QUOTE AND NEWS
Jutia Group  Nov 11  Comment 
[at Bloomberg] - Nov. 11 (Bloomberg) -- Jeffrey Boyd, chairman and former chief executive officer at Priceline Group, and Jeff Smedsrud, chief executive officer and co-founder of Healthcare.com, discuss a $7.5 million ... Read more on this. The...
Benzinga  Nov 6  Comment 
On Tuesday, Priceline Group Inc (NASDAQ: PCLN) reported third-quarter EPS of $22.16 on revenue of $2.84 billion, beating both top and bottom line estimates. Following the results, analysts at Jefferies and Credit Suisse commented on shares of...
TheStreet.com  Nov 5  Comment 
NEW YORK (TheStreet) -- Credit Suisse lowered the price target and annual EPS estimates for Priceline Group Inc. , and reiterated the company's "outperform" rating earlier on Wednesday. The firm reduced the price target for the online travel...
Motley Fool  Nov 4  Comment 
The online travel portal posted solid growth numbers once again, but traders weren't satisfied. How should long-term investors respond?
Benzinga  Nov 4  Comment 
Shares of Priceline Group Inc (NASDAQ: PCLN) tumbled on Tuesday following the company's weak third quarter results and troubling fourth quarter guidance. Michael Olson of Piper Jaffray defended shares on Tuesday, noting the more than 8 percent...
Forbes  Nov 4  Comment 
In early trading on Tuesday, shares of Expeditors International of Washington (EXPD) topped the list of the day's best performing components of the Nasdaq 100 index, trading up 3.1%.  Year to date, Expeditors International of Washington has lost...
MarketWatch  Nov 4  Comment 
Tech stocks were mixed in early trading Tuesday, with several big-name Internet sector leaders in the spotlight. Online travel agency Priceline.com Inc. fell 7% to $1,113 a share after the company forecast weaker-than-expected fourth-quarter...
Jutia Group  Nov 4  Comment 
[at Forbes] - Summer travel was a boon for The Priceline Group which reported an earnings beat Tuesday. Yet the company is finally saying so long to sweet summer with fourth quarter guidance that failed to impress. Read more on this. The...
StreetInsider.com  Nov 4  Comment 
Borderfree (NASDAQ: BRDR) 25.2% LOWER ; reported Q3 EPS of ($0.03), $0.02 worse than the analyst estimate of ($0.01). Revenue for the quarter came in at $31.3 million versus the consensus estimate of $31.73 million. Borderfree sees FY2014 EPS of...




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Priceline.com (NASDAQ: PCLN) is a travel service that offers airline tickets, hotel rooms, rental cars, vacation packages, and cruises. The company operates as priceline.com, rentalcars.com, breezenet.com, and lowestfares.com. The company's "Name Your Own Price" service (also called its "opaque" business) offers customers a unique value proposition by allowing them to name their own price for online products/services. In these transactions, Priceline.com determines the price it will accept and has discretion in supplier selection. PCLN's value-add to suppliers is that Priceline.com provides a brand preserving sales service that enables them to sell excess inventory without harming their existing retail pricing structure. Priceline.com also has a more traditional travel sales model that allows customers to choose specific suppliers and inventories. Under the retail model, Priceline.com acts as an agent for the airline, hotel or rental car company and the supplier is the merchant of record.

The subsidiaries of the Company include Lowestfare.com LLC and Travelweb LLC. In May 2010, the Company acquired TravelJigsaw LTD.

The company has benefited from growing travel demand, the shift to internet and robust international expansion.

Company Overview

Priceline is not a direct supplier of flights, hotels, or vacation packages; instead it provides comparative pricing from an assortment of service companies.

Priceline's generates revenue by charging a commission on each flight, hotel room, or other reservation that it books. Through its Name Your Own Price Program, Priceline earns the difference between the price an individual is willing to pay and the price charged by the service establishment. The number of airlines, hotels and car rental company participants in the Name Your Own Price program has increased as suppliers utilize this opaque market Priceline created to sell their perishable inventory without lowering prices through other traditional sales channels. Priceline now also sells discounted cruises, as well as tours and attractions.

