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Orbitz Worldwide (NYSE:OWW)

Q4 2013 Earnings Call

February 13, 2014 10:00 am ET

Executives

Brian Wolf

Barney Harford - Chief Executive Officer, President and Director

Michael O. Randolfi - Chief Financial Officer

Analysts

Naved Khan - Cantor Fitzgerald & Co., Research Division

Mark S. Mahaney - RBC Capital Markets, LLC, Research Division

Daniel L. Kurnos - The Benchmark Company, LLC, Research Division

Stan Velikov - Jefferies LLC, Research Division

Brian Nowak - Nomura Securities Co. Ltd., Research Division

Brian Nowak - Sanford C. Bernstein & Co., LLC., Research Division

Michael B. Purcell - Stifel, Nicolaus & Co., Inc., Research Division

Operator

Welcome, and thank you for standing by. [Operator Instructions] Now I will turn today's meeting over to Brian Wolf, Director of Investor Relations. Thank you. You may begin.

Brian Wolf

Thank you. Good morning, everyone, and thank you for joining us on the Orbitz Worldwide Fourth Quarter 2013 Earnings Call. I'm joined on the call by Barney Harford, CEO of Orbitz Worldwide; and Mike Randolfi our CFO. As many of you have seen, we filed a press release this morning detailing our fourth quarter results. If you have not received the press release, it is available on the Investor Relations portion of our website. Additionally, this webcast will be archived on the site for a period of at least 30 days.

Some of the statements made during this call constitute forward-looking statements that involve known and unknown uncertainties and other factors, including the factors described in our SEC filings. These risks and uncertainties may cause our actual results or performance to materially differ from any future results or performance expressed or implied by such forward-looking statements. We undertake no obligation to publicly update or revise forward-looking statements.

Finally, during the call, we will be referencing certain non-GAAP financial measures as defined by SEC rules. We provided in our press release or on our Investor Relations website a reconciliation of those measures to the GAAP financial measures that we consider to be the most comparable.

I would now like to turn the call over to Barney Harford, CEO of Orbitz Worldwide.

Barney Harford

Thanks, Brian. We delivered strong performance in the fourth quarter, rounding out a very successful 2013 for Orbitz Worldwide. For the full year 2013, revenues increased 9%, and adjusted EBITDA increased 12% versus full year 2012. Room night growth rate accelerated by 15 percentage points, up from -- up 3% year-on-year in 2012 to up 18% year-on-year in 2013. Investments in our global technology platform enabled our businesses to accelerate in this strategically important hotel segment, while also achieving operating efficiencies.

We finished the turnover of our consumer brands to the global technology platform 2 years ago in February 2012. Since then, we have taken advantage of the flexibility and capabilities of the global technology platform to dramatically speed up our test, learn and implement cycle, allowing us to achieve substantial improvements in landing page performance and file conversion, particularly in the areas of hotel and dynamic packaging. Having all of our consumer brands on a common platform allows us to rapidly share learnings from one brand across our overall portfolio.

To take this to the next level going forward, we recently made an important organizational change promoting Chris Orton to the role of Chief Operating Officer. Chris now has responsibility for all of our global online travel agency brands including Orbitz.com, CheapTickets and ebookers. This change will allow us to achieve greater consistency in our approach to key functional areas across brands and geographies as we develop increasingly sophisticated approaches to marketing optimization, site optimization and the use of advanced analytics to shape our business.

As we've shared with you before, we are focused on our mission to make our brands the world's most rewarding places to plan and purchase travel on touch devices. We launched the Orbitz.com loyalty program, Orbitz Rewards, just over 3 months ago. Orbitz Rewards is the best rewards program in the travel industry today. We've been very pleased with the results we've seen so far, which suggest that Orbitz Rewards can have a meaningful impact on increasing customer lifetime value, or CLV, by increasing levels of repeat activity and cross-sell from air to hotel.

We're also seeing very encouraging trends in terms of mobile app usage by Orbitz Rewards members, who are 20% more likely than non-Orbitz Rewards members to use one of our apps for iPhone, iPad or Android versus another channel when booking a hotel and 50% more likely than non-Orbitz Rewards members to use one of our apps versus another channel when booking a flight.

