Priceline’s Q2 2016 Earnings Preview
Company’s Guidance for Q2 2016
- Room night bookings Y-o-Y growth: 15% to 22%.
- Gross travel bookings Y-o-Y growth: 11% to 18% (on a constant currency basis).
- Revenue Y-o-Y Growth: 7% to 14%.
- Non-GAAP net income per diluted share: $11.60 to 12.50.
Booking.com Expected To Drive Forward Hotel Booking Growth
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Priceline’s hotel booking segment contributes to over 90% of its revenues. The segment is growing well with the help of Booking.com which is the current online accommodation booking leader globally. In Q1 2016, Booking.com’s platform included ~900,000 hotels and other accommodations in over 220 countries reflecting a 31% Y-o-Y growth. Booking.com is presently looking into more aggressive penetration into the single-owner, single-room market.
Merchant Model Might Dampen Revenues
The weak demand for Priceline’s Merchant model that allows customers in the U.S. to bid for services at discounted prices under the Name Your Own Price model had been dampening its domestic business over the last few years. One of the primary reasons for waning demand for the opaque model is that shoppers aren’t aware of the quality of the travel product purchased, until they have paid for it. Priceline.com’s CEO, Paul Hennessey had earlier been heading a turnaround plan for Priceline.com and the marketing campaign had started earlier in 2016. The biggest challenge before Priceline is to revive the opaque business model or replace it with a suitable alternative. Over 20% of Priceline’s revenue comes from the Merchant model. However, Hennessey resigned in June and priceline.com’s Chief Operating Officer, Brett Keller is currently acting as the interim CEO. The search for a new CEO in the midst of a turnaround plan poses an additional challenge to Priceline.com. It is noteworthy that in April, Priceline Group’s CEO and President Darren Huston had also resigned and the company is in search for a suitable candidate in his place as well.
The Recent troubles In Europe Might Dampen Q2 Results
Almost 50% of Priceline’s revenues come from Europe. Hence, with the recent terrorist attack in France and the Brexit decision, coupled with currency headwinds, might hurt Priceline’s results in the second quarter.
Have more questions on Priceline? See the links below.
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