Business and Financial Metrics

First Quarter Results 2010[1]

Priceline.com Inc's first-quarter profit more than doubled from last year, boosted by higher revenues, and strong bookings. The company posted GAAP net income of $53.9 million or $1.06 per share for the first quarter, up from $25.0 million or $0.53 per share in the prior year quarter. First quarter revenues increased 26.5% to $584.4 million from $462.1 million in the same quarter last year. Revenues from international operations climbed 88.2% to $215.8 million over a year ago.

Gross travel bookings for the quarter, which refers to the total dollar value of all travel services purchased by consumers, were $3.0 billion, an increase of 52.5% over a year ago. Merchant revenues rose 9% to $368.3 million, agency revenues increased 77% to $213.2 million, but other revenues declined 39.5% to $2.9 million in the first quarter of 2010. Priceline.com's gross profit for the first quarter soared 53.2% to $319.1 million from $208.3 million in the previous year quarter. Operating income jumped 105.2% to $87.9 million from $42.8 million in the year-ago quarter. Total operating expenses for the first quarter increased to $231.2 million from $165.5 million in the prior year quarter.

Business Segments

Hotel Booking

Priceline.com offer retail, price-disclosed hotel service globally, primarily through the Booking.com and Agoda brands. It works with over 100,000 chain-owned and independently owned hotels in 84 countries offering hotel reservations on various Websites and in 38 languages. Hotels participate in Booking.com, which operates under an agency model, and Agoda, which operates primarily under a merchant model, by filing rates in the extranet.

Through the Name Your Own Price hotel room reservation service, customers can make reservations at hotel properties in the cities and metropolitan areas in the United States and Europe. Hotels participate by filing private discounted rates with related rules in a global distribution system database. The specific rates generally are not available to the general public or to consolidators and other discount distributors who sell to the public; however, hotel participants may make similar rates available to consolidators or other discount providers under other arrangements.

Car Rental

The Name Your Own Price rental car service is available in all the United States airport markets. Consumers can access the Website and select where and when they want to rent a car, what kind of car they want to rent and the price they want to pay per-day, excluding taxes, fees and surcharges.

The Company also offers a price-disclosed rental car service on Priceline.com, which enables customers in the United States to choose between price-disclosed or Name Your Own Price rental cars. Customers can select the exact car they want to book and the price of the reservation is disclosed prior to purchase.

Flight Booking

As of December 31, 2009, 10 domestic airlines and 20 international airlines participated in the Name Your Own Price airline ticket service. The Name Your Own Price airline ticket service operates in a manner similar to the Name Your Own Price hotel room reservation service.

The Company also offers customers in the United States the ability to purchase retail airline tickets at disclosed prices and with disclosed itineraries. The airline sets the retail price paid by the consumer and is the merchant of record for the transaction. These airline tickets do not have the restrictions associated with the Name Your Own Price service.

Vacation Packages

The vacation package service allows consumers in the United States to purchase packages consisting of airfare, hotel and rental car components. Consumers can select the exact hotel or resort that they want to reserve, and then select either a retail airline ticket or an opaque airline ticket for the air component of their package. Vacation packages are sold at disclosed prices, although consumers cannot determine the exact price of the individual components on the Website.

The Company offer customers in the United States the opportunity to purchase destination services such as parking, event tickets, ground transfers, tours and other services available at their travel destinations. The service is offered to consumers as part of the process of booking an air, hotel, rental car and vacation reservation.

Cruises

The Company also offer price-disclosed cruise trips through World Travel Holdings, Inc. (WTH). The cruise service allows consumers in the United States to search for and compare cruise pricing and availability information from 20 cruise lines, and to purchase cruises online or through a call center by selecting from the published offerings and prices.

Insurance

The Company offer air, hotel and vacation package customers in the United States an optional travel insurance package, which provides coverage for trip cancellation, trip interruption, medical expenses, emergency evacuation, and loss of baggage, property and travel documents. It also offers the rental car customer in the United States the opportunity to purchase collision damage waiver insurance. The travel insurance is arranged for by BerkelyCare, a division of Affinity Insurance Services, Inc. and underwritten by Stonebridge Casualty Insurance Company, an AEGON Company.

