Priceline Group said fourth-quarter earnings would lag analysts' estimates, as the OTA spends more on advertising for and expands its vacation-rentals business.

By the end of the year, will have TV advertising campaigns in as many as 30 countries, up from 12 last year, Priceline CEO Glenn Fogel said on a conference call with analysts Monday.

Additionally, the company will try to further its growth in sales of vacation-rental units. As of Sept. 30, Priceline boosted its vacation-rental inventory by 58% from a year earlier to about 816,000 units.

As a result, Priceline forecast fourth-quarter earnings, excluding certain items, to be about $13.70 a share, about 14% less than the average analyst estimate of $15.57 a share. Priceline shares fell more than 9% in after-hours trading on Monday.

"There's a lower number of bookable rooms [per property], the partners require more services, and there's a higher level of customer contact," Fogel said of the vacation-rentals business. "As we further develop this business segment, we expect that some of these investments will put pressure on operating margins."

Oppenheimer analyst Jed Kelly wrote in a note to clients Tuesday, "Global OTAs are clearly shifting advertising strategies to channels that can potentially drive more direct traffic to their sites, but will likely cloud near-term visibility around marketing efficacy. We believe Priceline is well positioned to drive long-term global accommodation share gains, despite trading at a discount to lodging peers."

Priceline boosted third-quarter room nights by 19% from a year earlier, to 178 million.

" has posted very healthy growth rates during the past few quarters," said Priceline CFO Daniel Finnegan on Monday's call.

As for vacation rentals, he added that he didn't know "if it'll ever be as profitable as our core hotel business, but the opportunity to improve the profitability is there."

Priceline's net income of $1.72 billion was more than triple a year earlier, when the company took a $940.7 million goodwill impairment charge.


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