Booking Holdings Inc (BKNG) 2004 Q1 法說會逐字稿

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  • Operator

  • Priceline.com would like to remind everyone that this call may contain forward-looking statements which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

  • These forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict; therefore, actual results may differ materially from those expressed, implied, or forecasted in any such forward-looking statement.

  • Expressions of future goals and similar expressions reflecting something other than historical fact are intended to identify forward-looking statements.

  • For a list of factors that could cause Priceline.com's actual results to differ materially from those described in the forward-looking statements, please refer to Safe Harbor statements at the end of Priceline.com's earnings press release as well as Priceline.com's most recent filings with the Securities and Exchange Commission.

  • Unless required by law, Priceline.com undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events, or otherwise.

  • A copy of Priceline.com's earnings press release together with an accompanying financial and statistical supplement is available in the Investor Relations' section of Priceline.com's web site located at www.priceline.com.

  • Now, I would like to introduce Priceline's speaker for this afternoon, Jeff Boyd.

  • Sir, please go ahead. [Audio Difficulties] Ladies and gentlemen, please remain on your lines.

  • - President, CEO, Director

  • [Audio Difficulties/Missing Audio] 50%.

  • This bottom line performance was achieved despite a $4.3 million year-over-year increase in advertising costs as we boosted our investment in marketing during the quarter to build the new air business.

  • Strong results were achieved for all travel products.

  • The launch of Priceline's retail choice product for airline tickets where customers can now choose from a list of flights, times, and low fares, or name their own price for greater savings has been very successful.

  • The new product together with new advertising featuring William Shatner and Leonard Nimoy proved to be a powerful combination.

  • Airline tickets sold increased 28% over last year, making a positive contribution to growing bookings and earnings and driving customers for other Priceline products.

  • We intend to continue improving our new product and supporting it with advertising in the second quarter and beyond.

  • Priceline's hotel business had another strong quarter with 1.7 million room nights sold, a 35% increase over first quarter 2003.

  • Sales were lifted by strong room night sales in our packages product.

  • I will discuss our retail hotel initiatives in a moment.

  • Packaging of travel products is an important growth area for Priceline.com as suppliers continue to view packaging as an attractive discount channel and consumer acceptance of dynamic packaging grows.

  • First quarter growth in packages continued to accelerate, fueled by increased demand including the demand source from airline ticket customers and by product improvements.

  • Fourth quarter product improvements such as fixed pricing and enhanced flight options have been well received.

  • And we will announce shortly the addition of retail choice for vacations, where customer select an opaque or disclosed flight itinerary depending on their needs.

  • Given the results of our testing of this product and the success of retail choice in airline tickets, we are optimistic that these improvements will lift product sales.

  • Rental cars delivered a strong first quarter with 1.2 million rental car days sold, representing 83% growth versus first quarter last year.

  • Retail rental car sales are now sourced from owned URLs such as rentalcars.com, breezenet.com, and lowestfare.com as well as from placements on priceline, which provide customers with a retail option when their opaque offer fails.

  • With the expansion of our product offerings, we not only have more choice for customers, but more choice for suppliers who can now meet their distribution needs with a number of products.

  • With the most supplier-friendly opaque model and segmented leisure customer base, we continue to work with our airline, hotel, and rental car partners to address market challenges.

  • Over the past year we invested in and worked closely with travelweb.com to offer customers an attractive retail hotel product on lowestfare.com.

  • Travelweb was founded by the leading hotel chains and Pegasus Solutions and sells inventory through a number of other sites, including Orbitz.

  • Today we announced the purchase of Travelweb.com.

  • Our goals are simply stated.

  • Number one, we intend to build on our strong hotel relationships and capabilities in technology and marketing to create the best retail hotel product in the market.

  • Number two, given the success of retail choice in our airline ticket package and rental car products, we intend to enhance the availability of retail price for hotel rooms for Priceline's travel product customers.

