Orbitz Worldwide, which has implemented rewards programs that incentivize travelers to make additional hotel bookings, has undergone a monumental change in its self-perception.
If you thought Orbitz Worldwide, which fields brands ranging from Orbitz.com to CheapTickets, eBookers and Orbitz for Business, was mostly about travel booking then you’d apparently be wrong.
“We increasingly see ourselves as a travel rewards company rather than a travel agency,” Orbitz Worldwide CEO Barney Harford announced during the company’s third quarter of 2014 earnings call November 6.
If this spin — and that’s what it is — was supposed to depict the transformation of Orbitz Worldwide, investors weren’t particularly impressed with the verbal acrobatics as the company’s stock price plunged 9.2% to $7.70 per share as OWW missed analysts’ EPS estimates for the quarter.
Harford is bullish about Orbitz Worldwide’s new loyalty programs for Orbitz.com and eBookers; hence the positioning of Orbitz Worldwide as a “travel rewards company.”
Orbitz Rewards members earn 5% on hotel bookings and 2% for flights when they are booked through the company’s apps, for example.
“We expect Orbitz Rewards will cross the 3 million member mark by the end of the year,” Harford told analysts during the conference call. “The Orbitz Rewards program has enabled us to significantly increase the Orbitz.com hotel attach rate. It has helped us achieve a 10% increase in the number of hotel bookings per active Orbitz.com hotel customer, and we’re seeing that Orbitz Rewards members over-index on direct traffic.”
Growing, But Lagging the Leaders
In the third quarter, Orbitz Worldwide saw its hotel room nights sold increase 19% year over year, although that mark represented a deceleration from the 22% jump it saw in the second quarter. In comparison, the Priceline Group saw 27% room night growth in the third quarter and Expedia Inc.’s room nights jumped 24% year over year.
Orbitz Worldwide’s net income dropped 30% in the third quarter to $9 million on a 15% jump in net revenue to $253.1 million. Eight percentage points of that net revenue boost came from acquiring the Travelocity Partner Network on February 28.
On the plus side, Harford announced that Orbitz Worlwide has secured an agreement to power loyalty programs for Bank of America, adding that Orbitz sees the financial services sector as an area of focus for its private label business.
On the negative front, Harford confirmed that the Orbitz Worldwide-owned Travelocity Partner Network lost its longtime position as the exclusive flight and hotel provider for Yahoo Travel. Hipmunk took on those duties.
But Harford declined to discuss this seeming lapse in Yahoo Travel’s loyalty toward the Travelocity Partner Network (TPN), albeit under new ownership since Orbitz acquired it earlier this year.
Said Harford about the loss of Yahoo Travel: “We are not going to get into a detailed review of each of the strands of the TPN business.”