While Its Growth Momentum Continues, Priceline Says Its Current Focus Is To Grow Its Alternative Accommodations Segment

by Trefis Team
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In line with its steady growth momentum, Priceline delivered another robust quarter in Q2. The accommodation reservation growth for the company reached the top range of the management’s guidance with 21% y-o-y growth translating to 170 million room nights booked. Though the room nights grew well, yet the pace of growth, i.e., 21%, has been the slowest pace for the company since 2010. However, as the company keeps growing in size, the growth percentage is expected to slow down to some extent. This might also be the reason why the company is focusing on alternative accommodations, a segment whose growth rate far surpasses that of the traditional hotel bookings growth rate.

The gross bookings for the company grew by 16% y-o-y. Priceline’s gross profit and EBITDA grew by 21% and 20% y-o-y. After talking about how it was eating into its chief rival’s market share in the Q1 earnings call, it seems Priceline is now gearing up to provide tough competition to the alternate accommodation providers, such as Airbnb by upping its game in the vacation rentals and apartment homes segment. Priceline’s net income grew by 24% to $720 million while its revenues grew by around 18% to over $3 billion. Europe was one of the most important markets that drove growth for the company in Q2.

Priceline Has Its Eyes Set On Alternative Accommodations 

While mentioning Booking.com’s achievement of yet another impressive quarter in Q2, the company’s chief executive Glenn Fogel mentioned how Booking.com is growing steadily in the vacation rentals segment. The Booking.com platform included around 721,000 vacation rental properties by the first half of this year growing at the rate of 54% y-o-y. Q2 happened to be Priceline’s fourth consecutive quarter of this rapid growth in the rentals inventory which is currently growing at over twice the rate of its hotel inventory listings. Fogel mentioned that growing in this segment is one of the most important plans for the company.  It is noteworthy to add that Expedia has significantly grown its vacation rentals inventory after its acquisition of HomeAway in 2015. However, the competitive advantage that Priceline’s Booking.com has over HomeAway or AirBnb is the ease of booking. Additionally, Booking.com doesn’t charge an additional service fee and instantly confirms bookings. HomeAway is still striving to add all its properties into the online platform and it also charges a service fee. We can well expect Booking.com to be one of the most formidable competitors in the alternative accommodations space in the years to come.

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1) The purpose of these analyses is to help readers focus on a few important things. We hope such communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
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