7 years ago

Priceline provides glimpse into Asia Pacific business

Priceline has been very shy about providing specific numbers on its Asia-Pacific hotel business, but the online travel agency shed its inhibitions yesterday.

The company revealed that its Agoda and Booking.com business for APAC destinations, did $780 million in gross bookings for the 12 months ending Sept. 30 — and that amounted to around 6% of of Priceline’s gross bookings during that period.

In providing a “one-time” look into how it’s businesses are doing in new markets, Priceline stated that the Agoda and Booking.com business in APAC grew nearly 150% in the third quarter.

Priceline doesn’t have a point of sale presence in China, but the numbers include a small number of participating hotels in China and bookings from Chinese consumers who book on websites outside the country.

Booking.com’s business in South America, meanwhile, did $96 million in the trailing 12 months through Sept. 30 and grew more than 300%, Priceline revealed.

Overall in the third quarter, Priceline saw its gross booking climb 47.1% to $4 billion.

Rounding out the geography lesson, Priceline president and CEO Jeffery Boyd said, somewhat surprisingly, that its business in North America, where grossing bookings climbed 12% to $1.1 billion in the third quarter, is one of the company’s “fastest growing core markets.”

That runs counter to an often-heard view that the North American market is saturated and that OTAs need to look internationally for any growth.

Boyd attributed that growth in North America to the availability of promotional hotel in inventory and the expansion of Booking.com inventory on Priceline.com.

Boyd fielded a question about direct-connects with airlines and GDS bypass and what impact they might have on Priceline if domestic airlines insisted on direct-connects, as American Airlines is doing with Orbitz.

Boyd said such direct-connects with airlines would have no material impact on Priceline, which counts on airline ticket sales for a much smaller part of its gross profit than it does with its hotels business.

He seemed to be leaving the door open for direct connections with airlines if that is what they seek.

Boyd said Priceline believes it has “very good relationships with the airlines and we certainly have the ability to do innovative things in our connections with the airlines and I think we provide to the airlines the lowest cost distribution that they have out there.”

“And, I don’t believe operating expenses required to continue to connect with them in ways that are acceptable to the airlines are going to have any significant impact on our CapEx or anything of that nature,” Boyd said.

For the third quarter, Priceline’s net income fell 30.1% to $223 million on revenue of roughly $1 billion, a 37% increase.

Analyst Herman Leung of Deutsche Bank was upbeat about Priceline’s performance.

“Priceline continues to execute on its plan of dominating the international hotel market,
with a strong foothold of now 105,000 properties worldwide,” Leung wrote in a note to investors. “Growth remains in penetration of European hotels (lags about 10% behind US
penetration rates), new regions (Asia, South America) and new service expansions (rental cars).”

On one other hot-button issue — the Google-ITA Software deal — Boyd confirmed Priceline chose not to be part of the anti-deal coalition, FairSearch.org.

Boyd said Priceline continues to believe that the deal could benefit online travel agencies, although Priceline does have some concerns, which it has communicated to the Dept. of Justice.

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Dennis Schaal

About the Writer :: Dennis Schaal

Dennis Schaal was North American editor for Tnooz.



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