The environment for travel has been quite favorable lately, especially for U.S. travelers, and online travel specialist Priceline Group (BKNG -1.31%) has taken the opportunity to produce amazing growth in recent years. Yet with the stock having soared to all-time record highs, many have wondered if Priceline would be able to live up to high expectations.

Coming into Tuesday's first-quarter financial report, Priceline investors were looking forward to seeing another strong performance that would exceed what they had anticipated from the travel giant. Instead, sales fell short of expectations, and even solid earnings weren't enough to prevent a pullback. Let's look more closely at Priceline Group and what its results say about the future for the online travel specialist.

Maps for reviews.

Image source: Priceline.

Priceline hits the brakes

Priceline's first-quarter results weren't bad by any stretch of the imagination, but they nevertheless fell short of what investors had looked to see in some respects. Revenue climbed almost 13% to $2.42 billion, but that was a significant slowdown from past quarters and was slightly slower than the consensus forecast among those following the stock. Adjusted net income was up just 7% to $494 million, which worked out to $9.88 per share. That was almost $1 per share above what most investors had expected to see, but given Priceline's history of posting even more dramatic beats on earnings, the news was nevertheless disappointing.

Taking a closer look at Priceline's numbers, many of the company's fundamental metrics were extremely strong. Gross travel bookings jumped to $20.7 billion, up by 24% from year-ago levels. Although the strong dollar weighed slightly on results, the hit to revenue was only about 3 percentage points. International operations made a similar-sized contribution to gross profits as they did last year, which was a bit of a letdown compared to outpaced growth from the overseas business in recent quarters.

As we've seen before, Priceline continued to rely on its hotel business for most of its growth. Room-nights booked were up 27% from year-ago levels to 173.9 million, slowing down only slightly from its recent pace of growth. Rental car days had a healthy gain of 15% to 18.6 million -- the biggest gain in nearly two years. Airline tickets kept disappointing investors, however, falling another 2% from the year-ago quarter to 1.8 million.

Agency revenue was where Priceline got most of its boost in sales, with the top line jumping by almost 25%. Merchant bookings grew more slowly but still climbed by a fifth, bouncing back from a particularly poor period in the fourth quarter of 2016.

CEO Glenn Fogel put a positive spin on the quarter's performance. "The Priceline Group is off to a strong start in 2017," Fogel said, "with solid growth in room-nights and rental car days booked." The CEO went on to talk about the extent to which the platform has continued to grow.

Can Priceline bounce back?

Priceline maintained its enthusiasm about its future prospects. As Fogel described it, Priceline kept "making smart and sustainable investments to support future growth and to ensure we provide the best possible experience for our customers."

Yet even though longtime investors have gotten used to Priceline lowballing its guidance, the extent to which the company's outlook trailed their expectations was substantial. Going into a key spring quarter, Priceline expects gross travel bookings to rise just 12% to 17%, with a 3-percentage-point hit from currency impacts. Room-night booking growth could slow to just 16% to 21%, and adjusted earnings of $13.30 to $14 per share would be well below the roughly $15 per share that most of those following the stock have expected to see.

Priceline investors weren't happy with the sluggish performance, and the stock fell more than 3% in after-hours trading following the announcement. In order to justify the big gains in its share price, Priceline will have to find ways to reaccelerate its sales and profit growth if it wants to prevent this quarter's slowdown from becoming established as an ongoing trend.