  • And three, we intend to make travelweb a first choice for distribution partners looking for a hotel reservation service with great inventory, functionality, and service.

  • In particular, we are pleased that Travelweb's dispute with Orbitz has been settled and look forward to working together with Orbitz going forward to deliver high-quality inventory for sale with their own merchant inventory.

  • In summary, we have a great new product to offer to customers which nicely compliments our existing product lines and allows us to participate more fully in the attractive merchant hotel category.

  • We look forward to working closely with hotel partners and Pegasus to build the business.

  • Priceline also announced today the filing of a shelf registration statement which covers $100 million of debt and equity securities issuable by Priceline and 10 million shares of common stock owned by Hutchison Whampoa and Cheung Kong Holdings.

  • This shelf gives Priceline the ability to quickly access the capital markets from time to time for equity or debt financing based on market conditions and the needs of the business.

  • It also gives our largest shareholders the flexibility to sell shares over time in an orderly registered distribution, consistent with the contractual rights they received when they invested in Priceline and market practice, as a number of issuers have filed similar shelves recently.

  • Our first quarter results demonstrate the progress Priceline has made in expanding its product offerings and consumer appeal, and let me just review them briefly because I understand that some of the parts of the first minute of the call were dropped from the telephone call.

  • Gross bookings of $360 million were up 46% versus last year.

  • Revenue of $224 million was up 12% versus last year.

  • And gross profit grew 31% over last year to $43 million.

  • On the net income side, our net income was $5.1 million or 13 cents per share compared to a net loss of 21 cents a share in the first quarter, beating first call analyst consensus estimates by over 50%.

  • We intend to continue to build retail choice in the hotel package and rental car products and to offer customers attractive additional products at the point of reservation, especially through packages.

  • The acquisition of Travelweb.com enhances our ability to accomplish these goals and add new distribution for our products.

  • With our product line we can provide travelers today with a unique blend of choices, convenience and value available no place else in the market.

  • Add to that the Priceline brand and an effective advertising campaign, and we are well positioned to enhance Priceline's position in the growing online travel market.

  • Moreover with a growing top line and efficient cost structure, we are in a position to continue our investments in new products, distribution, and marketing while delivering attractive growth in bottom line earnings.

  • I will now turn the call over to Bob.

  • - CFO

  • Thanks, Jeff.

  • I'm going to give a brief review of our Q1 results, discuss some of the financial highlights of our Travelweb acquisition, and then I will finish with some forward guidance.

  • Let me start that by saying from a metrics perspective we are obviously pleased by the growth in gross bookings, but we were gratified to see that each of the products were significant contributors to the effort.

  • But the largest overall performance came in our agency bookings which grew by 455% year over year and 97% on a quarterly sequential basis as a result of the success of our retail airline product.

  • Our hotel and rental car businesses delivered unit sales growth that was substantially in excess of our previous guidance.

  • In short, we have successfully completed a transition from the business primarily dependent upon the sale of opaque airline tickets to a far more vibrant and diversified business that is now well positioned to participate fully in the highly attractive long-term secular growth trend inherent in online travel.

  • Revenue of $224 million also came in 10% higher than our guidance as well as 12% higher than last year's level.

  • We achieved this year-over-year growth despite an accelerated change in our airline ticket business mix from primarily opaque merchant business where revenues are reported on a gross basis to one in which our retail agency basis where we report revenues on a net basis represents an increasingly large percentage of our gross bookings.

  • As those of you who have followed Priceline for the past year or so know, we have stressed to investors that our gross bookings metric and our reported gross profit would ultimately become the most appropriate measures for evaluating the growth in the business.

  • With our net revenue based retail agency businesses now becoming a very significant component of our bookings, this fact is evident in our strong gross profit results relative to our reported revenue.

  • Specifically, our gross profit dollars grew by 31% year-over-year or roughly three times our growth in revenues.

  • It is also the principal reason for why gross margin of 19.4% expanded by almost 300 basis points versus last year to the highest level in Priceline's history.

