Priceline Profit Forecast Falls Short of Analysts' Estimates

  • Strong dollar, drop in U.S. bookings caused the shortfall
  • Competition heating up with Expedia's offer to buy HomeAway

Priceline CEO: Fantastic Q3, Fantastic Travel Season

Priceline Group Inc., the largest U.S. online travel agent, slid the most in more than three years after giving a fourth-quarter earnings forecast range that was less than analysts’ estimates, hurt by the stronger dollar and a drop in U.S. bookings.

Fourth-quarter profit, excluding some items, will be $11.10 to $11.90 a share, Priceline said in a statement Monday. Analysts predicted $12.38, the average of estimates compiled by Bloomberg. The stock fell 9.6 percent to $1,311.15 at the close in New York, the biggest one-day decline since August 2012.

Competition in the online travel industry is heating up as home-sharing company Airbnb and other startups are changing the travel market’s dynamics by adding capacity that competes with traditional lodging operators. Last week, travel-booking site Expedia Inc. agreed to acquire vacation-rental company HomeAway Inc. for $3.9 billion. Meanwhile, Priceline is trying to fight back by promoting its Booking.com as the place where there’s more places to stay than any other Websites in the world.

Priceline, which makes less than a quarter of annual sales in the U.S., said the weaker British Pound and Euro will “significantly” reduce results when converted into dollars this quarter. In the U.S., gross travel bookings will drop as much as 10 percent from a year earlier, the company predicted.

“If there was a source of weakness in that guidance, it’s their U.S. bookings portion, which is probably going to be around 10 percent of their total bookings,” said Dan Wasiolek, an analyst at Morningstar Inc. in Chicago.

Priceline, which also owns Kayak, has made five acquisitions in the past year. Among them was the July purchase of a minority stake in startup Hotel Urbano, marking Priceline’s foray into Brazil.

The Norwalk, Connecticut-based travel agent reported Monday that Booking.com has more than 820,000 properties and 21 million bookable rooms worldwide.

The stock has increased 15 percent this year, while Expedia has jumped 52 percent.

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