Cheap Tickets Inc., the Honolulu-based seller of discount travel services, today reported first-quarter income about half of what it earned in the same quarter last year. The reduced income is mostly due to higher expenses from boosting its marketing and improving its technology, the company said.
Cheap TicketsBy Russ Lynch
profits fall but
Cheap Tickets posted a first-quarter net of $1.2 million, or 5 cents a share, down from a year-earlier $2.3 million, or 10 cents a share. Revenues of $22.9 million in the latest quarter were up 18 percent from $19.4 million in the first three months of 2000.
The revenues that the company reports consist of the net amount Cheap Tickets keeps from its sales of non-published fares -- tickets it sells at discounted prices to allow airlines to dispose of unsold inventory as flight times near -- as well as commissions from sales of published fares where it acts as a travel agent.
Cheap Tickets reported revenues from non-published fares of $12.5 million in the latest quarter, down 3.1 percent from $12.9 million in the year-earlier period. Commissions and bonuses on sales of published fares as well as sales of other travel services such as hotels and car rentals, came to $10 million in the latest quarter, up 58.7 percent from $6.3 million in the 2000 quarter. The rest of its revenues came from service fees and other smaller income items.
The company's gross bookings in the first quarter -- the total value of the tickets it sold before paying airlines and other service providers -- came to $192 million in the latest quarter, up 21.1 percent from gross bookings of $158.6 million in the year-earlier period.
"We are very pleased with our double-digit growth in gross bookings and revenue, especially in light of the weakening economy and slowdown in consumer spending," said Sam E. Galeotos, Cheap Tickets president and chief executive officer. "We have continued to attract record numbers of visitors to cheaptickets.com, as well as increased sales inquiries to our call centers.
"In the first quarter Cheap Tickets overhauled its marketing strategy, including a harder-hitting television campaign and increased e-mail outreach," Galeotos said. He said call volume grew 40 percent in the latest quarter compared to the final quarter of 2000.
The company said it registered 2.1 million new users of its travel-booking Web site, www.cheaptickets.com, in the latest quarter, bringing total registrations to 10.8 million.
Galeotos said Cheap Tickets expects to report second-quarter earnings about what they were last year, 10 cents a share, and expects earnings for all of 2001 to come to between 56 and 58 cents a share, up 10 percent to 14 percent from 2000 earnings of 51 cents a share.