More Long-term Growth Is Expected for Priceline.com Inc (PCLN)

Competition

Through Booking.com, the company continues to shift more of its focus into the domestic market, competing directly with Expedia Inc (NASDAQ:EXPE). Similar to Priceline.com, Expedia Inc (NASDAQ:EXPE) also had a solid start for 2013. Expedia is rolling out its Expedia Traveler Preference (ETP) program as expected, with over 25,000 hotels signed up and over half of those live in production. Expedia is taking a smart strategic route to continue its growth. The ETP program will allow Expedia Inc (NASDAQ:EXPE) to compete with the agency-model players while maintaining merchant margins. Expedia is pushing aggressively into Europe while Priceline.com is trying to expanding into the U.S. market.

Another competitor, Orbitz Worldwide, Inc. (NYSE:OWW), is also having a solid start for 2013 with accelerating growth for stayed room nights. The company continues to invest in 3 key areas: mobile, loyalty, and international market. Orbitz Worldwide, Inc. (NYSE:OWW), rolled out its Orbitz.com Rewards Loyalty program in the first quarter and enhanced its HotelClub initiative with expanded support for more currencies and languages to allow it to expand further into the international market.

Bottom line

With continuous buyback financed with convertible notes, Priceline.com Inc (NASDAQ:PCLN) is making a sounding capital allocation decision to leverage its investment-grade credit and to enhance shareholder value. Although there will be short-term operating margin compression due to higher spending to build its brand name and increase customer awareness, the company remains well-positioned globally. By continuing its penetration into the U.S. market, Priceline.com still has more room for upside potential.

The article More Long-term Growth Is Expected for Priceline.com originally appeared on Fool.com and is written by Nick Chiu.

Nick Chiu has no position in any stocks mentioned. The Motley Fool recommends Priceline.com. The Motley Fool owns shares of Priceline.com. Nick is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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