honoluluadvertiser.com

Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser
Posted on: Wednesday, April 25, 2001



Cheap Tickets to target wealthy

Advertiser Staff and News services

Honolulu-based discount ticketing company Cheap Tickets Inc. said yesterday it is launching a branding campaign designed to appeal to affluent travelers.

Cheap Tickets, which also yesterday reported lower first-quarter earnings, will soon launch a new brand that seeks to attract upscale customers to its ticketing resale service, company officials said in a conference call with analysts. The company will also launch a new Internet platform that allows for features including electronic tickets, CEO and president Sam Galeotos said.

Galeotos called the advertising campaign critical to Cheap Tickets' goal of carving a permanent niche in the increasingly crowded online ticketing business, now occupied by players including Orbitz, a site run by five of the biggest airlines; Travelocity.com; and Expedia Inc.

Cheap Tickets in December hired J. Walter Thompson advertising agency to help promote its brand and attract more customers to its Internet site, call centers and stores. The new emphasis on wealthy customers is a product of "refined targeting of the market," Galeotos said.

"We've got a very good customer mix, but it's skewed surprisingly to the higher income bracket of the consumer base," Galeotos said. "We view our customers as well-educated, savvy shoppers, and will try to upgrade our brand to match those target customers."

The company reported yesterday that its income fell 49 percent as it spent more on television and other advertising in first-quarter 2001.

Cheap Tickets' customers, revenues and gross profits all rose in the quarter, but the company's income dropped to $1.18 million, or 5 cents per share, down from $2.31 million, or 10 cents per share, a year earlier. Revenue rose 17 percent to $24.9 million from $21.2 million.

"The returns aren't all going to come in the immediate quarter," said Legg Mason Wood Walker analyst Thomas Underwood, who rates the shares "market perform." "It's an investment, and the returns will have to come in later quarters."

Cheap Tickets forecast second-quarter earnings will be unchanged from a year earlier, when it earned 21 cents a share. Full-year profit is projected to be 56 cents to 58 cents a share.

Both of the estimates are in line with average forecasts of 22 cents a share in the second quarter and 56 cents for the year by four analysts polled by First Call/Thomson Financial.

The company also said revenue for the second quarter of the year is still forecast to increase 18 percent to 23 percent.

Cheap Tickets' selling, general and administrative expenses rose to $23.2 million from $17.5 million a year earlier, reflecting the higher advertising spending. Gross bookings, or the value of travel sold, rose 21 percent to $192 million from a year earlier. That was less than the 68 percent growth in gross bookings at Expedia, an Internet travel company controlled by Microsoft Corp., and 65 percent growth at Travelocity.com.