The Priceline Group made it clear last week that its recent surprise shuffling of CEOs, which brought back a familiar face to lead the OTA, would not result in the company shifting its focus on alternative accommodations.
Jeffery Boyd, the former longtime Priceline CEO who will oversee the company while it seeks a successor to Darren Huston, told analysts on last week’s first-quarter earnings call that the company will continue to try to broaden its base of 422,000 “instantly bookable” vacation-rental properties as a complement to its core hotel-booking services.
“We couldn’t be more enthusiastic about these types of accommodations and couldn’t be more convinced that the product we’re building and the service that we’re providing is better than anything else that’s out there in the marketplace,” Boyd said on Priceline’s May 4 call.
Boyd’s reasons for focusing on the vacation-rental business appear to be twofold: to continue to mirror Expedia Inc.’s move into the alternative accommodations space and to hedge its bets against what could be lackluster room-booking results, at least in the second quarter.
Late last month, Expedia Inc., which acquired the vacation-rental service HomeAway for $3.9 billion last year, reported a $121.9 million loss, compared with net income of $44.1 million a year earlier. Still, it beat analysts’ net income and revenue forecasts and said the integration of HomeAway and the recently acquired Orbitz Worldwide was going better than expected.
The increased focus on vacation rentals could enable the companies to better weather what Priceline said would likely be a slowdown in revenue from hotel bookings during Q2. With that in mind, Priceline forecasted that its second-quarter revenue would increase about 10% from a year earlier, less than the 16% growth rate that had been forecasted by financial analysts.
As a result, the Q2 forecast appeared to overshadow first-quarter results in which Priceline’s net income increased 12%, to $374.4 million, and revenue rose 17%, to $2.15 billion. Its shares dropped 7.5% after its earnings were announced May 4.
Boyd said little about the circumstances surrounding Huston’s departure. Huston, who succeeded Boyd as CEO in January 2014, resigned on April 28 after an investigation “surrounding a personal relationship ... with an employee of the company who was not under his direct supervision.”
Boyd said there was no prediction of how long it would take to recruit a successor. But he added that the circumstances of his return were “unfortunate” and that whoever is chosen as a permanent replacement will have “a demonstrated track record of success in managing large, global organizations where technology is an important part of the business.”