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Priceline.com Posts Rise in Bookings

Priceline.com LogoPriceline.com Incorporated has reported $7.3 billion in second quarter gross travel bookings – up 26.8% from last year – for Priceline Group. Revenues for the three months to June 30 were up 20.3% at $1.3 billion. International revenues were up 40.2% at $859 million. Gross profit rose 34% to $1 billion during the period – with international gross profit contributing $859 million, a 40.4% rise.

Operating income for Priceline Group during the quarter was up 41.2% at $458 million. GAAP net income applicable to common shareholders was up from $256 million to $352 million, while non-GAAP net income was up 43.2% at $405 million. Adjusted EBITDA increased 41.8% to $495 million.

Priceline.com president and chief executive Jeffery H. Boyd says that the group achieved strong results for the second quarter even though there is still uncertainty about economies in the US, Europe and Asia. They believe the group had market leading growth from a profitability and top line perspective. Worldwide, their hotel business booked more than 50 million room nights – which a 39% increase on the year before. Their rental car business also had a 29% rise in rental car days, which was led by strong growth at its rentalcar.com website.

Boyd added that Priceline Group’s worldwide hotel business keeps performing well amid the strengthening dollar and tough macro-economic conditions. They will continue building their franchise with investments in hotel and accommodation acquisitions, geographic expansion, customer acquisitions, and service and product innovations.

This financial report comes as Orbitz Worldwide also publishes its second quarter results, which weren’t what anyone expected. Gross bookings dropped 0.9% to $2.97 billion after a rise in the first quarter. Room nights rose 3%, which was consistent with the previous period and led by a 28% increase at ebookers. Revenue dropped 0.4% to $201 million, and net income fell from $8.9 million to $4.6 million. Meanwhile, operating margin tightened from 9.8% to 7.4%, and marketing costs jumped to $69.1 million – a 9.5% rise.

Orbitz Worldwide says transactions related to US air travel declined over the period and offset growth in its hotel and holiday packages transactions. Chief executive Barney Harford said that their outlook for the third quarter and full-year balance will be impacted by economic uncertainty across the globe. This uncertainty intensified over the second quarter and has lingered into the third quarter so far.

After Priceline.com and Orbitz Worldwide reported their financial results for the second quarter, shares in the travel agencies slumped. Priceline.com fell 16% on Wednesday, and Orbitz dropped 24%, making it the loss leader in New York. Expedia, another rival travel agency, also saw its shares fall by over 5%.

Benchmark Co analyst Danial Kurnos says near-term pressure is a factor in this shares decline. However, she noted that there are still many opportunities for the online travel companies to grow as they expand into new geographies. He predicts they will experience incremental or increasing weaknesses for the next quarter at the least and possibly into the final quarter.

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