In the past few years, adoption of smartphones and tablets has witnessed a tremendous growth. By the end of this year, 22% of people across the globe will own a smartphone, and this penetration is expected to continue increasing. The mobile platform offers immense growth for travel sites. In accordance with this, priceline.com (PCLN) has been focusing on developing and updating new applications for its mobile users. In the past three years, the company's mobile application reached over 20 million mobile downloads. Priceline launched a functionality to enhance its iPad application known as "Explore." Travelers can search for flights and access prices of destinations all across the world without entering a specific destination.
Its rivals Expedia (EXPE) and Ctrip.com (CTRP) are also developing mobile and tablet applications to leverage the trend of smartphone adoption. Expedia's mobile application for booking hotels surpassed 25 million downloads globally. The company recently launched a new application specially for Amazon's Kindle Fire users which lets travelers read reviews of destinations and search for various destinations on the go. The Hotel.com application is now available on all smartphones including Apple (AAPL) iPhone, Android (GOOG), and Microsoft's (MSFT) Windows phone.
In accordance with the trend, Ctrip.com has also focused on strategies to encourage travelers to book from its mobile application. Its mobile application contributed approximately 40% of total hotel booking transactions at its peak, which makes its mobile platform a significant booking platform for the company. Its latest mobile application version reached 50 million downloads, and to engage more travelers, the company launched a new version of its mobile application known as "CTrip travel 5.0." Through this application, all Ctrip's services available on personal computers will be available on smartphones with enhanced location based search. With its various strategies to capitalize on the mobile platform, its revenue from mobile travel booking has reached a record of $16.47 million in its third quarter results update, and it is expected to increase further with a new version of its mobile application.
Well positioned to capitalize on European recovery
In the second quarter of 2013, the European economy grew with a positive GDP growth rate of 0.3% quarter over quarter. The rising GDP and per capita income of European residents will lead to higher spending on travel and tourism, thus offering an opportunity for priceline.com in terms of its revenue enhancement. The European market plays a significant role in Priceline's travel bookings, since more than 60% of its bookings are generated through this market.
With this, Priceline is set to benefit from the European recovery as it is a market leader in Europe with 47% market share in online travel agency business. The company is also adding hotels on its booking.com website to enhance its offering to customers. Currently its hotel booking website, booking.com, contains around 3,30,000 hotels from across the world. The European recovery, along with the enhanced number of hotel offerings, will act as a tailwind for the company in Europe.
Priceline's strong fundamentals generated robust free cash flow. Over the past five years, the company's free cash flow has increased by a tremendous 54.40%, which is supported by its strong fundamentals. In the third quarter of 2013, Priceline reported $6.58 billion of cash and cash equivalents. The company had total long term debt of $1.73 billion by the end of third quarter 2013. I feel its significant cash position gives it flexibility to expand its operations. Moreover, its debt to equity ratio has reduced to 0.36 in the third quarter of 2013 as compared to 0.41 during the same period last year.
The online travel leader is adopting various strategies to enhance the customer travel experience by making it easy to book online. This is expected to convert into enhanced revenue on account of travelers selecting priceline.com as their travel website. I believe continuous focus on enhancing its mobile platform coupled with enhanced offerings for customers will play an important part in Priceline's growth going forward.