International growth leads the way
Priceline’s (PCLN) gross bookings grew by about 13% year-over-year (or YoY) during 4Q15. The strong international bookings drove its overall bookings and helped offset the weakness seen in the domestic bookings market. For 4Q15, international bookings grew by 16% while domestic bookings shrank by 8%.
Rivals Expedia (EXPE), TripAdvisor (TRIP), and Ctrip (CTRP) have reported high growth in gross bookings from hotels. PCLN forms ~3.12% holding of the PowerShares Russell Top 200 Pure Growth Portfolio ETF (PXLG).
Strong dollar is a negative
This performance was subdued by the US dollar’s appreciation. Since Priceline has a widespread international presence, it is prone to currency fluctuation risks. The impact can be understood from the fact that PCLN’s currency neutral gross bookings growth stood at a strong 27% YoY.
Priceline’s top line grows
The strong upsurge in bookings helped PCLN record a strong topline growth. Revenue grew by 9% to $2 billion as compared to $1.8 billion in 4Q14. For fiscal 2015, Priceline’s top line grew by 9% to $9.2 billion as compared to $8.4 billion in 2014.
Outlook: Growth with volatility
As discussed in the previous article, the hotel business should continue to be PCLN’s key revenue driver in 2016. As the size of international travel far exceeds that of the US, growth in international business could be key to Priceline’s future growth. The growth opportunities in the international market are tremendous given the low Internet penetration as compared to the US and rising disposable income.
However, all this means increased volatility for PCLN, given the dependence on different economies and increased currency fluctuations risks.
For 1Q16, Priceline noted that it continues to see strong international demand across all regions and channels. The company expects to see its revenues grow somewhere between 9%–16% YoY and its gross bookings to grow by 12%–19% YoY during this timeframe. The company also expects to see a strong travel season during spring as fuel prices are expected to remain lower.
Overall, it seems like Priceline is set for another year of growth. However, it expected to continue to be subdued by a strong dollar.