Travel Giant Booking Holdings Shrugs Off Airbnb Competition
Travel giant Booking Holdings Inc. jumped in after-market trading after beating analysts’ profit estimates and talking down the threat of new competition from Airbnb Inc.
Booking, which changed its name last week from the Priceline Group, grew the total number of non-hotel accommodations on its websites to 1.2 million, a 53% jump from last year. Airbnb has about 4.3 million. Asked about that company’s new push into hotels, Booking’s main business, Chief Executive Officer Glenn Fogel didn’t seem worried.
“I don’t see that one company coming in and saying they’re going to offer a small number of select hotel type properties as a big issue,” Fogel said. “We’ve been facing competition of all sorts for a long time.”
The shares jumped 7% in extended trading in New York to $2,030.
Booking is pouring resources into alternative accommodation, the fastest-growing part of the online travel market. Separately, the company has switched from a focus on online advertising through travel search companies like Trivago NV, to a strategy of focusing more on TV ads, which it says have more long-term benefits.
That change initially hurt Booking’s bottom line, but this quarter shows the switch is starting to pay off.
Profit, excluding some items, was $16.86 a share in the three months ending in December, compared with the average analyst estimate of $14.13 and the company’s forecast of as much as $14. Revenue was $2.8 billion, while analysts had projected it would be $2.7 billion. The company predicted profit in the current quarter of $10 to $10.40 a share, the midpoint of which is below the average analyst estimate of $10.32.
“I am very, very pleased with how things ended up in the fourth quarter,” Fogel said.
Gross travel bookings, which shows the total amount of travel booked on the company’s various websites, was $18 billion, compared with $15.1 billion in the same period last year.
The name change to Booking from Priceline was partly due to the company’s efforts to get consumers in the US to use the Amsterdam-based brand, which makes up the majority of the group’s revenue. US consumers aren’t as aware of Booking.com as people around the world are, especially when it comes to the ability to book non-hotel properties.
“In some geographies our abilities in this area are not as well known as other geographies,” Fogel said on a conference call. The company is “determined” to change this, he said.
News by Bloomberg, edited by Hospitality Ireland