Across all of our B2C brands, 28% of hotel reservations completed in Q4 2013 were made using mobile devices, up from the 21% of reservations in the year-ago quarter. We have important app launches coming soon for ebookers and HotelClub, so we're looking forward to seeing continued progress there over 2014.

As we hone the loyalty program value proposition, we see air customers representing an increasingly attractive way to acquire potential hotel customers. Over the course of the last couple of years, we've invested disproportionately in the hotel opportunity, and we've been pleased with the acceleration in hotel room night growth that we have achieved. To a certain extent, this has come at the expense of investments in air, where the growth trajectory has been disappointing. In 2014, we plan to allocate more of our technology resources towards air-related initiatives, taking advantage of knowledge acquired from our site optimization and landing page optimization efforts in hotel.

Complementing these new air initiatives, we recently announced that we've entered into new multiyear agreements with each of the 3 major GDS, or global distribution systems, Amadeus, Sabre and Travelport. Since our IPO in 2007, we've been subject to an agreement with Travelport that included certain exclusivity provisions limiting our ability to work with Travelport competitors. This agreement ran through December 31, 2014. Beginning January 1, 2015, Orbitz Worldwide will no longer be subject to these exclusivity provisions. Travelport will remain an important partner and supplier of services to us. But beginning in 2015, we will have much greater flexibility in how we manage supply connectivity and in particular, how we take advantage of the strengths of each of Amadeus, Sabre and Travelport as we look to optimize both customer experience and economics. We feel confident that these global platform air initiatives, combined with the loyalty tie-in and our enhanced GDS flexibility, will allow us to improve our unit volume trend in air going forward. We expect to see improvements start to kick in, in the second half of 2014 and then more strongly in 2015.

Having touched on loyalty and mobile, let me talk about our third strategic initiative, international expansion. As we've talked about before, HotelClub is our most geographically extensible brand, given the hotel-only nature of the business. We added 16 currencies to our global technology platform over the course of 2013, bringing our total to 35. Asia was the biggest beneficiary of this currency expansion and has been our focus area for growth. We are pleased with the results we've been seeing with room nights from Asia points of sale up 35% year-on-year and now representing over 25% of HotelClub room nights. We're putting a particular focus within HotelClub on China and specifically, the development of a business focused on the rapidly growing China outbound market. We've launched HotelClub's Chinese brand, [indiscernible], and we've built out and launched Chinese payment method capabilities through our partnership with Alipay, the first between Alipay and a global hotel site. It's still early days, but we're excited by the growth opportunity, and we think the HotelClub loyalty membership and value proposition plays well with Chinese consumers.

In summary, we're feeling very good about what we achieved in 2013 and how we are positioned for continued growth. It's a competitive industry, but we've been successful in developing an insurgent strategy with a significantly differentiated consumer value proposition centered around an extremely compelling loyalty offering with a strong mobile tie-in. Our global technology platform approach and the new organizational structure I outlined earlier, where we brought together leadership of all of our global OTA businesses, is helping us get maximum benefits from the product, technology and analytics investments that we've made and that we continue to make as we build our brands to be the world's most rewarding places to plan and purchase travel on touch devices. As we enter 2014, we feel confident about our trajectory and our ability to deliver sustained growth and adjusted EBITDA and cash flow as we grow our businesses around the world and take advantage of this huge market opportunity.

Before I wrap, the people and the culture at Orbitz Worldwide are huge factors driving our success. We are extremely proud to have been recently ranked in the top 10 of Glassdoor's Best Places to Work, which recognizes the best places to work in the United States based on employee reviews. We were in great company. Others in the top 10 included Twitter, Facebook and Google. We are the top-rated company in Chicago and the top-rated company in the travel industry. I'd like to thank the Orbitz Worldwide employees for all their hard work over the course of the year. We achieved a lot in 2013, and they should feel very proud of what we accomplished. I know they share my excitement about the opportunities ahead.

With that, let me turn the call over to Mike.

