Priceline Profit Tops Estimates on Hotel Growth in Europe, Asia

Tuesday, 26 Feb 2013 04:46 PM

 

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Priceline.com Inc., the biggest online travel agency by market value, reported fourth-quarter profit that exceeded analysts’ estimates as the company gained hotel customers in Europe and Asia.

Profit, excluding items, rose to $349 million, or $6.77 a share, the Norwalk, Connecticut-based company said in a statement Tuesday. That compares with the average analyst estimate of $6.53 a share, according to data compiled by Bloomberg. Revenue jumped 20 percent to $1.19 billion from $990.8 million a year ago.

Priceline and Expedia Inc. are competing to sell hotel reservations in Europe and Asia, where consumers have been slower to move to booking via the Web. Expedia, whose growth has lagged behind Priceline’s in recent years, said last month that international sales accounted for almost half of its fourth- quarter sales, a sign of more growth opportunities abroad.

“While Expedia is in a much better global position than 18 to 24 months ago and we’re encouraged by the results, we still prefer Priceline given higher bookings and profit growth,” Doug Anmuth, an analyst at JPMorgan Chase & Co., wrote in a research report on Feb. 21. Additionally, Priceline has the “potential to stabilize or re-accelerate its international business in 2013,” said Anmuth, who rates the shares overweight.

Priceline rose as much as 6 percent to $718.99 in extended trading. The shares advanced 1 percent to $678.49 at the close in New York, leaving them up 15 percent in the past year.

International Bookings

The company forecast first-quarter profit, excluding certain costs, of $4.90 to $5.30 a share, compared with $5.10, the average estimate of analysts.

International bookings increased 40 percent to $5.49 billion in the fourth quarter, accounting for 83 percent of total bookings. Most of the company’s revenue outside the U.S. is through Booking.com, an Amsterdam-based business that Priceline purchased in 2005.

Priceline and Booking are now both offering services in the U.S. market after the European unit started promoting itself in the U.S. last month. Booking is airing a series of commercials as part of a campaign called “Booking.yeah,” which focuses on getting past the painful elements of traveling and the joy experienced when customers arrive at their hotel rooms.

© Copyright 2014 Bloomberg News. All rights reserved.

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