  • As for operating expenses, Jeff made mention of our increased advertising expenditures in the first quarter.

  • Indeed, ad spend grew by 39% on a year-over-year pay sis and came in above the high end of the guided range of between $13 million and $15 million.

  • I wanted to share two observations of how we as managers of and investors in Priceline evaluate this data.

  • First we're extremely proud of the fact we were able to grow gross books and net income as a meaningful faster pace than we grew our advertising expenses.

  • We believe it demonstrates the effectiveness of both our advertising strategy as well as the creative execution of that strategy.

  • It also shows the financial leverage inherent in our P&L.

  • Second, this quarter's ad pend is reflective of a management discipline of reinvesting some of the over-performance on the bottom line back into the business in the form of increased ad spend in order to position the company for future growth.

  • As Q1 unfolded we did just that.

  • Investors should expect that we will do the same in future quarters if and when we are meeting and exceeding our financial targets and are creative is as compelling as it has been thus far in 2004.

  • As for the remaining expense line items in the P&L all of our expenses with the exception of our personnel costs came in at or below the guidance we gave on the fourth quarter earnings call.

  • We said that we expected to report personnel costs of up to $7.5 million in the quarter.

  • Actual personnel costs of $8.2 million came in higher than that guidance primarily as a result of an accrual we took for employee bonuses that will be paid out at the end of the year in the event that we exceed full year budgeted goals that were established by our board of Directors at the beginning of this year.

  • We reported GAAP net income of 13 cents cents per share, which as I mentioned came in comfortably ahead of our guidance of between six and ten cents and bested the consensus first call estimate of eight cents per share.

  • I want to point out that GAAP net income was negatively affected by a total of $264,000 worth of expenses associated with option payroll taxes, stock-based compensation, and acquisition-related amortization.

  • GAAP net income applicable to common stock holders per share of 11 cents was negatively affected by a $772,000 dividend which was declared and paid on the preferred stock in the quarter consistent with our previous guidance.

  • As for cash and cash flow, we began the quarter with $268 million of cash and marketable securities and we closed the quarter with $278.1 million of cash and marketable securities, representing a net increase in cash of $10 million.

  • Total capital expenditures in the quarter were $1.25 million.

  • Now, I would like to share a few more details with respect to the Travelweb acquisition.

  • Also, we delivered $20.8 million in cash to acquire 71.4% of Travelweb that we did not already own, thus bring the total ownership interest to 85.7%.

  • In addition we will issue 995,000 shares of restricted stock to the sellers of Travelweb in the event that Travelweb hits certain hotel bookings targets within the next 12 months.

  • We also have an agreement with Intercontinental Hotel Group to purchase the remaining 14.3% of Travelweb's equity at a future date.

  • Jeff mentioned many of the strategic and operational benefits that we expect to attain from this deal.

  • From a financial perspective, there are many additional assets that come with the transaction.

  • First, we bought a business with estimated annual gross bookings of approximately $40 million to $50 million and net revenues of approximately $8 million to $10 million.

  • Second, we have inherited approximately $15 million of cash that Travelweb will have on its balance sheet after the net effect of deal costs, restructuring costs, and post acquisition working capital adjustments.

  • Third, as Jeff mentioned, Travelweb is clear of all the litigation activities associated with its much publicized dispute with Orbitz, and, to boot, as part of the settlement, Orbitz and Travelweb have re-engaged in a business relationship that we expect will provide Travelweb with a meaningful base of gross bookings through 2005.

  • Finally, we believe that we have further solidified our hotel industry relationships as a result of today's acquisition.

  • The founding shareholders of Travelweb, namely Hilton, Hyatt, Marriott, Pegasus, Six Continents, Starwood have expressed their confidence in our ability to be successful stewards of the Travelweb asset that they built.

  • The structure of the deal is also representative of the partnership approach that we have always taken in both our words and our actions with respect to the hotel suppliers.

  • We have structured an earnout payment to our hotel partners in the even that we exceed certain bookings targets.

