Orbitz posts profit, says hotel business picking up
(Reuters) - Orbitz Worldwide Inc. (OWW.N), the online travel agency, reported a quarterly profit on Thursday and forecast revenue for the current quarter above Wall Street's estimates, sending its shares up 23 percent above their high for the year.
The company, which competes with Expedia Inc. (EXPE.O) and Priceline.com (PCLN.O), said investments in technology were helping its hotel business, which had growth of 14 percent in room nights in the first quarter, up from a 3 percent rise a year earlier.
"Initial (second-quarter) trends show continued acceleration," Chief Executive Barney Harford said on a conference call. He added that hotel room-night bookings for March and April rose more than 20 percent.
Orbitz, which owns other travel sites, including CheapTickets, ebookers and HotelClub in addition to its namesake website, is pursuing under-penetrated opportunities in the hotel space, said Dan Kurnos, an analyst with Benchmark Co.
"Where Priceline and Expedia have significant leverage and reach in terms of hotel supply penetration, Orbitz has built a very broad network of suppliers and companies that service the hotel industry," he said.
Kurnos also said Orbitz had built a good brand in the vacation package and private label businesses.
Gross bookings, or the dollar value of all travel services purchased, fell 1 percent to $3.1 billion in the quarter, mainly because of lower air-ticket volumes.
Net income at Orbitz came to $146.2 million, or $1.34 a share, in the first quarter, compared with a loss of $6.5 million, or 6 cents a share, a year earlier. The company cited a tax benefit of $158.5 million.
Adjusted for special items, Orbitz had a loss of 11 cents a share, compared with a loss of 6 cents a share expected by analysts, according to Thomson Reuters I/B/E/S. Operating expenses rose 11 percent to $205.7 million.
Revenue rose 7 percent to $202.9 million, better than the $198 million expected by analysts on average. Revenue tied to airline tickets fell 4 percent in the quarter, while standalone hotel revenue gained 27 percent.
Orbitz said it expected revenue for the current second quarter of $214 million to $220 million. Analysts currently expect $212.6 million for the quarter.
Orbitz shares rose 23.3 percent to $7.95 on Thursday. Priceline eased 0.1 percent to $734.34 and Expedia shares were down 0.8 percent to $56.71.
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