Orbitz Worldwide, Inc. Reports Second Quarter 2010 Results
For the second quarter 2010, Orbitz reported net income of $9.7 million or $0.09 per diluted share compared with net income of $10.3 million or $0.12 per diluted share for the second quarter 2009.
CHICAGO, Aug. 5 /PRNewswire-FirstCall/ -- Orbitz Worldwide, Inc. (NYSE:OWW) today announced results for the second quarter and six months ended June 30, 2010.
"Orbitz Worldwide's second quarter results significantly exceeded our Adjusted EBITDA expectations, increasing 7 percent year over year, to $48.1 million. We posted solid year over year improvements in gross bookings, transactions, and hotel room nights," said Barney Harford, president & CEO of Orbitz Worldwide. "ebookers continued its strong performance with hotel room night growth of 58 percent. Both Orbitz for Business and our private label business also posted strong growth in transactions and hotel room nights."
Second Quarter 2010 Financial Highlights
For the second quarter 2010, the company reported net income of $9.7 million or $0.09 per diluted share compared with net income of $10.3 million or $0.12 per diluted share for the second quarter 2009. Income before income taxes for the second quarter 2010 was up nine percent year over year. Adjusted EBITDA increased seven percent year over year to $48.1 million from $45.0 million for the second quarter 2009.
Gross Bookings and Net Revenue
Global gross bookings increased 17 percent (18 percent on a constant currency basis) year over year. This increase was due primarily to higher air fares and higher transaction volume. Air gross bookings increased 21 percent (22 percent on a constant currency basis) and non-air gross bookings increased seven percent (six percent on a constant currency basis) year over year. Domestic gross bookings increased 17 percent and international gross bookings increased 19 percent (20 percent on a constant currency basis) year over year.
Net revenue was $193.5 million for the second quarter 2010, an increase of three percent (two percent on a constant currency basis) year over year. Domestic net revenue was up two percent while international net revenue increased eight percent (six percent on a constant currency basis) year over year. The growth in net revenue was due primarily to an increase in standalone hotel and international air transactions as well as higher travel insurance revenue. These increases were partially offset by lower airline hosting and advertising revenue.
• Air net revenue was $70.9 million in the second quarter 2010, up three percent on both a reported and constant currency basis year over year. Domestic air net revenue was up one percent year over year due to higher net revenue per airline ticket and a slight increase in air transactions. The company's air transaction growth rate slowed in the second quarter 2010 as the company passed the anniversary of removing booking fees on most flights. International air net revenue increased $1.6 million or ten percent (14 percent on a constant currency basis) year over year due primarily to higher air transactions partially offset by lower net revenue per airline ticket.
• Hotel net revenue was $52.1 million in the second quarter 2010, up 13 percent (nine percent on a constant currency basis) year over year. Hotel net revenue for the company's domestic brands increased due primarily to an increase in standalone hotel transactions. Hotel net revenue also increased due to another quarter of strong performance at ebookers driven by increases in both standalone hotel transactions and net revenue per hotel transaction. Net revenue at HotelClub declined due to lower volume in European destinations and a geographic mix shift towards hotel bookings in lower margin markets.
• Vacation package net revenue decreased one percent in the quarter to $31.2 million due to lower domestic transactions primarily caused by higher package prices as a result of higher air fares and average daily rates for hotel rooms. Strong demand for packages at ebookers partially offset the decline in domestic vacation package net revenue.
• Advertising and media revenue decreased 13 percent year over year to $12.4 million, primarily due to a decline in revenue from membership discount programs. Effective March 31, 2010, the company ended the membership discount program previously offered on its domestic websites.
• Other net revenue, which primarily includes car rental, cruise, destination services, travel insurance and airline hosting revenue, decreased one percent (flat on a constant currency basis) year over year. This decrease was primarily due to the termination of one of the company's airline hosting agreements in the first quarter 2010. Higher travel insurance revenue due to higher attachment rates and higher air fares partially offset this decline.
• In July, Chris Orton was named the company's Chief Marketing Officer. Chris is a leader in developing algorithmic approaches to online marketing and customer relationship management. Chris joined Orbitz Worldwide from eBay, Inc.
• In July, Orbitz Worldwide launched its EasyConnect™ solution, an improved connectivity solution for channel managers and small to medium-sized hotel chains which will allow the company to expand its hotel supply more efficiently.
• As of June 30, 2010, Orbitz Worldwide offered approximately 100,000 bookable hotels on its websites, including nearly 70,000 merchant hotels. Orbitz Worldwide websites offer over 40,000 hotels in the EMEA region and 16,000 hotels in the Asia Pacific region.
• During the second quarter, Orbitz Worldwide renewed its global agreements with Starwood and Marriott. In addition, the company signed global agreements with a number of new European hotel partners during the second quarter, including Jury's, Falksteiner, Motel One and Bastion. The Company also signed a global agreement with New Zealand-based Scenic Hotel Group.
• In June, Orbitz launched its Open Beach Guarantee, developed in partnership with participating Florida hotels, which offers full refunds on standalone hotel reservations if the beach at a customer's destination is closed due to the oil spill. Under the Open Beach Guarantee, customers who make a standalone hotel booking at a participating property on Orbitz.com for travel between June 14 and September 30, 2010, will be eligible for a full refund on their hotel stay if a government agency closes or declares dangerous a beach within 20 miles of the property.
• As of June 30, 2010, Orbitz had over 5,000 travel agents participating in its Orbitz for Agents program, a groundbreaking program that offers travel agents the opportunity to earn commissions on hotel reservations and customized travel package bookings made on behalf of their customers.
• During the second quarter, the company launched a customized solution for LAN Airlines, providing their customers the ability to book vacation packages using the Orbitz Worldwide global network of suppliers.
• In May, Orbitz Worldwide launched AdventureFinder, a new travel website that provides instant access to the world's leading adventure vacations. The website allows consumers to research, customize, and plan active escapes quickly and easily.
• Orbitz for Business completed a strong second quarter, delivering 39% year over year gross bookings growth. This growth reflects continued acceleration in corporate travel demand and the addition of new customers, such as Tourneau, Inc. In addition, Orbitz for Business signed renewals with existing customers including Clearwire LLC, Fellowes, Inc., Federal Signal Corporation and Mastec, Inc.
• During the second quarter, Orbitz Worldwide signed global contracts with a number of destination marketing organizations including Vermont Department of Tourism & Marketing, Visit Denver, New Orleans Tourism & Marketing Corporation and Hong Kong Tourism Board to promote travel to those destinations. Orbitz Worldwide now has partner marketing agreements with nearly 175 destination marketing organizations.
Q3 2010 and Full Year 2010 Outlook
For the third quarter 2010, the company expects:
• three percent to six percent year over year increase in net revenue;
• 19 percent to 21 percent cost of revenue as a percentage of net revenue;
• flat to six percent year over year increase in Adjusted EBITDA.
For the full year 2010, the company expects:
• marketing expense as a percentage of net revenue will approximate 2009 levels;
• capital expenditures in the range of $36 million to $42 million; and
• five percent to ten percent year over year increase in Adjusted EBITDA.
About Orbitz Worldwide
Orbitz Worldwide is a leading global online travel company that uses innovative technology to enable leisure and business travelers to research, plan and book a broad range of travel products. Orbitz Worldwide owns a portfolio of consumer brands that includes Orbitz, CheapTickets, ebookers, HotelClub , RatesToGo, the Away Network and corporate travel brand Orbitz for Business. For more information on how your company can partner with Orbitz Worldwide, visit corp.orbitz.com.