Michael O. Randolfi

Thanks, Barney. For the full year, net income came in at $847 million, up 9% year-over-year, and adjusted EBITDA came in at $143.6 million, up 12% year-over-year. Free cash flow, defined as operating cash flow less CapEx, was $114 million for the year. We expect similar levels of cash flow generation in the coming years, indicating the underlying strength of our business model.

Turning specifically to the financial results for the fourth quarter 2013. Net revenue grew 4% year-over-year to $197 million, and adjusted EBITDA came in at $34 million. Both revenue and adjusted EBITDA exceeded the top end of the guidance we provided in November. And we experienced stronger-than-expected air volumes in December due to temporarily lower airfares, and then there was stronger hotel volumes that also contributed due to successful marketing and promotional efforts targeted towards hotel. Stayed room nights, including vacation packages, grew 18% for the full year 2013 and 15% for the fourth quarter. Breaking down the fourth quarter a little further, approximately 2 percentage points of this growth came from American Express, which on a stayed basis, was still ramping up during the same period last year.

Average daily rates were up 5% year-over-year for the quarter, with domestic ADRs up 5% and international ADRs up 2%. Excluding our private label distribution business, ADRs were up 3% year-over-year with domestic ADRs up 4% and international up 1%.

Hotel revenue was up 18% year-over-year for the quarter, while vacation package revenue was up 16% in the quarter. Standalone air revenue was down 11% in the fourth quarter versus prior year. Over the course of the last couple of years, we've invested in a higher percentage of -- we have invested a higher percentage of our technology resources on the strategically important hotel segment, and we're pleased with the strong growth we've seen from hotel. However, this has come somewhat at the expense of our air business. We expect that the air initiatives that Barney discussed and the flexibility that being multi-GDS provides will result in an improvement in our year-over-year unit air volume trends in the second half of 2014 and beyond.

Cost of revenue as a percentage of revenue fell 254 basis points from the fourth quarter up -- from the fourth quarter -- fell 254 basis points in the fourth quarter of 2013 to 17.6% of revenues. This leverage was due to our continued focus on driving efficiencies throughout our operations, in particular at our customer service call centers.

Marketing expense as a percentage of revenue was 32.1%, up 272 basis points from the fourth quarter of 2012. The deleverage in the fourth quarter was driven primarily by a mix shift towards businesses that have higher marketing expense as a percentage of revenue, in particular, our private label business. SG&A as a percentage of revenue was 36%, up 140 basis points from the fourth quarter of 2012. As we've talked about in previous calls, in 2013, we experienced higher year-over-year incentive compensation costs, and this impacted the fourth quarter disproportionately. Excluding the impact of higher incentive compensation costs, we saw 390 basis points of SG&A year-over-year leverage.

Our interest expense was $9.6 million in the fourth quarter, up 12% from the fourth quarter of 2012. This increase was due to the higher average interest rate incurred on our term loans, driven by our debt refinancing in March 2013 and subsequent debt repricing in May 2013. The weighted average interest rate on the term loan was 216 basis points higher this quarter versus the fourth quarter of 2012. Although at a higher rate than our old credit facility, the refinancing of these loans has provided us with valuable stability in our capital structure.

Net income was $5 million for the fourth quarter. Our available liquidity was $182 million, which was composed of $117 million in cash and cash equivalents and $65 million available on our revolver.

Moving to guidance. As we look to the first quarter of 2014, we expect net revenue between $202 million and $207 million, and adjusted EBITDA between $22 million and $25 million. For the fourth quarter 2014, we expect net revenue growth in the low to mid-single digits and adjusted EBITDA growth in the high-single digits.

To provide some context around this financial outlook, I will talk about revenue and then adjusted EBITDA. First, revenue. In 2014, we expect hotel and vacation packages to continue to be strong contributors to our growth. We expect the loyalty program to have a positive impact on our long-term revenue growth as we tap into a greater share of our customers' travel spend and bend the curve in terms of lifetime value. As we indicated on our last earnings call, the loyalty program will have a short-term in-year impact on revenue growth due to contra revenue recorded as customers earn Orbucks. We expect to see a decline in standalone air volumes in the first half of 2014 as a result of our -- as a result of lower online travel company volumes associated with continued high airfares and the end of an exclusive relationship with KAYAK that expired on December 31, 2013. While the importance of the meta-channel has declined for us over time, we were still generating a meaningful amount of volume due to the exclusivity provisions in our previous agreement. The air initiatives that Barney mentioned should result in an improvement in our year-over-year unit volume trends in the second half of 2014 and into 2015.