  • It is certainly our goal to hit those targets because such an accomplishment would be accretive to our earnings and result in significant hotel ownership of Priceline.

  • Now, I would like to go over our guidance.

  • Keep in mind that all of the guidance that I'm about to give is inclusive of the effects of the Travelweb acquisition with the exception of all of the acquisition-related noncash amortization expense, stock-based compensation, and option payroll taxes.

  • I will address these adjustments at the end of my remarks.

  • Also keep in mind that the substantial majority of Travelweb's bookings are structured under the quote/unquote merchant model, and consequently, most of Travelweb's gross bookings will appear in the merchant line item in our financial supplement.

  • In terms of reported revenue, Travelweb's revenues will be reported on a net basis consistent with the way Travelweb has reported its revenues historically.

  • With that said, let me start with fairly specific line item guidance with respect to Q2.

  • We expect to see total gross bookings grow by approximately 44 to 50% versus last year's second quarter.

  • This includes an estimated 350 to 400% year-over-year increase in agency bookings.

  • Total airline tickets are expected to grow by 42 to 50% on a year-over-year basis.

  • Hotel room nights sold are expected to grow by approximately 25% year-over-year.

  • And rental car days are expected to grow by 50 to 60% year-over-year.

  • As for the income statement, we expect revenues to grow by approximately 5% versus last year's levels.

  • Although it should hopefully come as no surprise that actual reported revenues could come in higher or lower than this estimate depending upon the ultimate mix of the business between merchant activities where non-Travelweb revenues, which make up the substantial majority of our merchant bookings, are reported on a gross basis and agent activities, where revenues are reported on a net basis.

  • We expect total gross profit dollars to grow by 25 to 30% versus last year's second quarter levels.

  • As for operating expenses, we expect advertising expenses of approximately $14 to $15 million.

  • We expect sales and marketing expenses of $8 million to $8.5 million.

  • We expect personnel costs of the $8.5 to $8.8 million, and we expect general administrative expenses of approximately $4 million.

  • We expect information technology expenses of $3.3 million to $3.5 million and operating depreciation and amortization expenses of approximately 2.4 to $2.5 million.

  • Total interest income is estimated to come in at approximately $400,000.

  • We expect to report net income in the second quarter of approximately 25 to 30 cents per share, adjusted to exclude noncash acquisition-related amortization expense and the effects of stock-based compensation and option payroll taxes.

  • The midpoint of this guidance represents a 1.5 cents increase to the previous guidance.

  • And keep in mind that our guidance includes approximately 2 cents worth of operating losses that we expect to incur at Travelweb during the quarter.

  • We expect Travelweb's operating results to improve over the competitors over the second half of 2004.

  • As I just mentioned, our GAAP net income with include the effects of noncash acquisition related amortization expenses principally associated with Travelweb.

  • We have not finalized our purchase accounting allocations as of yet, but we are targeting quarterly acquisition-related amortization expenses of approximately 1 to $1.5 million per quarter.

  • GAAP net income will also include the effects of stock-based compensation and option payroll taxes of approximately $200,000 to $500,000 in the second quarter.

  • As for the third quarter guidance, while I'm going to provide the type of granular detail that I have provided for Q2, we expect gross bookings, revenues, gross profit dollars, and net income applicable to common shareholders adjusted to exclude noncash acquisition related amortization expense and the effects of stock-based compensation and option payroll taxes as well as our non-cash preferred stock dividend to come in at roughly the same levels as we are expecting in the second quarter.

  • As for Q4, we are targeting adjusted net income applicable to common shareholders of approximately 13 to 17 cents per shear.

  • Finally, I want to point out as I have done on previous calls that all of the aforementioned forecasts are based upon an assumption that we will continue operating in a consumer travel market that is roughly similar to the current one, and any geopolitical instability or terrorist event, particularly within the United States would, in all likelihood, have a negative impact on the travel market in general and our operating results in particular.

  • With that, we'd be happy to answer your questions.

