Source: Priceline

Priceline (BKNG 0.67%) delivered rock-solid performance for the first quarter of the year on Thursday. Even if competition from the likes of Google (GOOG 0.08%) (GOOGL -0.04%) and Expedia (EXPE 1.00%) is a relevant risk to watch, the online travel leader is positioned to continue generating substantial growth for investors in the long term.

International growth
Sales during the quarter ended on March 31 increased by an impressive 26%, to $1.64 billion, versus $1.3 billion in the first quarter of 2013. The figure was above analyst's expectations in the area of $1.63 billion.

Gross travel bookings -- the total dollar value of travel services purchased on the platform -- came in at $12.35 billion during the quarter, a big increase of 34% versus the prior year. Priceline booked more than 83 million hotel nights during the quarter, an annual increase of 32%.

The business is performing remarkably well on the international front: International bookings increased by 37% versus the prior year. According to management, sound performance reflects, "increased penetration of core Western European and North American markets, but also very attractive growth in newer markets, including Eastern Europe, the Middle East, South America, and the Asia-Pacific region."

Adjusted earnings per share came in at $7.81, a big 36% increase, versus $5.76 per share in the first quarter of 2013, and comfortably above analyst's estimates of $6.93 per share.

Guidance was lower than anticipated, though. Priceline said it's expecting an increase of between 22% and 32% in gross travel bookings for the second quarter of the year. This is a fairly wide range, and also a deceleration versus a 34% growth rate in the most-recent quarter.

However, Priceline is well-known for providing conservative guidance and consistently delivering above those numbers, so the company's guidance is probably too modest if history is any guide.

Competitive landscape
Expedia is Priceline's most direct competitor, and it owns a strong position in the U.S. market. Both Priceline and Expedia have increased their spending in marketing and advertising lately. This is a risk to watch because a competitive war could have a serious negative impact on both players.

However, Priceline has materially outgrown Expedia during the last several years, as its focus on international expansion has proven to be a winning strategy.

PCLN Revenue (TTM) Chart

PCLN Revenue (TTM) data by YCharts

Expedia has recently released some very strong numbers for the first quarter of 2014, but the company is still not growing as fast as Priceline. Expedia announced a sales increase of 19% in revenues during the first quarter of 2014, to $1.2 billion, while gross bookings increased by 29%, to $12.6 billion in the quarter. This level of performance indicates that the online travel industry is generating enough room for both Priceline and Expedia to deliver remarkable results, and Priceline investors should feel comforted by the fact that the company continues outgrowing its main competitor.

Investors and analysts are getting increasingly concerned about the competitive risk that Google could represent for both Priceline and Expedia lately. The online search giant has struck a deal providing it access to technology and data from hotel booking software start-up Room 77, and Google is also adding more photos and reviews to its hotel listings.

Google is the undisputed king in search, and a global juggernaut with enormous financial, technological, and strategic resources. Considering its innovative drive, Google is certainly not a potential competitor to underestimate.

However, both Priceline and Expedia spend big amounts of advertising money on Google. According to estimates by RBC Capital Markets, as quoted by the Wall Street Journal, Priceline and Expedia will spend nearly $1.5 billion and $1 billion, respectively, on Google advertising during 2014.

Google needs to be careful not to hurt its relationship with two major advertisers such as Priceline and Expedia in its attempts to gain ground in the online travel search business. As long as Google does not go deeper into that area, to the point where consumers can bypass online travel agencies while making their search and reservations entirely via Google, things seem to be under control in terms of competitive pressure.

Foolish takeaway
Priceline delivered truly impressive results for the first quarter of 2014, and the company continues consolidating its leadership position in the online travel industry. The way things are going for the company, investors have solid reasons to expect sustained growth from Priceline in the years ahead.