Acquisitions[2]

In May 2010, Priceline.com acquired Manchester-based TravelJigsaw LTD, a multinational car hire reservation service. Priceline.com said it intends to retain TravelJigsaw's current management team, who will maintain a minority ownership stake in the company and continue to manage TravelJigsaw's operations. Established in 2004, TravelJigsaw believes that it is the fastest growing online car rental agency in the world. It offers its car hire services in more than 4,000 locations in 80 countries in North America, South & Central America, Europe, Asia, Australia, the Caribbean, Africa and the Middle East. Customer support is provided in 20 languages. Customers using TravelJigsaw can book online through one of TravelJigsaw's branded websites, or they can reserve their cars by phone. The company offers a full range of vehicles so international travelers are able to rent cars and vans they are familiar with at home.

Trends and Forces

Growing travel demand, especially in Asia

Boeing Company (BA), a leader in airplane manufacturing, expects a rise in travel demand in the Asia-Pacific region, led by China. “Currently, one-third of global aviation traffic passes through the Asia-Pacific region,” Randy Tinseth, vice president of the marketing department at Boeing Commercial Airplanes, said in a report looking at the market over the next 20 years. “But with the rapidly growing market, by 2029, 43 percent of all planes taking off and landing will be in this area.”[3]

Airlines based in the Asia-Pacific region account for more than 40 percent of the demand for Boeing’s two-aisle airplanes and could take up a greater share going forward.[3] Meanwhile, the Middle East is becoming a growing aviation hub as well.

Boeing believes that stable growth in the world economy in 2010 will help to create a beneficial environment for the aviation industry, leading to higher profits for airlines. The report also noted that there is growing demand for single-aisle airplanes, which is tied in particular to the increasing number of budget carriers, the rise in air travel in emerging countries like India, China and Southeast Asia, and fluctuating oil prices.

Growing demand for flights benefits Priceline because the company charges a commission for every flight that it books.

Shift to Online Travel Reservations

Priceline has grown rapidly due to the convenience of booking flights, hotels, and vacation packages online. The Internet was used by approximately 90 million American adults to plan travel during 2009 with 76 percent of online travelers planning leisure trips online.[4] Most see the Internet as a very useful or essential tool for planning most aspects of a trip including where to stay overnight, planning travel routes, potential places to visit, attractions to visit, as well as learning about what to do. The primary tools for travel planning are online travel agency websites, search engines, company websites and destination websites. Airline tickets, overnight lodging accommodations and car rentals are the dominant travel products and services purchased online by travel planners.[4]

Online travel planners have increased many facets of trip planning including the number of information sources used for planning, the number of places considered during the planning process and the number of places actually visited.[4]

The most widely-used information source to plan leisure trips is the Internet followed by online travel agencies, branded suppliers, and other websites.[4] One-in four of adult leisure travelers also obtain information from friends, relatives, neighbors, and/or co-workers.[4] Guide books were the fifth most popular source, being used by 15 percent of all leisure travelers.[4]

Competition

Priceline.com competes with Expedia, Orbitz Worldwide, Sabre, Venre, Tui Travel, Gullivers, octopustravel, Superbreak, hotel.de, Hotel Reservation Service, Ctrip, Rakuten, Wotif, Google, Yahoo!, Bing, AOL, Mobissimo.com, FareChase.com, Kayak.com, SideStep.com, TripAdvisor, Travelzoo, Cheapflights.com, Galileo, Travelport and Amadeus.



References

  1. RTT News: "Priceline.com Profit More Than Doubles, Gives Cautious Foreast" May 10, 2010
  2. Priceline.com Acquires Multinational Car Hire Reservation Service TravelJigsaw LTD
  3. 3.0 3.1 JoongAn Daily: "Aviation industry to soar" July 17, 2010
  4. 4.0 4.1 4.2 4.3 4.4 4.5 US Travel: Travel Facts and Statistics
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