Priceline is spending big to grow its international business- where it's making the most money, and often has the upper hand against rivals. Bobbi Rebell reports.
Online travel agency Priceline, known for helping customers spend less, has itself become a big spender. Operating expenses shot up 39 percent last quarter, though earnings beat forecasts, as it pushes to expand internationally. Macquarie's Tom White: SOUNDBITE: TOM WHITE, EQUITY ANALYST, MACQUARIE CAPITAL (ENGLISH) SAYING: "We view Priceline as still the A+ operator in this space. They grew room nights 29% year over year in the quarter, that is far outpacing their next largest rivals. So the online travel space is sort of an increasingly competitive space at the moment. You've got big competitors like Expedia and TripAdvisor spending aggressively on both offline and online advertising. But it's not constraining Priceline's overall ability to maintain high levels of top line growth." And they will continue to invest- estimating they will spend about $130 million in offline advertising, and in its Open Table business- expanding abroad. That international bet is key. International bookings rose by more than a third in the quarter, accounting for 86 percent of total bookings. And they are zooming in on China- investing half a billion dollars in China's Ctrip.com- which will give customers access to more than 100,000thousand places to stay in the greater China region. Priceline has also recently spent to buy Open Table, an example of a lower price point offering for its consumers, that can leverage mobile apps, and cut dependence on search engines like Google. SOUNDBITE: TOM WHITE, EQUITY ANALYST, MACQUARIE CAPITAL (ENGLISH) SAYING: "Really what is enabling this is mobile. So booking a restaurant reservation while you are in destination, booking a museum tour while you are in destination, these are all interesting and complimentary potential businesses for the large online travel brands." Priceline says it's expanding the Open Table app beyond the current New York market, and just Monday they launched a service that lets users pay their restaurant bill using their app.