“What happens next year is open to analysis and debate potentially”

Priceline.com says its worldwide business has performed well in the wake of the financial crisis and global recession.

Going forward, near-term results will continue to show the impact of the relative strength or weakness or prior year periods and cyclical trends in demand and pricing, according to priceline.com’s president and CEO Jeffery H. Boyd.

“We believe our long-term performance will continue to be more closely tied to building our geographic and supply footprint, growing new markets, strengthening our brands worldwide, and executing on integration initiatives,” said Boyd as the company announced its third quarter results. 

Customers

Boyd, according to third quarter earnings call posted on Seeking Alpha, mentioned that the accelerating growth rate isn’t really reflective of much more than increasing new customers and repeat customers.

“We haven’t seen a remarkable trend in terms of the changing mix of customers with the exception of retail airline tickets. Retail airline shopping is pervasive on the Internet, and all of the interest in reduced and eliminated booking fees that started two years ago with us and continued with the matching has generated a lot of new customers that are coming around and shopping for an airline ticket, and that’s something that we’re happy to see in that it’s our opportunity to try to cross-sell them and bring them into the brand, especially to buy things that are uniquely ours such as the opaque product.”

Competition

“...what happens next year is open to analysis and debate potentially. On the one hand there will be an anniversarying of the fee cuts and the generation of new business that that created on the website, but on the other hand you’re also going to be lapping earnings results that reflect the benefit of reduced marketing spend,” said Robert J. Mylod Jr. - Vice Chairman of the Board, Head - Worldwide Strategy and Planning, commenting on marketing spend. 

He added, “So I don’t think it’s a foregone conclusion that our competition will be absolutely free, for example, in the case of Orbitz to reinject $38 million into their marketing spend in the third quarter of next year because I think the pressure that puts on their earnings comps is very, very significant. So my expectation is not that there’s going to be a flood of new marketing spend to try to make up for anniversarying fee cuts. I think that the competition - and this is the way we approach it - will be ROI driven and trying to execute on a rational marketing strategy that is accretive to their earnings.”