  • Operator

  • Ladies and gentlemen, if you have a question at this time, press the one key on your touch-tone telephone.

  • If your question has been answered or you wish to remove yourself from the queue, please press the pound key.

  • Again, if you would like to ask a question, please press the one key now.

  • The first question comes from Anthony Noto from Goldman Sachs.

  • - Analyst

  • Thank you very much.

  • Hi, Jeff and Bob.

  • A couple of questions.

  • First on the travel business -- on the air business, specifically you had launched the retail product, and obviously it helped drive a significant increase in air ticket sales.

  • And I know you're not releasing bind rate any longer, but I was wondering in you could give us a sense of how much bind rates improved in the trough you saw in the third quarter from the low 20% to the peak of 50% previously so we get a sense of how much upside there is in closing demand you are getting.

  • Secondly, was that the driving force behind the decision to launch a hotel retail in addition to the hotel opaque product?

  • There seems to be very little consumer hesitation on the hotel opaque product as there has been on the -- or friction, so to speak, as there has been on the air opaque product.

  • And so the bind rates there have been healthy, and so is there as much upside from a hotel retail product?

  • Then as it relates to the Travelweb acquisition, could you comment specifically on the disputed point in the court ruling about whether or not Orbitz would have to roll back its rate to Travelweb?

  • Obviously the merchant revenue they were recognizing on some of Travelweb's partners was much higher than agency rate.

  • Will that rate go back to an agency rate for Orbitz and therefore a merchant rate for Travelweb?

  • And then on the dilution, is Q3 and Q4 impacted at all by a dilution from the acquisition?

  • Thanks.

  • - President, CEO, Director

  • Okay.

  • Anthony, that is a handful of questions.

  • We will start with the first one and hope we can remember all of them by the time we get to the last.

  • As to the air business buying trends, I don't think we're going to get into combating very specifically on buying rate trends.

  • I think what we can say is that the improvement in ticket sales was driven very much more so by improvement in retail gross bookings than any dramatic change in booking trends for opaque.

  • The related question you asked about hotel retail, and I think your question really was -- is -- is bind rate issues the reason that we're getting into hotel retail?

  • And I think the simple answer to that is it is much more important for us to focus on product improvements that customers see a benefit from.

  • And our observations in our airline ticket retail launch is that the notion of choice has played very well with the consumers.

  • They respond very favorably to being given good viable alternatives for their travel purchase, and not every consumer is the same.

  • Some want to have more certainty with their purchases, and others are willing to make tradeoffs to save money.

  • And we think the providing choice for hotel room night purchasers is a similarly powerful product improvement really independent and apart from what may be happening at any given time to the hotel bind rate.

  • With respect to Travelweb, I really don't -- I can't get into a commentary on what the court ruling does or does not mean.

  • The Travelweb/Orbitz deal that is in existance today following the settlement provides for Travelweb to continue to provide merchant inventory to the travel -- to the Orbitz retail website.

  • It provides that Travelweb is the source for founder chain inventory.

  • In other words, hotel rooms by the Travelweb founder chains.

  • And I think that is as far as I want to go with that one.

  • The last question, and maybe you can restate that on dilution, Bob could answer that.

  • - CFO

  • I think Anthony, as I mentioned when I mentioned the guidance in Q2 of 25 to 30 cents, that includes what we expect to be approximately a two-cent operating loss that will be generated by Travelweb in the second quarter.

  • So, as compared to the previous guidance of 22 to 30, which did not include the two cents of loss, was obviously the implications are that it is a fairly, at least in our view, a decent increase in our guidance for Q2.

  • It is a relates to going forward, after Q2, we expect that we will continue to run some amount of operating losses for some period of time, although, by the time we get to the end of 2004, and -- and -- and in front of 2005, we expect Travelweb is going to be meaningfully accretive to us.

  • So that is another of saying reducing operating losses during the remaining second half of 2004.

  • - Analyst

  • Great.

