Excluding a few high profile exceptions such as priceline.com, the online travel sector is generally surviving the Wall Street sell-off and the tidal wave of negative publicity for e-commerce of the past year.
While most news and financial analysts have focused on rapidly declining stock prices, the e-travel success stories are often overlooked.
Many online travel sites are succeeding and the revolution in the way tickets are sold continues. One example of this is the report released today by Travelocity.com reporting record year-end financial results. Travelocity also reported gross bookings and revenue growth exceeded 100% last year, gross profits were $125.5 million (an increase of 150%), new booker conversion rate rose to 8.1%, and membership was 24.9 at year-end.
Gross travel bookings were $2.5 billion for the year, more than double 1999. The look-to-book conversion rate increased to 8.1% in the fourth quarter, compared to 5.1% in the fourth quarter of 1999 and 7.1% in the third quarter of 2000. Pro forma revenues for 2000 were $201.3 million, exceeding 1999 pro forma revenues by 121%. Revenues for the fourth quarter of 2000 were $65.5 million, 117% higher than the fourth quarter of 1999 and 23% higher than the third quarter of 2000.
“Travelocity entered 2000 with a business plan that included aggressive performance and financial goals,” said Terrell B. Jones, president and CEO of Travelocity. “Our objective is clear: reach profitability as soon as possible, while continuing to grow our business, manage expenses, and provide superior customer service. While 2000 was a disappointing year for many e-commerce companies, we stayed the course and executed the plan. We had a terrific year in which we had a successful merger with Preview Travel, became a public company and also doubled the size of our business.”
Travelocity reports a gross margin of 68.4% in the fourth quarter improved 6.3 percentage points over the third quarter. Net loss before intangibles and after Sabre interest was $0.9 million, or $0.05 per share in the fourth quarter. This reflects a 69% improvement over the third quarter of 2000.
“We continue to see strong growth, both in transaction revenues and in advertising revenues,” commented Ramesh Punwani, chief financial officer of Travelocity. “Our quarterly cash loss from operations, EBITDA, narrowed more than we expected to $1 million due to higher revenue and strong financial controls. Our cash and marketable securities increased to $72 million. In addition, our pro forma net loss before intangibles and after Sabre interest improved to $0.05 per share. With these results, we have updated our outlook and believe we will be at or close to profitability by the end of the second quarter of 2001, and profitable for the full year.”
Travelocity also announced today that it will participate with eleven leading airlines in the Asia-Pacific region in an expansive new online travel exchange. Travelocity will be the primary technology provider for the exchange as well as a founding shareholder in the new venture.
“Although Travelocity has made great strides in improving its conversion rate, only 8 percent of visitors to the site actually make a purchase,” Jones said. “This reflects a tremendous growth opportunity as shoppers become more comfortable with the Internet. To capture that growth, we will focus on the factors that have made us the largest online travel company—customer service, technological innovations, our experience in the industry and our key relationships.”
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