
Outlook
For the third quarter 2011, the company expects:
• Net revenue in the range of $194 million to $200 million; and
• Adjusted EBITDA between $33 million and $37 million.
For the full year 2011, the company expects:
• Net revenue in the range of $752 million to $762 million; and
• Adjusted EBITDA between $118 million and $125 million.
This outlook assumes relatively stable foreign exchange rates.
