Priceline
Group had a better-than-expected 2014, with gross travel bookings of
$50.3 billion, up from almost $40 billion a year ago. Gross profit for
the year was $7.6 billion, up by a third from the prior year.
In the fourth quarter of 2014, Priceline had 24% growth in hotel rooms units booked. Most of its revenue came from Booking-com.
Not worried about Expedia
On an earnings call, CEO Darren Huston
responded to a bank analyst’s question by saying he wasn’t worried
about Expedia’s recent acquisitions of online travel agencies Wotif,
Travelocity, and Orbitz.
“Our
focus is on organic growth and acquisition. We’re focusing on premium,
winning brands that add new business competencies or geographies. It’s
all been adjacent growth rather than tripling down on similar brands,
like others are doing. I don’t see the Orbitz deal, if it passes, as
being a negative to Priceline. The global travel market was maybe $1.3
trillion, and if you add Expedia and Priceline’s businesses all
together, they amount to less than 10% of that.
There’s tremendous
potential for us…. Expedia’s average room night rate increase was higher
in recent quarters than ours. I give them credit for a great quarter,
but we have a different philosophy when it comes to building inventory….
We pride ourselves on our growth rate. Our room night growth is 100%
organic, unlike what you’re seeing with Expedia.”
The company’s market capitalization is above $50 billion, roughly four times that of rival Expedia Inc.
Rental properties
Last
year, Booking-com inventory rose to more than 600,000 listings, up 41%
year-over-year. Much of that was due to a doubling of vacation rental
properties, to about 270,000 properties.
That
meant that it had more than one million holiday rooms available and
instantly confirmable on its platform on any given day. It also meant
that vacation rentals are becoming a greater proportion of Booking.com’s
overall inventory.
Darren
Huston said the homeowner property category was of interest to the
company, but it poses challenges because the product is different from
hotels.
“Our
next move as a company is to address homeowner-managed rather than
professionally-managed vacation rentals….There is a lot of interest
among our consumers in self-catered products…. We’ve taken steps here.
We’ve adjusted our business system. We’ve rolled out a simple extra net.
We have a lot of things in our pipeline to address the needs for a
single-owner model. Delivering single-owner vacation rentals is
ultimately where our destination as a company.”
