Orbitz Sees 48 Percent Drop in Second Quarter Profits
By James Shillinglaw
August 08, 2012 10:41 PM
Online travel agency giant Orbitz Worldwide reported gross bookings in the second quarter dropped 1 percent to $2.970 billion, from $2,997 billion in the same quarter last year. The company said it continued to see grown in transactions, especially those through mobile devices. At the same time, Orbitz reported a drop in second quarter profits to $4.584 million, down 48 percent compared with $8.888 million reported last year.
Net revenue was $200.977 million in the second quarter was flat when compared with the $201.826 million reported in the same period last year. New revenue margin also was essential flat at 6.8 percent, compared with 6.7 percent last year.
“Despite a challenging economic environment in Europe in particular, we grew room nights 3 percent, consistent with the first quarter, led by 28 percent growth at ebookers," said Barney Harford, CEO of Orbitz. "Our U.S. distribution business grew room nights 19 percent, ahead of the planned launch of our American Express Consumer Travel Network partnership in the third quarter. Our outlook for the third quarter and balance of the year is impacted by the global economic uncertainty that intensified during the second quarter and has continued into the third quarter. We continue to see very strong growth in mobile as we deliver new mobile apps and services across our global brands. Mobile, defined broadly to include smartphones and tablets, now represents 20 percent of Orbitz.com standalone hotel transactions.”
Net revenue was $201.0 million for the second quarter 2012, relatively flat year over year. On a constant currency basis, net revenue was up two percent in the quarter due primarily to higher vacation package and hotel volume, higher net revenue per airline ticket and higher advertising revenue, partially offset by lower air volume and lower revenue from travel insurance and hosting. Hotel net revenue, including hotels booked on a standalone basis and as part of a vacation package, represented 38 percent of the company's total net revenue for the trailing 12 months ended June 30, 2012, up from 36 percent for the trailing 12 months ended June 30, 2011.
Standalone air net revenue was $67.3 million in the second quarter 2012, down 3 percent year over year. This decline was driven primarily by lower domestic air volume, partially offset by higher net revenue per airline ticket and higher air volume at ebookers.
Orbitz reported standalone hotel net revenue was $55.9 million in the second quarter 2012, up 1 percent year over year. This increase was driven primarily by higher hotel volume for the company's domestic leisure business and ebookers, partially offset by lower volume at HotelClub. Vacation package net revenue increased 9 percent in the quarter to $36.4 million due primarily to higher volume for both the company's domestic leisure business and ebookers. Advertising and media revenue increased 12 percent year over year in the second quarter to $15.3 million.
Other net revenue, which is comprised primarily of car rental, cruise, destination services, travel insurance and airline hosting revenue, declined 13 percent year over year. This decline was driven primarily by a new Department of Transportation regulation that went into effect January 2012, which no longer allows travel insurance to be pre-selected on the company's domestic websites. This change reduced travel insurance attachment rates. The termination of the company's remaining airline hosting agreement in July 2011 also contributed to the decline.