Priceline’s Q3 2016 Earnings Preview

November 4th, 2016 by Trefis Team
PCLN: Priceline Group logo
PCLN
Priceline Group

Priceline’s Q3 2016 earnings results are expected to be released on November 7th. For the first half of 2016, Priceline seemed to grow steadily despite macroeconomic setbacks. Its booking.com is the global accommodation leader and the platform witnessed a 30% y-o-y growth in the second quarter and almost doubled its number of properties in around two years time. Priceline’s fastest growing advertising and media segment continues soaring higher mainly with the help of Kayak. Another major brand for the company, Priceline.com is repositioning itself with refurbished products and services and a stronger management team in order to start the next year with higher momentum.

Booking.com Holds Promises For Alternative Accommodations As Well

Since almost 90% of the company’s growth comes from hotels and booking.com is the main driver for this growth, hence a continuous impressive performance by the brand does suggest that Priceline’s growth story is bound to continue. In Q2, the list of accommodations on booking.com’s platform crossed 1 million, reflecting a 30% year-on-year growth. The brand is presently looking into more aggressive penetration into the single-owner, single-room market.

Not only in traditional accommodations, but according to Priceline Group’s interim CEO, Jeffery Boyd, booking.com might be a more preferable choice for users for alternative accommodation bookings as well. Though Expedia’s HomeAway is the market leader in vacation rental bookings, HomeAway’s recent imposition of a booking fee might work in Priceline’s favor according to Boyd. Currently, booking.com offers close to 500,000 vacation rentals and apartments and does not charge any booking fee.

pcln trends booking final

Discontinuation Of Name Your Own Price For Flights And Selling Off The Hotel Urbano Stakes

Priceline.com finally discontinued its Name Your Own Price model for flight bookings on September this year. Under the aforementioned model, travelers could submit their desired price for a flight and only after a carrier accepted the bid, would the traveler know the name of the airline and the flight schedule. The unimpressive demand for the services under this model was weighing down Priceline’s domestic business over several years. The removal of the service might be a part of priceline.com’s ongoing turnaround plan, the marketing campaign for which had started earlier in 2016. However, Priceline.com’s Name Your Own Price for hotels and car rentals will still be available for now.

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Recently, Priceline also sold of its minority stake worth $60 million in the Brazil-based OTA, Hotel Urbano. Brazil’s economic slowdown and the consequent poor performance of the OTA are assumed to be reasons for the decision. Brazil is one of the largest emerging economies and Hotel Urbano is the top player in Brazil and hence Priceline had earlier made this investment decision.

Have more questions on Priceline? See the links below.

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Priceline

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