And while talking about 2015, I'll add that we expect the new agreements we announced on Monday with Amadeus, Sabre and Travelport will benefit us in 2015 and beyond as we're able to allocate business among different providers to maximize economics. When looking at the revenue trajectory overall in 2014, we expect the growth rates to accelerate throughout the year.

Now turning to EBITDA. As we execute on strategic initiatives and grow revenue in 2014, we expect to continue to drop the benefits of incremental revenue to the bottom line as we generate a more profitable revenue mix and achieve further cost leverage. When looking at our quarterly earnings trajectory in 2014, in addition to the first quarter guidance we are providing, it is important to highlight that in the fourth quarter of 2014, we accrued disproportionately more performance-based incentive compensation than for the overall year.

On CapEx, we expect that spend will be in the $42 million to $47 million range, which is generally in line with our level of spending over the last few years.

In summary, we're feeling very positive about the success we had in 2013, and we are enthusiastic about what we can achieve in 2014 and beyond. With that, operator, we'd like to open the line for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Naved Khan.

Naved Khan - Cantor Fitzgerald & Co., Research Division

Just a quick question on the KAYAK relationship that ended. How significant was that for you? And then also on the Orbucks, what kind of redemption rates are you seeing from this program? And I have a quick follow-up.

Barney Harford

We've had an exclusive relationship with KAYAK for a year -- for a number of years and we actually -- important part of KAYAK was getting off the ground in the early years. And while the importance of that channel had declined over time, we were still generating a meaningful amount of volume relating to the exclusivity provisions in the previous agreement up until that expiration. We continue to have a relationship with KAYAK, but it will be a headwind for us during the course of 2014, given the new relationship.

Michael O. Randolfi

And on Orbucks, the early signs we're seeing in Orbucks are very positive. The program is performing as we hoped and expected. And the goal of the program over time is to increase customer lifetime value, increase attachment, encourage a good value proposition and encourage people to come to our site directly. And we're seeing benefits from that. With regard to specifics in terms of redemptions, we're not going to get into the specifics on that, other than to say the program is performing very consistently with our expectations.

Naved Khan - Cantor Fitzgerald & Co., Research Division

Okay, and then did you earlier spell out the sort of the contra revenue impact from Orbucks in the fourth quarter?

Michael O. Randolfi

We haven't split that out specifically. The way I would think about the impacts of contra revenue in terms of the way it will impact us, because of -- because there's a 1%, 1% of Orbucks applied to air, 3% on hotel and then 5% on hotel with regards to if it's booked on mobile, there will be a disproportionate impact on air revenue take rates in the short run, and that will also impact our growth rates. But we do expect that the growth rate over time in our revenue and over time our take rate and our mix of revenue will benefit as more customers ultimately utilize the benefit. And all of that's consistent, all of that's included in our current guidance.

Naved Khan - Cantor Fitzgerald & Co., Research Division

Understood. And then quickly on the GDS, if I understand it right, it seems like there is no impact on 2014 from the agreements you just signed?

Michael O. Randolfi

Yes. The way I would think about the GDS is just in general. And then we're not going to talk to specific contractual impacts with supplier arrangements. But the way I would think about GDS is, in general is, previously we had an exclusive relationship. In the future, we will have a multi-GDS set of arrangements. And each GDS has a set of strengths, whether it be geographic, whether it be technological, whether it be the supply they provide. And when we look forward and we go forward, we'll have the opportunity to leverage the strength that each of them provides because we have multi-GDS contracts. We are excited about the opportunity that will provide over the longer run. With regards to specifics and the contractual impacts that we just can't get into, unfortunately.

Naved Khan - Cantor Fitzgerald & Co., Research Division

Understood, but just on the -- in terms of the timing, nothing on 2014 and it definitely start, kicks in, in 2015, is that...

