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Priceline now largest OTA, eclipsing Expedia in revenue and net income

November 11, 2011 | Online Travel

Priceline is not only out-performing Expedia on Wall Street, the company's third-quarter revenue is higher and net income more than double than Expedia's. However looking at the future, analysts say Expedia has a jocker with Hotels.com and its new technology platform.

On a snapshot basis, the two hotel booking giants are in the same ballpark. Priceline’s third-quarter revenue was $1.45 billion vs $1.14 billion for Expedia. Net income was $469.5 million, or $9.17 a diluted share at Priceline, vs. $209.5 million, or 75 cents a diluted share at Expedia.

So, if Expedia could ramp up its growth and somehow Priceline’s growth slowed, Expedia shares today would by comparison be undervalued. Roger King, a transportation analyst at CreditSights and one of the smartest travel mavens around, has been making just that point. After the second results were out, King noted that Expedia’s Hotels.com had converted to a more user-friendly technology platform and that hotel bookings at Expedia were “reaching priceline.com-like growth rates.”

Both companies also sell airline seats and rental car reservations, but the action is in hotels. And the growth there is outside the U.S., where the highly-fragmented hotel industry and bewildered international travelers both badly need a middleman. The companies try to lure travelers directly to their web sites, but they continue to spend hundreds of millions of dollars combined each quarter on search terms like “Hong Kong hotel.” Yay for Google.

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