Once marked for expansion, Priceline has announced that it will be scaling back the expansion plans for OpenTable some.
OpenTable was the cause of a $941 million writedown that managed to take a bit out out of Priceline’s otherwise strong Q3 performance in its core travel business.
Priceline gobbled up OpenTable for $2.6 billion in 2014, marking an unusual move for Priceline, which had previously kept its investing purview limited to travel-related brands. The thought, at the time, was that travelers need to eat, and they are the demographic of people most likely to eat out (lacking kitchens and all), making them a natural fit for growing OpenTable.
“While OpenTable will continue to pursue these growth opportunities, they will do so on a more measured and deliberate basis,” the company said in a statement Monday (Nov. 7).
A Priceline Group spokeswoman said the company doesn’t expect the changes at OpenTable to result in layoffs, and interim CEO Jeff Boyd said the company still backs the business.
“It’s something that’s taken a little bit longer to scale up than we thought it would,” Boyd said in an interview. “If we can execute, I think we’ve got a fabulous opportunity to build a global business.”
OpenTable, at the time of the Priceline acquisition, had about 31,000 restaurants — a figure that has grown to 38,000.
Priceline’s overall Q3 numbers were solid. The firm reported a third-quarter profit of $506 million, or $10.13 a share, down from $1.2 billion, or $23.41 a share, a year earlier. Revenue increased 19 percent to $3.69 billion, compared with expectations for growth of 12 percent to 17 percent. Revenue from advertising and other activities, which mostly comes from OpenTable and the company’s Kayak search site, made up about 5 percent of sales during the quarter.
On the whole, the market liked what it saw. Priceline shares rose 4.4 percent to a record $1,545 in recent after-hours trading.