February 17, 2016 / 1:18 PM / 2 years ago

Priceline earnings beat estimates; shares surge

(Reuters) - Priceline Group Inc (PCLN.O) on Wednesday reported a higher-than-expected quarterly profit after hotel and rental car bookings rose, with travel demand suffering only briefly from the Nov. 13 Paris attacks.

Shares of the online travel services company surged more than 11 percent in premarket trading after it said fourth-quarter earnings rose nearly 12 percent from a year earlier to $504.3 million.

Excluding special items such as stock-based employee compensation, earnings of $12.63 per share topped the analysts’ average estimate of $11.80, according to Thomson Reuters I/B/E/S.

“It’s been a pretty rocky market externally, but for travel, it’s actually been quite good,” Chief Executive Officer Darren Huston said in an interview.

Lower oil prices have resulted in lower airfares that have enticed travelers, he said. The operator of Booking.com, Priceline.com and Kayak.com reported a nearly 13 percent rise in bookings to $12 billion for the quarter, with hotel nights jumping 27 percent.

While the company had a couple of weeks’ worth of cancellations for European travel after Islamic State militants killed 130 people in Paris, bookings to the area have returned to their typical rate of growth, he said.

Rival Expedia Inc (EXPE.O) said a week ago that its travel volumes there had not rebounded fully.

Edward Jones analyst Josh Olson attributed Priceline’s seemingly faster recovery to Booking.com’s brand recognition and wider hotel selection that gave travelers more options when rethinking trips in Europe.

For the first quarter, Priceline forecast bookings would increase 12 percent to 19 percent from a year earlier, leading to a 14 percent to 21 percent rise in gross profit.

Concerns about the rapid spread of the Zika virus in the Americas so far have not dented traveler interest.

    In Brazil, “Carnival is actually very strong this year, and you’re starting to see bookings build up toward the Olympics” in Rio de Janeiro, Huston said.

    Scientists are investigating a potential link between Zika infections of pregnant women and more than 4,000 suspected cases in Brazil of microcephaly, a condition marked by abnormally small head size that can result in developmental problems.

    Huston said home and vacation rentals, which have a growing fan base in part from apartment-sharing rival Airbnb, would remain a focus and investment area for Priceline this year.

    “They’re going to be very competitive in the long-run with Airbnb,” Olson said.

    Huston said Priceline planned mainly to expand existing operations rather than make acquisitions.

    Reporting by Jeffrey Dastin in New York and Ankit Ajmera in Bengaluru; Editing by Kirti Pandey and Lisa Von Ahn

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