  • If I could ask a follow-up on the Travelweb relationship.

  • If I just do the middle point and the net revenue, it will lead to $10 million, and the midpoint of gross bookings is about 20%.

  • And so the real question I'm trying to ask is that Orbitz is selling about 7,000 -- they have about 7,000 existing properties that they have in the OMH business.

  • About half those, maybe more, are properties that are partners with Travelweb that they are not paying specifically a, you know, pay back to Travelweb at the agreed upon original contract.

  • And so depending on your relationship and the resolution of Travelweb to Orbitz, that 20% rate could be well understated.

  • And that is really my question.

  • Is the 20% as you go forward, does that have upside to it because of the renegotiated contract between Travelweb and Orbitz?

  • Thanks.

  • - President, CEO, Director

  • I think the short answer to that, Anthony, is that we can't give you any additional guidance other than what Bob has outlined here on the call.

  • We intend to work very closely with Orbitz to try to maximize the sale of Travelweb inventory alongside Orbitz merchant hotel inventory.

  • We think we have got a good workable agreement to accomplish that, and we will do whatever we can to maximize it.

  • - Analyst

  • Great.

  • Thanks.

  • Operator

  • Your next question comes from Tom Underwood from Legg Mason.

  • - Analyst

  • Yes, thanks.

  • Just wanted to follow up a little bit on Anthony's question, particularly about the selling of retail or merchant hotel inventory within the opaque hotel path.

  • First, do I understand correctly that you are you planning on selling it in the hotel path or just elsewhere throughout the site?

  • And then if you are selling it in the hotel path, does that mean that Travelweb will be integrated to such a degree that you will have star ratings and geo-coding that is consistent with the opaque product?

  • - President, CEO, Director

  • I think, Tom, first of all as to where the retail hotel inventory will be added on the Priceline site, we have an open mind and time to work and test our way into what is optimal for our customers.

  • That is what we have done in air and rental cars and vacations, and would intend to do the same thing with hotels.

  • It includes the ability to offer the product to customers that are in opaque hotel path in a number of places including when the offer fails and including when customers indicate to us affirmatively that they want to pick the exact hotel.

  • And we also think that there may be places in other product paths where conversion of a disclosed retail hotel room night would be superior to the name your own price offering.

  • That is as to the -- as to the first question.

  • You could expect over time that star level ratings and mapping and so forth would be consistent across Priceline and Travelweb.

  • - Analyst

  • Okay.

  • Then on the rental car product I notice that I guess the 81% growth was considerably above expectations.

  • Was that within the Priceline set of URLs or the affiliates such as are actually -- I guess the other owned URLs such as rentalcars.com, or how did you achieve such strong growth in rental cars?

  • - President, CEO, Director

  • Rent cal cars benefited from continued strong growth in the opaque business and retail rental car days contributed by rental cars.com please net and lowest fares.com.

  • - Analyst

  • Okay.

  • And did you see an uptick or downtick in terms of the cross sell rate for the rental car product?

  • - President, CEO, Director

  • We have not significantly changed the integration for cross-sell just for airline ticket customers.

  • We have seen some good results in our packages offering with some in-path cross-sell, so we are encouraged by that.

  • But across the broader business I'm not aware of significant changes in cross sell -- in the rate of cross-sell.

  • When you sell more airline tickets, you are going to cross sell more rental cars even if the rate of cross sale stays the same.

  • - Analyst

  • Great.

  • Thanks.

  • Operator

  • The next question comes from Scott Barry from CSFB.

  • - Analyst

  • Hey, guys.

  • Ed Lowe for Scott Barry.

  • The first question is on the economics of the new Travelweb deal.

  • Can you guys talk a little bit about it?

  • Or if not, can you just talk about if there are material differences from the previous agreement?

  • And then secondarily, can you guys talk about the product enhancements you expect to roll out in the back half of the year, particularly with respect to the retail product?

  • Thanks.

  • - President, CEO, Director

  • Sure, Ed.

