LOS ANGELES (Reuters) - Priceline.com Inc. (PCLN.O: Quote, Profile, Research, Stock Buzz), the U.S. No. 4 online travel agency, is focusing on increasing sales rather than expanding margins to fuel growth as the worldwide travel boom continues, its chief executive said on Monday.
The company made its name with the "name-your-own-price" auction service. But in recent years it has focused on traditional air fares and hotel bookings, and is looking to take advantage of the bustling European market, boosted by a move toward Internet booking there.
"It's always been our goal to grow the top line and not necessarily rely on growing gross margins to deliver growth in earnings," said Priceline Chief Executive Jeff Boyd, speaking at the Reuters Hotels and Casinos 2007 Summit in Los Angeles. "I think that's consistently how we've been operating the business."
The travel industry has seen a huge resurgence over the past five years or so, after a slump caused by the attacks of September 11, 2001. Strong economies and low-cost air travel have spurred the trend, and lately, Europeans have been taking advantage of the strong euro, which can often buy a better vacation in the United States.
"The travel market there (in Europe) is at least equal in size to the market in the United States," said Boyd. "It's also a very fragmented market," he added, because of the variety of languages and lack of large hotel chains.
Priceline, which competes against Expedia Inc. (EXPE.O: Quote, Profile, Research, Stock Buzz) and others in the global online travel market, is now introducing European customers to the wide array of U.S. hotels accessible through its site. At the same time it is also working to provide more information on Europe's smaller hotels to U.S. customers.
"The idea of an Internet service that can provide you a lot of photographs, information, amenities and consumer reviews about 25,000 (European) hotels is really quite valuable to the customer," said Boyd. "Because they are not going to have the kind of familiarity with a hotel in a European town that they've never been to, the way we might just pick a Marriott in any city in the United States."
Priceline, which bought European travel site Booking.com in 2005, is expecting strong growth across the board this year.
Earlier on Monday, as it announced quarterly earnings, the company forecast gross travel bookings -- the total dollars spent by customers through its site -- of some $4 billion for the full year. That would be a hefty increase from its 2006 total of $3.3 billion.
For the first quarter, Priceline forecast a 15 percent increase in revenue from the $242 million it reported in the same quarter last year. It estimated a 25 percent to 35 percent increase in overall gross travel bookings, with a 75 percent to 80 percent increase in travel bookings from its business in Europe.
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