Barney Harford

We're not going to get into -- in general, we don't get into the details of contractual relationships we've got and financial impact they may have, so we're not going to get into that with regard to GDS. But we want to -- I think what we're talking about is the flexibility it can provide the business.

Operator

Next question, Mark Mahaney.

Mark S. Mahaney - RBC Capital Markets, LLC, Research Division

Let me try a couple of questions. Any more color on regional markets, geographic markets where you saw strength, where you saw weakness? And can you talk about alternatives to KAYAK? And there are other meta-search engines. There's also more direct channels involving Google. As you think about those alternatives, are there other ones that strike you as more obvious than others?

Michael O. Randolfi

Yes, just to provide a little bit more regional color. As we were going through the back part of the year, we definitely saw strength both domestically and in Europe specifically on hotels. In addition, we saw -- in addition to the strong hotel growth, we saw strength in those regions also on the packaging side. With regards to HotelClub, the Australian market has been very competitive, and I think there's -- you see that in that marketplace. But we've seen really strong growth in Asia, particularly the locations we've added currencies. So overall, we feel good about how the business performed.

Barney Harford

Yes, and I'll take the question on KAYAK. We continue to work across the spectrum of different providers. We've invested a lot in building up the algorithmic marketing capabilities which allow us to be particularly effective in channels where you can -- you have the opportunity to get bid across a very fragmented set of demand. So Google and a variety of different placements via [indiscernible], et cetera, that we can work with them on are effective. But we're also seeing a number of different providers out there on the meta space that we can work with on a geographical basis across the rest of brand. So when we think about meta, we definitely see a broad base, and we're thoughtful about how we participate to take the advantages of various different channels that are out there.

Mark S. Mahaney - RBC Capital Markets, LLC, Research Division

And then, Barney, could I -- one follow-up, on alternative accommodations. Is there something there in that particular market segment that you think is becoming more interesting, more material for Orbitz and other online travel agencies? Or is that -- that been something that's been attractive for a while? Is there anything you find unusual there?

Barney Harford

It's something we definitely are paying a lot of attention to and thinking about how it might be relevant. But as we look at the mix of business that we currently have and orientation of different our brands, it is not a major driver of the business volumes. We're definitely paying attention and at this stage, the [indiscernible] we're considering it intently.

Operator

Our next question, Dan Kurnos.

Daniel L. Kurnos - The Benchmark Company, LLC, Research Division

So Barney, yet another great quarter on hotel and vacation package. I'm just curious, how much of that you would attribute to loyalty, or how much of the incremental benefit was from loyalty? And you talked a lot about product developments, particularly outside of the U.S. currency launches, but any thoughts on building out supply? And I've got a follow-up.

Barney Harford

Well, the drivers of strength in the quarter were diverse across the various different parts of the business. We certainly feel really good about how loyalty is working. It's working to drive cross-sell. So air customers, it is allowing us to increase the percentage of air customers who are purchasing hotel. It is also allowing us to increase the repeat rate, so the frequency with which people purchase hotel, who are already purchasing hotel through us. And it's also, as I mentioned in the call, getting people to engage better with our apps and that's just a great experience. So we think that will have an ongoing benefit. But we also have other components to the growth. We continue to have some inorganic or some kind of new store benefit from the American Express launch out of state, state-run basis. Approximately 2 percentage points of the room night growth in the quarter can be attributed to that American Express launch given the book-to-stay timing.

Michael O. Randolfi

I was going to say on loyalty, the benefit of the loyalty program is largely ahead of us. So we think that program is going to build over time, and we think that's going to provide stronger longer-term benefits over the long term.

Daniel L. Kurnos - The Benchmark Company, LLC, Research Division

And on the supply side of the question?

Barney Harford

So addition of supply is definitely something that we are focused on. We are -- we want to make sure we have the right supply and we want to make sure that the supply that we have is as competitively priced as possible. And so we're also focused on making sure we remain relevant to kind of key supply partners and we have focused on, in particular, the most productive hotels for us. But we are also strategically focused on hotel acquisitions in kind of key geographic growth areas and in segments -- segments waiting for particular opportunity.

Daniel L. Kurnos - The Benchmark Company, LLC, Research Division

Great. And just one quick follow-up on the partnership or private label side of the business. Just any new wins you could talk about and how the pipeline is looking there?

