Why Priceline’s peers are struggling to maintain operating margins » Market Realist

By Smita Nair • Apr 29, 2014 9:00 am EDT 

Operating margins

Priceline and its peers such as Expedia (EXPE) and Orbitz Worldwide (OWW) have been investing in marketing and promotion, technology, and personnel in an attempt to improve long-term operating results, but these expenses have pressured operating margins. Priceline’s management said on the earnings call that “operating margins were impacted by 146 bps of deleverage and offline advertising mainly related to our Booking.com TV campaigns in the U.S. and Australia and the inclusion of KAYAK offline advertising.” Although Priceline has managed to efficiently improve its margins, its peers have struggled.


In 2013, Priceline’s total online advertising expense was approximately $1.8 billion, up 41.2% year-over-year. A substantial portion of this was spent internationally through Internet search engines, meta-search and travel research services, and affiliate marketing. The company has worked on building brand awareness for Booking.com, Priceline.com, Agoda.com, KAYAK, and Rentalcars.com via aggressive marketing and promotion campaigns. It said it uses online search engines (primarily Google), meta-search and travel research services, and affiliate marketing as primary means of generating traffic to its websites. It also invested approximately $127.5 million in offline advertising via television, print and radio.

Priceline said its online advertising ROIs were down year-over-year for 2013. Its online advertising as a percentage of gross profit has increased due to lower returns on investment (ROIs) from online advertising, brand mix within the group, and channel mix within certain of its brands. Plus, its international brands are generally growing faster than U.S. brands, and usually spend a higher percentage of gross profit on online advertising.

Priceline CEO Darren Huston said in a Bloomberg interview that the company spends more on search ads on Google, and that results from Facebook (FB) and Twitter (TWTR) haven’t worked out for the company. Huston said in the article that the ad spending would be modified to include TripAdvisor Inc. (TRIP), the KAYAK travel search engine, and Expedia’s (EXPE) search site Trivago. When asked about the emergence of Google as a potential competitor, Hudson said he was not worried, adding “Google of course respects us as an advertiser.”

Expedia mentioned in its annual filing that its marketing channels include social media sites such as Facebook (FB) and Twitter (TWTR). The marketing initiatives also include promotional offers and traveler loyalty programs such as Welcome Rewards and Expedia Rewards that are recorded under its expenses. Orbitz (OWW) said in its annual filing that its marketing expense increased 16% or $39.5 million to $292 million, due largely to the growth of its private label distribution channel, which increased affiliate commissions by $23.5 million, and search engine and other online marketing of $32.7 million.

via Why Priceline’s peers are struggling to maintain operating margins » Market Realist.

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The Muslim travel market: The Kuoni Group has a vision – eTurboNews.com

Crescentrating, the world’s leading authority on halal travel, and the world\’s leading group travel provider Kuoni Group Travel Experts, have announced a global partnership that will enable Kuoni Group Travel Experts to market Crescentrated halal friendly group travel arrangements. It will see Muslim families, leisure and MICE groups enjoy better travel experiences around the world thanks to a network of Crescentrating accredited travel agents in Asia.

The partnership launched at the Global Islamic Economy Summit in Dubai (25-26 November). Fazal Bahardeen, Crescentrating’s CEO, spoke at the event alongside several of Kuoni’s hotel partners, to highlight the value of the global Islamic economy and latest trends within halal industries such as food, travel and lifestyle.

via The Muslim travel market: The Kuoni Group has a vision – eTurboNews.com.

Introducing Where2TravelNext – A Powerful New Marketing Platform for Travel Professionals Provided at No Cost to Travel Agents, Subsidized by Travel Suppliers – Press Release – Digital Journal

Tallahassee, FL (PRWEB) September 30, 2013

Introduced by Travel Research Online, Where2TravelNext is the next-generation marketing platform to help today’s travel agents utilize their existing email database and Social Media channels as lead generators. It is designed to tap an agent’s own customers and prospects to increase sales using email marketing and social media. Best of all, the platform automates several elements of marketing so agents do not need to do any additional work, and since the program is funded by travel suppliers, it is provided at no cost to travel agents.

“Where2TravelNext enables travel agents to further enhance their offerings with an entire suite of marketing options with no extra work for them and at no additional cost as it’s subsidized by travel suppliers. The secret to increasing sales is to rev up marketing frequency. Where2TravelNext agents do just that by automating a lot of the work for them! We highly encourage travel agents and group planners to take advantage of this incredible lead generation platform,” said Caroline Hughes, travel agent support for Travel Research Online.

“Plus, Not only does Where2TravelNext provide agents with targeted ways to build interest and market to their clients, but it also gives our travel supplier partners assurance that their specials and deals are reaching more than one million consumer travelers who are directed back to their preferred travel agent for planning and booking expertise. It’s an exciting way to drive leads for travel agents and support travel suppliers at the same time,” continued Hughes.

Read more: http://www.digitaljournal.com/pr/1496899#ixzz2gq3wj05d

via Introducing Where2TravelNext – A Powerful New Marketing Platform for Travel Professionals Provided at No Cost to Travel Agents, Subsidized by Travel Suppliers – Press Release – Digital Journal.

Marketing experts give Cook rebrand cautious thumbs up – www.travelweekly.co.uk

Marketing experts give Cook rebrand cautious thumbs up

Marketing experts gave a cautious welcome to Thomas Cook’s decision to rebrand the company with a new heart logo and ‘Let’s Go’ strapline.

There is no doubt such a largescale change – which sees the globe logo and ‘Don’t Just Book It’ strapline disappear – is high-risk, according to Brighter Group chairman Steve Dunne.

“After all your logo is the personification of the brand; the symbol that the customer becomes familiar with and, if it is doing its job properly, reassures and reinforces everything about the brand in their eyes,” said Dunne.

The challenge to keep pace with change is one many traditional retailers face, added Branwell Johnson, acting editor of Marketing Week magazine.

He said: “Thomas Cook has the same problem as many legacy consumer retail and service brands in trying to transform itself into a 21st century powerhouse – it has to shed all its cumbersome baggage in terms of an overstuffed brand portfolio and the assoc

via Marketing experts give Cook rebrand cautious thumbs up – www.travelweekly.co.uk.

Why travel agents aren’t completely pointless – MarketWatch

By Catey Hill

Job site CareerCast recently put them on its “most useless professions” list, many consumers have stopped calling or visiting them, and even some within the industry worry they may soon be out of work. After all, when it’s so easy for consumers to plan and book their own travel online, does anyone need a travel agent anymore?

While “travel agents used to be mostly mom-and-pop, brick-and-mortar shops selling trips to Disney World and cruises and things like that,” that’s all changing, says Elias Garcia, a marketing specialist at travel company Global Basecamps. Many agents still provide such services of course, but fewer and fewer are doing so, because those package deals, as well as one-off plane tickets and hotel rooms — once more difficult for regular people to find and compare on their own — are now at most everyone’s fingertips, he says. Despite that, one in four airline tickets is still sold by brick-and-mortar travel agents, according to industry estimates. (70% is for corporate travel and the rest leisure.)

via Why travel agents aren’t completely pointless – MarketWatch.