Priceline is being bested by Expedia in US hotel bookings
Priceline Group expects its US gross travel bookings to drop between 5 and 10 percent in the next few months, relative to its fourth-quarter performance a year ago.
Its overall gross bookings in the US were down 2.5% in the third quarter, year-over-year.
That showing contrasts with the third-quarter performance of its rival Expedia Inc, which saw 22 percent growth in room nights in the US.
Priceline Group’s chief financial officer Daniel Finnegan partly blamed the trend on a 13% reduction in the year-over-year sale of airfares, which had an impact on gross hotel bookings during the quarter. The reason? There were fewer instances of travelers needing hotel stays to accompany their flights.
Finnegan also said that the company had two earlier quarters of accelerating growth for US room nights. So the overall 2015 story wasn’t as bad as the company’s latest numbers may suggest.
Another caveat: Priceline’s numbers didn’t include the performance of its Booking.com brand, which landed in the US in 2013. CEO Darren Huston says he feels “very good” about that brand’s inroads into the US.
Priceline noted it would stop reporting US gross bookings in its future earnings calls. Finnegan explained:
“We believe that the usefulness of this metric has diminished due to the relative size of our US business to our consolidated results, and because two of our three US businesses do not have gross travel bookings.”
“Overall we feel great about our US business. There’s a lot more to do. It’s one of the big markets where we’re definitely under-indexed.
We do think we have a good set of cards to continue to compete in the US and North America overall.”
Hotel reservations are important because they make up about roughly the lion’s share of Priceline Group’s and Expedia Inc’s revenue globally, according to Morgan Stanley estimates.
Today (Nov. 9), Priceline Group beat its analyst estimates, such as by reporting growth in gross profits to $2.9 billion, up 12 percent over a year earlier.
Investors overlooked that good news and seemed to be responding instead to Priceline’s downward revision in its estimates for growth in early 2016. The stock declined 9 percent, its worst drop since May 2010 — the last time the company disappointed investors with a downbeat outlook.
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