Michael O. Randolfi

We can't talk specifically about anything that's imminent or anything about any specific contracts, other than to say we feel very confident about the stream of potential customers on the private label side of the business. And we think that's a good source of growth for us going forward.

Barney Harford

Yes, I mean, we've talked for several years now about the investments we're making at the global platform level. And those have really facilitated our private label business. Other than the private label space, can focus more on the hotel only opportunity. We definitely play in that. But we're also have been quite active in the kind of the broad OTA, air, car, hotel package side of things, and the global platform really positions us extremely well to do that. And I think there's a lot of opportunity out there and there's some really exciting stuff in the pipeline that I'm not going get into details but we think this is a big, big opportunity ahead of us.

Operator

Next question, Brian Fitzgerald.

Stan Velikov - Jefferies LLC, Research Division

This is Stan Velikov sitting in for Brian. A question on the marketing expense. It increased fourth quarter in a row, and you cited private label as the primary driver here. But are you seeing channel [ph] drivers driving [indiscernible] the spend? Is this kind of the result of competitive pressure in brand marketing or in variable channels?

Michael O. Randolfi

The way I'd describe what's happening in our marketing, in our marketing line is there's really 2 impacts. One is we've had a mix shift towards the private label business, specifically American Express. One thing to take into account is there's a rev share payment that goes through the marketing line, and that has some impact there. And excluding that impact, that's most of the leverage or most of the deleverage. The other thing to take into account is that we've been experiencing strong growth particularly in Asia. And the percentage of marketing, as a percentage of revenue, is higher in those regions as we begin to spool off. So those are the primary drivers of what we're seeing on marketing. And we still feel like overall, we're maintaining the same level of marketing efficiency.

Operator

Your next question, Andrew Marach [ph].

Unknown Analyst

This is Andrew Marach [ph] on for Kevin. Two quick questions. Is the shutdown of the Travelocity platform benefiting you as you build out your supply? And separately, have you given any thought to marketing campaigns around the Orbucks program?

Barney Harford

Yes, we definitely -- as we talk to supply partners, the Travelocity migration is something that makes them appreciate the relationship that they have with us as one that brings diversification to the marketing channel. So there's definitely somewhat of a tailwind we see there, I think the broader benefit that we expect to see, it's hard really, again, to break it out. It's just as we've talked about before, Travelocity will have fewer dollars to work with on a variable marketing base. And given variable marketing is such a big part of the online marketing equation, it is likely to mean that they end up being less aggressive in terms of their online activity, which will be a benefit for us. With regard to Orbitz Rewards, the program in Orbucks and how we market them, yes, our teams are doing a lot of actually really interesting stuff, I think, around the program. There's a lot of promotional campaigns that they are using to generate trials and to generate social sharing of the program. And I'd say they're only really just getting started as well. So we think there's a lot of opportunity there. We think it's a killer value proposition. We think it's only going to get better and better as well. We've got a lot of really fun stuff that are kind of -- that we have in the pipeline as well. And so we definitely think that there's a bunch of untapped potential for us to go and generate more and more consumer excitement behind this program.

Operator

Your next question, Brian Nowak.

Brian Nowak - Nomura Securities Co. Ltd., Research Division

Let me try a couple. You mentioned that strong domestic hotel business in the fourth quarter. I was wondering, Barney, can you talk to the domestic room night growth or domestic hotel bookings in the fourth quarter if we excluded the private label business? And then what leverage do you have in place to kind of keep up this mid-teens hotel growth throughout 2014? I have one follow-up, please.

Barney Harford

So if you take out the American Express business, our domestic hotel room night growth was still strong. We have got a variety of different levers that we're pulling. Loyalty is one of them, but there's a bunch of other stuff that the team is doing well, but probably not going to give too many details, but the growth that we've seen domestically has been good. Going forward, I -- we're not guiding on room night growth for 2014. Mike, do you want to talk about...

