By Doyinsola Oladipo and Anshuman Tripathy
Nov 3 (Reuters) – Booking Holdings said on Tuesday it recorded a $900 million reduction in revenue and accrued a loss of $100 million related to an FTC action involving Priceline’s connection to deceptive hotel ads.
The company warned that its business could face further impact after the online travel agency’s third-quarter revenue fell 1% year-over-year. Shares of the company were down 1.5% in extended trading.
The FTC had been investigating its unit’s relationship with Guest Reservations, a third-party website which often charges higher prices and fees for hotel rooms, and whether it violates a rule against impersonating other businesses, and other potential violations regarding fees.
An FTC spokesperson declined to comment.
Guest Reservations has been the subject of more than 1,000 consumers’ complaints to the Better Business Bureau, many of whom said they believed they were booking directly with hotels. Consumers complained of surprise fees and unresponsive customer service representatives.
Priceline supplies hotel room inventory to Guest Reservations through Priceline Partner Solutions, according to an ongoing lawsuit against the companies filed by San Francisco.
In addition to the $1 billion cumulative hit related to this matter, a settlement has not been agreed and litigation remains possible, the company said in a filling. A settlement “would likely” include an agreement by Priceline to pay a certain amount to the FTC directly as well as to provide monetary restitution to certain U.S. consumers.
The company warned that future litigation and regulatory processes in other jurisdictions related to similar claims, could harm the company’s business, results and reputation.
Reuters reported in October that the case could carry more than $500 million in potential penalties.
The charge comes as global travel demand moderated somewhat toward the end of the third quarter, reflecting softer international travel trends, while domestic travel has remained resilient, Booking said in a statement on Tuesday.
Booking also said travel disruptions to and from the Middle East and elevated airfares due to the conflict along with localized unrest in certain European cities affected demand in October.
Booking said gross bookings grew 10% year-on-year during the quarter and room night grew 7%, as the travel industry has been supported by affluent travelers.
The Norwalk, Connecticut-based company posted a profit per share of $4.66 for the third quarter, compared with $3.98 per share in the year-ago period. Analysts were expecting $4.50 per share.
Total revenue for the quarter ended September 30 came in at $8.89 billion, compared to about $9 billion a year earlier.
(Reporting by Anshuman Tripathy in Bengaluru, Doyinsola Oladipo and Jody Godoy in New York; Editing by Shailesh Kuber)
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