Photo: Carol M. Highsmith / LOC (archive)
Booking Holdings recorded a $900 million reduction in third-quarter revenue and a separate $100 million accrued loss tied to a Federal Trade Commission matter involving Priceline’s relationship with hotel-booking website Guest Reservations, the company disclosed Tuesday. The combined $1 billion accounting impact is not a fine ordered by a court or an agreed settlement.
No settlement has been reached, and litigation remains possible, the company said in a filing cited by Reuters. Booking warned that the dispute and similar claims in other jurisdictions could further affect its business, results and reputation.
The charge overshadowed continued growth in travel reservations. Gross bookings rose 10% to $54.5 billion and room nights increased 7% to 345 million, according to the company’s earnings release. Reported revenue fell 1% to $8.893 billion from $9.008 billion a year earlier.
Booking shares were down 1.5% in extended trading, Reuters reported in its Tuesday account, updated at 5:55 p.m. Eastern. That is the reaction reported at that point, not a live quote or a claim that the legal matter alone caused the move.
Scrutiny of hotel ads, identity and fees
The FTC has been investigating Priceline’s relationship with Guest Reservations, including whether the arrangement violates a rule against impersonating other businesses and other potential fee-related violations, Reuters reported. An FTC spokesperson declined to comment to the news agency.
Priceline supplies hotel-room inventory to Guest Reservations through Priceline Partner Solutions, according to an ongoing San Francisco lawsuit described by Reuters. The allegations concern how hotel bookings are marketed and sold, rather than whether demand for travel itself has disappeared.
Reuters said Guest Reservations has drawn more than 1,000 consumer complaints to the Better Business Bureau. Many consumers said they thought they were booking directly with hotels and complained about unexpected fees and difficulty getting help. Those complaints are consumers’ accounts, not findings that every transaction was unlawful.
Booking said a possible settlement would likely involve a direct payment by Priceline to the FTC and monetary restitution to certain U.S. consumers, Reuters reported. The company has not agreed to such a settlement, and the accounting entries do not establish what any final payment would be.
Travel growth and reported revenue move in different directions
The company excluded the $900 million revenue reduction and the $100 million loss accrual from its adjusted measures, as applicable. Adjusted revenue was $9.793 billion, up 9%, compared with the 1% decline in reported revenue. The adjusted figure helps separate operating trends from the FTC matter but does not erase its financial impact.
Gross bookings measure the total value of travel services booked, generally including taxes and fees and net of cancellations. They are not the revenue Booking keeps. The company said gross bookings did not reflect the FTC matter, which helps explain why that measure rose even as reported revenue declined.
Booking said travel demand moderated toward the end of the third quarter as international travel softened, while domestic demand remained resilient, according to Reuters. It also pointed to Middle East travel disruptions, elevated airfares linked to the conflict and localized unrest in some European cities as pressures on October demand.
The results leave investors weighing two separate issues: a travel business still expanding reservations and an unresolved regulatory exposure whose ultimate cost is not yet fixed. The company has recognized a substantial accounting impact, but the legal process and any settlement terms remain unsettled.
JBizNews Desk | Norwalk
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