As economies worldwide start to show signs of improvement, the travel industry is also experiencing a steady recovery. The U.S. Commerce Department expects international travel to the country to grow 4% annually over the period 2013 through 2017. In another report, the Global Business Travel Association expects international business-related travel outside the country to grow 12.5% this year to $36.7 billion. Overall, the research study expects U.S. business travel spending to grow 6.6% to $289.8 billion this year. The online travel industry is already cashing in on such rosy projections.
Priceline's (NASDAQ: PCLN) Q4 revenues grew 29% over the year to $1.54 billion, ahead of the market's projections of $1.52 billion. EPS of $8.85 was also significantly ahead of the market's projected $8.31 and previous year's $6.77. Bookings for the quarter grew 39% to $9.1 billion driven by a 42% improvement in international business, which reported bookings of $1.3 billion.
By segment, merchant business grew 2% over the year to $481.78 million and agency revenues grew 40% to $999.69 million. Advertising revenues grew from $3.2 million a year ago to $59.7 million for the quarter primarily due to the Kayak acquisition. They ended the year with revenues of $6.8 billion, compared with $5.3 billion reported a year ago. EPS for the year grew from $31.28 a year ago to $41.72.
For the current quarter, Priceline expects bookings to grow 23%-33% over the year and revenues to grow 15%-25% with net income per share estimated to be $6.35-$6.85. The market was projecting revenue growth of 27% with earnings of $7.27 per share.
Booking.com's Strong Growth
Priceline is benefiting from the strong growth being delivered by the mobile bookings on Booking.com. The total transaction value of mobile accommodation bookings on the site grew from $3 billion in 2012 to more than $8 billion last year. The site continues to add inventory and they ended the year with more than 425,000 properties across 25 different accommodation types. A year ago, they had an inventory of 355,000 hotels. Analysts expect Booking.com's business to improve as the European market picks up. The site already commands 45% of the online travel bookings made in Europe.
Their stock is trading at $1,292.39 with a market capitalization of $67.39 billion. It touched a year high of $1,378.96 earlier this month.
Expedia's (Nasdaq: EXPE) Q4 revenues grew 18% over the year to $1.15 billion, marginally ahead of the Street's projections of $1.14 billion. EPS of $0.92 was significantly ahead of the market's expected earnings of $0.85 per share.
Among key metrics, average daily room rates for the quarter were flat while average airfares grew 1%. Air tickets sold by Expedia reported a 13% growth over the year. Domestic bookings grew 19% over the year and international bookings grew 24% to $4.1 billion. They reported revenues of $4.77 billion for the full year with EPS of $1.67.
Brand Expedia and Travelocity
Earlier last year, Expedia had announced a tie-up with Travelocity, which would enable them to use Travelocity's platform for sales in the U.S. and Canada in exchange for a revenue share. The deal essentially translated Travelocity to a marketing arm for Expedia. During the last quarter, Expedia migrated a majority of Travelocity's U.S. traffic on (to?) Brand Expedia. Expedia believes it is too early to comment on the overall benefits of the deal, but they were pleased with the initial results. According to their figures, Brand Expedia helped drive airline ticket sales by 13% during the quarter.
Expedia's stock is trading at $75.21 with a market capitalization of $9.74 billion. It touched a 52-week high of $81.78 earlier last month.
Orbitz's (Nasdaq: OWW) Q4 revenues grew 4% to $197.4 million and EPS grew to $0.05 compared with a loss of $2.96 per share a year ago. The market was looking for revenues of $191.2 million with an EPS of $0.01.
For the current year, Orbitz projected revenues of $202-$207 million with an EBITDA of $22-$25 million. They missed the Street's projections of revenues of $207.3 million with an EBITDA of $27 million.
Orbitz's New Agreements
Till recently, Orbitz was restricted to using Travelport's technology as their global distribution systems partner. With the current agreement with Travelport expiring this year, Orbitz has now entered into agreements with Amadeus and Sabre as well. The expansion will help them become more flexible in their supply offerings.
Orbitz's stock is trading at $8.07 with a market capitalization of $880.1 million. It touched a 52-week high of $13.26 in November last year.
Finally, TripAdvisor's (Nasdaq:TRIP) Q4 revenues grew 25% to $212.7 million. EPS grew from $0.21 a year ago to $0.29. The Street was projecting revenues of $205.8 million with earnings of $0.22 per share.
By segment, revenue from Click-based advertising grew 17% over the year to $144.4 million. Display based advertising revenues grew 46% to $32.5 million and subscription and transaction revenues brought in the remaining share by growing 53% over the year.
TripAdvisor's Growing Member Base
According to a PhoCusWright report, most travelers prefer to plan their travel based on the reviews of other travelers. TripAdvisor is counting on this behavior for their growth. Recently, TripAdvisor announced that they crossed the milestone of 150 million travel reviews on their website, contributed by more than 2 billion members. Over the last year alone, the site has added 50 million new reviews.
To continue to expand their offerings, TripAdvisor also announced plans to grow their GreenLeaders program into Canada and Europe. The GreenLeaders program is already being implemented in the U.S. and aims at enabling travelers to plan greener trips by featuring hotels and B&Bs that follow environment friendly practices. As part of this expansion, hotels and B&Bs in 19 markets, including Canada, U.K., Ireland, Germany, France, Italy and Spain will now be able to apply for TripAdvisor's GreenLeaders status. Their stock is trading at $103.36, with a market capitalization of $14.70 billion. It touched a 52-week high of $109.79 earlier this month.
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