Travel distribution and technology
companies had a decent third quarter. Among the publicly traded
firms that report quarterly results, all the major pincreased in
the 23% to 25% range, solidifying their positions at the top of the
heap.
Sabre Holdings
and Cendant, owners of the Sabre and Galileo GDSs, reported
continued weakness in GDS booking levels and fee revenue, but both
firms ended the quarter on the upside owing to offsetting gains in
other lines of business.
Unless otherwise
indicated, the reports below are for the quarter ended Sept. 30,
and all percentage comparisons are to the same period of
2003.
At
American Express, travel sales increased 23.4% to
$4.6 billion, a big gain that Amex said was primarily the result of
its acquisition of Rosenbluth International, whose annual sales
volume had been estimated at $5 billion a year. Reflecting the
increased sales, commission and fee income rose about $77 million,
or 22%, to $426 million, representing 9.2% of sales.
The additional
revenue helped boost the top line at Travel Related Services to
nearly $5.4 billion, a 12.7% gain; net income for the unit rose
nearly 20% to $726 million. Overall, American Express reported net
income rose 14.1% to $879 million as revenue grew 12.2% to $7.2
billion.
IAC/InterActiveCorp, parent of Expedia,
Hotels.com, Hotwire and other Web sites, said its combined travel
sales grew 25% to nearly $3.4 billion. Expedia accounted for over
78% of that, or $2.6 billion.
Revenue at IAC
Travel increased 24% to $570.5 million, generating a bit over a
third of the parent companys total. The revenue boost was helped by
the inclusion of Hotwire, acquired last year, but the company noted
that its margin on merchant sales declined, a possible reflection
of the hotel industrys recent effort to rein in Web
retailers.
Overall, the
parent company reported revenue of $1.5 billion, a 13% increase,
and net income of $89.5 million, close to quadrupling the $18.7
million reported a year ago.
Navigant
Internationals net income fell 14% to $4.8 million, a
reflection of declining revenue per transaction and lower net
profit per transaction, the company said. Revenue was up 25.3% to
$113.7 million, partly owing to acquisitions, but operating
expenses increased 41%.
Navigant, whose
quarter ended Sept. 26, attributed the decline in revenue and net
income per transaction to a variety of factors, including
commission cuts in Europe, reduced override commissions and
faster-than-expected adoption of lower-cost online booking tools
among corporate clients.
Sabre managed to boost its net earnings by
165% to $67.4 million, despite flat bookings on the GDS side and a
modest revenue growth of 3.3%. Overall revenue came to $544.4
million, and Travelocitys contribution grew nearly 24% to $139.5
million or 25% of the total. The online retailers gross travel
bookings increased 15% to $1.2 billion. Sabres total transaction
count came in at 97.4 million, a 0.6% rise. In the traditional
agency channel, bookings dropped 0.4% to 87.2 million.
The number of
consumer online bookings rose 10.3% to 10.3 million. Sabre said the
Travelocity unit recorded its second consecutive profitable
quarter, reporting operating income of $1 million.
For
Cendant, the big revenue drivers are real estate,
cars, and hotels, but Cendant Travel Distribution Services kicked
in revenue of $437 million, a 3% increase. The units earnings
before taxes, interest, depreciation and amortization rose 3% to
$123 million. Cendant said revenue growth was depressed by a drop
in Galileos booking fee revenue. Transaction volume for the Galileo
GDS fell 3% to 66.9 million.
The companys car
rental and fleet services unit generated revenue of nearly $1.7
billion, a 5% increase, while its hotel franchising arm contributed
$789 million, a 13% gain. Overall, Cendant revenue increased 5.4%
to $5.4 billion and net income tripled to $593 million.
Orbitz, in its last full quarter before
its acquisition by Cendant, reported travel sales increased 20% to
$41 billion, generating a 20% boost in revenue, to $77.5 million,
and net earnings of $5 million. Air still accounts for over half of
the firms revenue, but hotel, car and other modes are on the rise,
Orbitz said.
Pegasus
Solutions, which provides the hotel booking engine for
numerous Internet sites, reported net income of nearly $3.8
million, a 1.6% decrease, as revenue rose 8.2% to $49.5
million. The company said distribution
services revenue fell 14% to $7.2 million, a drop that was
partially offset by a 6% jump in GDS transactions.
Priceline posted a net profit of $9.3
million, an 8.5% increase, as total travel sales for the auction
pioneer rose 44% to $432 million. Revenue was reported at $235.9 million, a 3.1% decline.
That figure includes nearly $8.7 million in commissions and fees
for sales on the agency model, and $226.5 million in merchant
revenue, reflecting sales on the merchant or wholesale model where
the company reports the full value of the sale as
revenue.
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