Digital Booking Sites

Orbitz Profits Top Estimates With More Hotel and Vacation Packages

Aug 08, 2013 7:53 am

Skift Take

A focus on hotels instead of airline tickets, as well as investment in mobile, are paying off for Orbitz.

— Eliza Ronalds-Hannon

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Velas Vallarta  / Flickr

Vacation package popularity helped boost Orbitz's earnings this quarter. Velas Vallarta / Flickr

Orbitz Worldwide Inc, an online travel agency, reported higher-than-expected quarterly earnings on Thursday as it booked more hotel and vacation packages, and it forecast full-year revenue above current analysts’ estimates.

Shares of Orbitz rose 17.4 percent to $10.84 in early trading.

Orbitz, which operates its namesake and CheapTickets brands in the United States, ebookers in Europe and HotelClub primarily in the Asia-Pacific region, has been investing heavily on mobile capabilities that enable consumers to search and book on smartphones and tablets.

The company has also been moving to increase the amount of revenue it garners from hotels as opposed to airline tickets, which tend to be less profitable.

Gross bookings, or the dollar value of all travel services purchased, rose 4 percent to about $3.1 billion in the second quarter, aided by increased hotel and vacation package sales.

In the quarter, earnings fell as the company wrote off financing fees. Net income was $561,000, or nil per share, compared with $4.6 million, or 4 cents a share, a year earlier.

Excluding an $18.1 million write-off of deferred financing fees and other refinancing costs, earnings came to 17 cents a share. Analysts on average were expecting 9 cents, according to Thomson Reuters I/B/E/S.

Revenue rose 12 percent to $225.8 million, compared with analysts’ estimates of $218.9 million.

Orbitz said it expected revenue of $840 million to $850 million for the full year, which would represent growth of nearly 8 percent to 9 percent over 2012. In May, the company forecast net revenue growth of 4 percent to 7 percent for the year. The analysts’ average estimate is $831.4 million.

For the third quarter, Orbitz said it expected revenue of $214 million to $220 million. Analysts have forecast $213.8 million.

Reporting by Karen Jacobs in Atlanta. Editing by John Wallace and Lisa Von Ahn.

Copyright (2013) Thomson Reuters. Click for restrictions.

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