Continued increases in hotel room demand helped the largest U.S. online travel agencies, Priceline, Orbitz and Expedia, improve first-quarter financial results.
Priceline, the world's largest online travel agency (OTA) by global sales, increased first-quarter net income by 34% from a year earlier, to $244.3 million. Revenue rose 26%, to $1.3 billion, as it boosted hotel room-night bookings and car rental days by 38% and 43%, respectively.
Overall gross bookings advanced 36%, to $9.2 billion, Priceline, which generates more than 80% of its business from overseas, said year-over-year U.S. bookings growth accelerated to 8.7% from 4.4% in the fourth quarter, as the company debuted its Express Deals semi-opaque service this year. Priceline in January also launched its first U.S. advertising campaign for its Booking.com European division.
"Hotel room-night growth rates in the latter part of the quarter were better than expected," said Priceline CEO Jeffery Boyd on a May 9 conference call with analysts, and he added that the OTA broadened its room inventory.
"Growth rates benefited from good results in Europe and continued high growth rates in Asia-Pacific and the Americas," he said.
Meanwhile, Orbitz shares reached five-year highs earlier this month after it reported a first-quarter profit and beat analysts' revenue projections.
Orbitz reported net income of $146.2 million, compared with a year-earlier loss of $6.5 million, as the company had a one-time tax benefit of $157.5 million from deferred tax assets.
Revenue rose 6.9% from a year earlier, to $202.9 million, exceeding the $198.1 million average analyst estimate in a Thomson Reuters survey.
Higher hotel room bookings and higher revenue per air ticket more than offset lower air volume, even though overall bookings fell 1.3%, to $3.1 billion.
Those results followed up Expedia Inc.'s late April announcement that its Q1 revenue increased 24%, to $1.01 billion, as gross bookings advanced 16% from a year earlier, to $9.78 billion. Hotel room-night bookings jumped 28%.
Expedia took a $104.2 million Q1 loss, after it set aside about $60 million in legal reserves when a Hawaii judge ruled earlier this year that OTAs owe the state $150 million in unpaid excise taxes. That compares with a $3.3 million loss in Q1 2012.
Additionally, Expedia booked about $57 million in expenses stemming from its first-quarter acquisition of a 62% stake in Germany-based metasearch company Trivago.
Competition in the U.S. and abroad
The U.S. hotel market continues to recover from the recession and resulting drop in travel spending. First-quarter revenue per available room advanced 6.4% from a year earlier primarily on a 4.5% increase in room rates, according to Smith Travel Research.
Priceline in 2010 overtook Expedia as the world's largest OTA by sales, though Expedia remains by far the most popular OTA among Americans.
Expedia accounts for about 44% of U.S.-based OTA bookings, compared with about 21% for Orbitz, 17% for privately held Travelocity and about 11% for Price-line, according to travel research firm PhoCusWright.
Meanwhile, Priceline and Expedia are intensifying their competition for travelers overseas, where online booking habits are far more fragmented than in the U.S.
Priceline, which agreed in November to acquire metasearch leader Kayak, recently set a May 21 closing date for the transaction.
The acquisition was delayed after U.K. antitrust regulators said they would review the proposed buyout. That review has been completed.
Expedia paid $564 million in cash and about $65 million in Expedia stock for its majority stake in Trivago, which will continue to operate from its headquarters in Dusseldorf, Germany.