Ebookers was among the few bright spots in a lackluster second quarter for Orbitz Worldwide.
Orbitz Worldwide's global gross bookings decreased 3% to nearly $3 billion and the dip was attributed to poor performance by U.S. brands Orbitz.com and CheapTickets, which continue to be weighed down by a loss of metasearch traffic.
Since taking the CEO post in early 2009, Barney Harford has been focused on making Orbitz Worldwide a player on the global hotel scene, but global hotel gross bookings climbed just 9% during the second quarter, largely fueled by rising average daily rates.
On the other hand, Harford points out that hotel revenue as a percentage of total revenue increased one percentage point to 36%.
On the profit front, Orbitz Worldwide's net income declined 9% to nearly $8.9 million on $201.8 million in revenue, a 4% rise.
While its U.S. businesses languished, Orbitz Worldwide's Ebookers, which operates in 12 European countries and is skewed toward northern Europe, saw a 31% increase in room night growth and Ebookers' air net revenue climbed 29%.
Part of the boost at Ebookers can be attributed to increased marketing spend, including an advertising campaign in the form of some 3,000 spots across Europe in a 10-week period during the June quarter. Ebookers also saw an 18% jump in email transactions tied to its migration to a "trigger-based" email platform in the UK, Ireland, France and Benelux.
With its 3% gross bookings decline, Orbitz Worldwide, which is seeing is stock trade near 52-week lows, is losing more ground to the market leaders.
For example, during the second quarter, Priceline saw its global gross travel bookings increase 70% to nearly $5.8 billion. Part of that increase, though, was helped by its TravelJigsaw acquisition late in the second quarter of 2010.
Expedia Inc., too, far outpaced Orbitz during the second quarter. Its global gross bookings increased 19% to $7.9 billion. Expedia's global hotel revenue and room nights jumped 27% and 21%, respectively, during the quarter.
Harford, speaking during the company's second quarter earnings call today, expressed confidence that Orbitz will turn things around based largely on a variety of technology investments to improve hotel supply and conversion rates, Ebookers' growth trajectory, placing HotelClub brands on the parent company's global platform, and "an extremely strong pipeline" in Orbitz Worldwide's private label business.
Harford attributed part of the challenges at Orbitz and CheapTickets to changes that Delta Air Lines and US Airways made -- and American Airlines did so years earlier -- in barring online travel agencies from displaying their fares in metasearch engines. Orbitz may have been more dependent on metasearch traffic than its major competitors. (Here's more about Delta's metasearch strategy.)
Orbitz is also locked in a dispute with Kayak over its alleged violations of exclusivity provisions in the way it runs advertisements from other online travel agencies in the U.S.
Kayak denies the allegations and an arbitration panel heard the matter during the second quarter.
Harford, who alleges that Kayak's deal to take direct hotel bookings on Kayak.com from a Travelocity affiliate also contravenes their exclusivity deal, says the two parties are awaiting a final ruling from an arbitration panel.
Orbitz is seeking damages and injunction to block some of Kayak's actions.
In a Tnooz interview after the conference call, Harford said Orbitz is not yet participating in the new Google Hotel Finder but will begin to do so later this year.
Orbitz and other online travel agencies may have the added expense of paying Google for clicks in this Hotel Price Ad program to the extent that consumers use Google Hotel Finder to shop for hotels instead of going directly to OTA sites, Harford said.
Instead, Orbitz is focusing on improving the value proposition of its own sites with an increased focus on conversion and new products such as Orbitz Insider Deals, Harford said.
On the mobile front, Harford says that 6% of CheapTickets' hotel bookings, mainly same-day bookings, are now coming from its mobile website.
He added that Ebookers is slated to roll out an iPad app before the end of the year.
Harford argues, too, that Orbitz Worldwide has begun to change its revenue mix, with international revenue now accounting for 30% of the company's total revenue. International revenue climbed 42% in the second quarter.