Michael O. Randolfi

Yes, we're not guiding to room night growth for 2014. But I think as we're looking at aspects of our business model and particularly things like loyalty, our international growth that we're seeing in Asia, the ability to extend learnings from our domestic business to our European business and leverage the global platform. We still feel very positive about the ability to grow room nights going forward. So -- while we're not providing a specific number, we're optimistic about the growth trajectory. We think this is -- it's a big world out there, and we think there's lots of opportunities for us.

Brian Nowak - Sanford C. Bernstein & Co., LLC., Research Division

Okay. And then the follow-up, you talked a lot about lifetime value of customers, today talking about loyalty. In the past, Barney, I think you talked about a slightly lower lifetime value of customers in meta. Has it changed at all now in your meta-analysis? Is that impacting your marketing allocation decisions, you're more likely to spend on meta now?

Barney Harford

It's such [indiscernible] over the course of the last 12 months, we've really sharpened our kind of analytic focus on this customer. We call it see the customer, so we're looking at everything in terms of customer acquisitions in terms -- as opposed to just transactions. So the channel is just one of the -- it's just one of the dimensions that we're analyzing. But there's also significant dimensions around product, both at the aggregate level, air, car, hotel package, but also in much more micro dimension. And then there's just a bunch of other kind of dimensions that we're able to go and segment this off. And so we've been very thoughtful about that and how we use that to drive acquisition strategies. We continue to see the customers that come to us through meta have a lower lifetime value in general than customers come to us for example through SEM. And this is a very, very rough approximation of kind of the detail that we see. I think that the loyalty program we've got, definitely, we are seeing that it has the ability to allow us to bend the curve in terms of customer lifetime value. And as a result, that certainly flows into our bidding models. But there is still a decent gap between expected lifetime value of customers, if you hold everything else constant, they coming to us through meta and then the other channels.

Operator

Our final question is from Michael Purcell.

Michael B. Purcell - Stifel, Nicolaus & Co., Inc., Research Division

Barney, I got a little late, so I was stuck in storm, apologies if you went through this. But 2 things. One, observationally, it seems like you are more active on the trip platform. And I'm wondering if this is a little bit more of a strategic shift now that you're not as active in KAYAK. And your question, your comment that you just mentioned about the lifetime value of meta versus some of your other channels, I was wondering if you have enough data yet to make that just across all of meta? Or if different meta performs differently, if you will?

Barney Harford

Yes, I mean, we've had an ongoing relationship with TripAdvisor consistently. It does vary by market and by brand. But I think it is fair to say that there's been greater visibility to the Orbitz brand on TripAdvisor in recent months. This is a different channel. Some of them are more accurate [ph]. Some are more negotiated in terms of Trip. There's a kind of a combination of both. And I think we have as we have found ways to get the appropriate level of value with Trip. We have -- we've dialed it up. And we'll dial up our participation in different channels, dial it up, dial it down based on the value that we're able to achieve. So I think we definitely see differences in value between different channels, but I'm going to hold off on sharing too much of that information just for competitive reasons.

Michael B. Purcell - Stifel, Nicolaus & Co., Inc., Research Division

Understood. Okay, and then lastly, Barney, your cash [ph] to common platform, you've been accomplishing a lot. Where are you focusing most of your efforts right now within the company in growth initiatives?

Barney Harford

I think that there's some really interesting product opportunities that we have. We're feeling very excited about the opportunity ahead of us. And as a result, we are really narrowing our focus on these kind of key strategic areas of loyalty, mobile and international expansion. And I would say that I am spending a lot of my time really making sure that we're connecting the dots across to each [ph] of the team and making the best use of scarce resources to go and drive our initiatives there, and balancing the need for short-term performance with making great investments for long-term growth because we think we're in an incredible position here. It's a great opportunity ahead of us. And we -- there's such a wealth of different things we can go and invest in, we've just got to make sure we are appropriately focused. And we think the mission that we've outlined to build our brands to be the most rewarding places to find a place to travel on touch devices really speaks well to this opportunity. And yes, that's I guess as far as [indiscernible].

Operator

That concludes the question-and-answer session. You may go ahead and conclude today's conference.

Barney Harford

Thank you so much. We appreciate all of your time and support, and we look forward talking to you again in 3 months' time. Thank you.

Operator

Thank you for your participation. That does conclude today's conference. You may disconnect at this time.

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