  • And, Bob, maybe what I will do is I'll hit product enhancements first, and then you can talk about the economics.

  • We have got a number of product enhancements on deck here at Priceline.

  • With respect to vacations, we mentioned in the press release that we are imminently announcing an upgrade to the vacations product to include a retail choice for package purchasers, which we think there is an exciting new offering for us.

  • We have done some testing on it, and we are excited to make that official launch.

  • We also continued to add improved functionality on our retail airline ticket site.

  • Things like one-way and multi-destination trips, shortening up booking windows, and other search enhancements and so forth have significantly improved the products -- the product features for customers, and we will continue to work on that.

  • And we think that provides some -- some upside for us in coming quarters.

  • With respect to hotels, the biggest tasks now will be to make sure that we are offering the retail hotel inventory that we have now with Travelweb across all of our properties in the right places and build out that functionality in a very consumer-friendly way.

  • - CFO

  • And, Ed, as for the economics, presumably you mean in terms of the structure of the deal.

  • As I mentioned, we are paying a approximately $21 million of cash to acquire 71% of Travelweb.

  • We had already, as you may recall, at the beginning of last year had acquired approximately a 15% interest in Travelweb thus bringing now, our total ownership interest in Travelweb to approximately 86%.

  • The deal also was structured with an earnout provision whereby if certain hotel bookings targets are met we are going to give the sellers of Travelweb an additional consideration in the form of approximately a million shares of Priceline stock.

  • The earnout in terms of the targets, while I'm not going to go over what the targets are, as I mentioned, if the earnout is met and we deliver those shares, we will be happy as a management team because, as I said the -- the transaction would result in an accretive deal for Priceline.

  • The bookings that we get certainly help finance more than finance the price we're paying in the form of the earnout.

  • - Analyst

  • What about the deal with -- what about the deal with Orbitz?

  • Are there material changes to the previous agreement on the Travelweb site?

  • - President, CEO, Director

  • We are not going to get into the specifics of the deal with Orbitz.

  • - Analyst

  • Okay.

  • Great.

  • Thank you, guys.

  • - President, CEO, Director

  • Thank you.

  • Operator

  • The next question comes from Paul Keung from CIBC.

  • - Analyst

  • Yes.

  • Two quick questions.

  • Does the earnout and new relationship you have with the ownership in Travelweb prevent you from negotiating for [ INAUDIBLE ] much inventory from hotels that are part of the chain?

  • And the second question, what sort of growth did you see in the first quarter in terms of new unique users or traffic as you look at the advertising spend?

  • - President, CEO, Director

  • Paul, on the first question, inherent in the deal with Travelweb are supply agreements with the existing hotels, so -- with the founder chain hotels.

  • So we have supply arrangements with the hotels currently, so that is the response on the first question.

  • I don't have the specific traffic data in front of me.

  • But if you look at the Nielsen's traffic data, you will see that we have consistently since sort of the end of January run it at very, very nice growth rates year over year.

  • You really can see a bump in Priceline's traffic.

  • And going through to the last weekly reports that I saw, which don't represent the entire Nielsen universe, our year-over-year growth rates continued to be very impressive, and I think impressive in an absolute sense, but also impressive relative to the growth experienced by other players in the online travel space.

  • - Analyst

  • And that first question I'm trying to -- maybe ask it a different way, then.

  • Does that prohibit you from actually getting -- selling merchant inventory, let's say on lowestfares that is outside of the Travelweb inventory arrangement?

  • - President, CEO, Director

  • There would be no reason for us to do so because we have access to that inventory through Travelweb.

  • It is just a nonissue for us now that we are -- we own the asset.

  • - Analyst

  • Okay.

  • Operator

  • There are no further questions.

  • - President, CEO, Director

  • Okay.

  • Well, thank you very much for participating in our call.

  • Operator

  • Ladies and gentlemen, that does conclude the conference for today.

  • Again, thank you for your participation.

  • You may all disconnect.

  • Have a good day.