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Concern over the macroeconomic backdrop notwithstanding, we continue to see strong topline growth in the online travel industry. Operating performance was somewhat mixed in 4Q11 relative to Wall Street expectations: Gross bookings and revenue exceeded expectations, but profit margins generally lagged. We point to three key themes emerging from quarterly operating results:
- 1) Bookings and revenue growth remains robust, with no evidence of any macro-related slowdown.
- 2) Profit margins missed Wall Street expectations, as several companies opted to step up investment spending. However, margins were still up in the quarter.
- 3) There were no real surprises on the competitive landscape; Priceline continued to accrue market share.