Two things I am keeping an ear/eye out for in Agoda/Priceline announcements/transcripts (thanks to Morning Star for the Q1 2010 transcript). Firstly general information on performance and secondly anything on integration of inventory between the three models (opaque of Priceline, negotiated retail of Booking.com and merchant of Agoda). Here is what the transcript has on those questions.
On general performance CEO Jeffrey Boyd made a number of positive comments on Agoda’s performance. Saying that Agoda and year on year improvements in ADR were strong contributors to the 73% increase in international gross bookings growth (on a local currency basis). Agoda’s growth now seems to be having enough of an impact to shift the overall retail/merchant model mix. In this area Boyd said.
"Merchant gross bookings increased 25% as merchant hotel gross bookings both at priceline and Agoda offset year-over-year decreases in opaque airline ticket and rental car sales, where reduced industry capacity squeezed inventory available for opaque discounting."But the future is not without challenge or risk – as we should expect for a business based in Thailand. As Boyd observed
"...civil unrest has reemerged in Thailand, severely disrupting certain sections of Bangkok and forcing Agoda’s team to relocate to temporary offices. As a result, business for Bangkok and other Thai destinations is under pressure for both Agoda and Booking.com. Nevertheless, both businesses continue to grow their overall Asian pacific businesses at impressive rates."During the Q&A Mark Mahaney of Citigroup (author of the Agoda turnover report). Asked Boyd to give some more details on the Asian business. Here is the exchange edited to focus only on the Asia elements:
“Mahaney: ...could you comment a little bit more on the Asia business, particularly the Agoda asset? In the past, you’ve said that’s been growing close to triple digits year-over-year. Were the disruptions in the March quarter significant enough to take that growth rate materially below that level?On Inventory integration
Boyd: With respect to Asia and Agoda... the disruptions had a very significant impact on business for Bangkok and Thai destinations. And while I don’t want to give a specific growth rate for Agoda, their business notwithstanding those disruptions are still growing at a faster rate than our overall business ...I’ll also add that the Booking.com business is growing, again..at impressive rates in Asia. So, Thailand is certainly having an impact, but the business is diverse within the region and the region is having very strong growth for us just in general”
He was then asked about the integration of inventory between the different brands. Boyd is still not giving away much here. It is clear that we have seen and can expect to see Booking and Agoda inventory appear on both sites but is not clear from his comments whether we can expect to see merchant and negotiated retail seamlessly integrated in the way that Expedia has started to do with its merchant and Venere backed Expedia “EasyManage” hotels. Here is that exchange (edited for focus on integration).
"James Cakmak - Sidoti & Company: Can you talk about the progress made on sharing supply inventory across your multiple brands and sites?
Boyd: With respect to sharing supply, we now have on priceline.com, Booking.com inventory available not only in Europe, but also in North America and Agoda has been selling for several quarters inventory of Booking.com to its customers in Asia. I think that we’ve made very good progress in getting that integration up and running, and we believe it’s been additive to the business. The next phase of that is really one of optimization to make sure that we’re able to display the inventory in a way that is additive to the Group as a whole and understand the relationships between how various inventory performs in different marketing channels. It’s not a trivial exercise, but in our view we’ve got plenty of time to get it just right, because as we optimize over time it will be beneficial to our results. So we’re encouraged by our progress on that front, but there is plenty of work left to do in that regard.”