PCLN - Priceline Group Inc.

[rishig]

Here is my spreadsheet with past 8 years of data:

https://docs.google.com/spreadsheets/d/11XzvbPSE8JSyFW3p-4t_nVa-_rjTqoFL9LKAUieKIaA/edit?usp=sharing

[karthikpm]

http://www.wsj.com/articles/priceline-earnings-beat-views-as-hotel-bookings-jump-1455713368

[JBTC]

Have the same question, there was a good writeup over here http://www.jnvestor.com/otas/ .

 

Where you see following numbers:

 

Monthly visitors

 

Tripadvisor advertises on their about page that they are getting 350m monthly unique visitors in Q3/2015.

 

I couldn’t find reliable data on booking.com and expedia brand site metrics, so I ended up using this skift article written last year with travel site traffic metrics. Takeaways:

 

Booking.com + Agoda etc. – ~210m visitors / month

Tripadvisor – ~160m visitors / month (likely too low)

Expedia + hotels.com etc. – ~120m / month

And here are Alexa rankings:

 

booking.com: 112

tripadvisor.com: 196

hotels.com: 511 (Expedias most popular site)

These metrics aren’t reliable, but I believe they give some indication on the relative popularity of these sites.

 

To reiterate my point: EXPE and PCLN both use billions in advertising, over 2-3 times more than Tripadvisor has in revenues. Yet, Tripadvisor is still pulling roughly as much traffic.

 

I believe that there’s significant overlap with people visiting Tripadvisor and people who book their rooms through EXPE/PCLN.

 

Is quite the difference in visitors.. I'm wondering if management is able to do short term pain for long term gain.. Any thoughts?

 

Trip's direct booking is a long term threat to PCLN's model, but I think it is further away than it appears. There are a few reasons why I think it is further away:

1) PCLN's business is predominantly international in fragmented markets. Trip's direct booking is mainly focused on US. It is easier for Trip to start in the US because you simply need to sign up the 5 dominant US chains and get a large market share. Others would follow. Not the same in international. If Trip wants to go after the international market, it needs PCLN's help and PCLN has the leverage in this case.

2) Trip's current business is dominated by revenues from OTAs. It needs to walk into the direct business carefully in order to not cannibalize its existing business. Can you imagine an executive going to the board and saying they think the direct business is huge and they should go after it and alienate their largest customers (OTAs) today? That's exactly why the search engine companies have not succeeded in the booking business (should we cannibalize our large recurring ad revenues today to go after a new business?).

3) Also, note from Trip's InstantBooking FAQ's on how the pricing works:

 

"Instant booking works on a simple “Pay for Stays” commission basis, with a choice of two commission rates: 15% or 12%. The share of “Book on TripAdvisor” traveler views (see above) you receive is determined by the commission level you choose. With a 15% commission, you claim half of all “Book on TripAdvisor” traveler views, as well as any resulting bookings those views may generate. With a 12% commission you claim a quarter of all traveler views and any resulting bookings.

 

For example, if “Book on TripAdvisor” is displayed 100 times for your property, and you’ve signed up at a 15% commission, your rates and availability will show at least 50 times out of the 100. At the 12% commission, your rates and availability will show at least 25 times.

 

What happens to the remaining views? They are allocated to other distribution partners (such as Online Travel Agents) who are also participating in instant booking, and are able to share rates and availability for your property.

 

Keep in mind: To give travelers the best possible booking experience, your rates must be the same or better than those of your other distribution partners. You must also provide clear, complete room rate and description details for travelers. If you don’t have availability, your pricing isn’t competitive, or you’re providing room and rate details that are incomplete – your rates may not appear. Also, you’ll only pay a commission after a traveler completes a stay with you."

 

Trip's InstantBooking commissions are same or higher than OTAs. And the model is designed in a manner that OTAs can continue to get half or more than half of the views. So, its not a complete wash when a hotel is listed on InstantBooking. This is how Trip is slowing entering this space without upsetting its customers (OTAs)

 

One important point to note is that when a customer books through Trip's InstantBooking, the hotel owns the customer relationship i.e. gets their email address. This is unlike the OTAs. So, may be hotels are willing to give up higher commissions to "acquire" the relationship. I think it will be interesting to watch how this all works out. But I am not selling my PCLN yet (although I reduced the position size when it hit 1400 last year).

 

rishig,

 

Two questions:

 

1) When Darren Huston said TRIP represents low single-digit percentage of PCLN's business, what did he mean? Was he saying of only low single-digit percent of PCLN's customers come from TRIP? That would seem surprisingly low.

 

2) Understanding your view that TRIP's Instant Booking would take a long time to be material, do you have any guess as to the relative competitive position between TRIP and PCLN say 10 years out? It just seems TRIP is the natural one-stop shop for everything related to hotels, from reviews to direct booking.

 

Thanks.

 

 

[snailslug]

 

2) Understanding your view that TRIP's Instant Booking would take a long time to be material, do you have any guess as to the relative competitive position between TRIP and PCLN say 10 years out? It just seems TRIP is the natural one-stop shop for everything related to hotels, from reviews to direct booking.

 

Thanks.

 

Perhaps one way to think about it is that Tripadvisor has to optimize their user experience on 2 dimensions (reviews and conversions) while Priceline only has to optimize on conversions, so a Tripadvisor page for a given hotel will always convert at a lower rate than an equivalent Priceline page. However, because Tripadvisor has richer content, it is able to acquire traffic more cheaply than Priceline. The question is whether they can get their pages to convert at a higher rate without reducing organic engagement, presuming that the things that make a page convert better i.e. "BUY NOW" buttons also make the user experience feel worse. There's potentially a similar dynamic with YELP / GRUB, where YELP has struggled to convert traffic into sales/conversions while GRUB as a marketplace can focus purely on conversion.

[JBTC]

 

2) Understanding your view that TRIP's Instant Booking would take a long time to be material, do you have any guess as to the relative competitive position between TRIP and PCLN say 10 years out? It just seems TRIP is the natural one-stop shop for everything related to hotels, from reviews to direct booking.

 

Thanks.

 

Perhaps one way to think about it is that Tripadvisor has to optimize their user experience on 2 dimensions (reviews and conversions) while Priceline only has to optimize on conversions, so a Tripadvisor page for a given hotel will always convert at a lower rate than an equivalent Priceline page. However, because Tripadvisor has richer content, it is able to acquire traffic more cheaply than Priceline. The question is whether they can get their pages to convert at a higher rate without reducing organic engagement, presuming that the things that make a page convert better i.e. "BUY NOW" buttons also make the user experience feel worse. There's potentially a similar dynamic with YELP / GRUB, where YELP has struggled to convert traffic into sales/conversions while GRUB as a marketplace can focus purely on conversion.

 

I see what you are saying. It's probably true that TRIP was able to grow exponentially by focusing on reviews. But I really don't feel content and booking have to be separate.

 

If you listen to PCLN, they believe part of their success is in content (pictures, so called verified reviews, etc).

 

The fact of the matter is TRIP was content in making ad revenue in the past, while PCLN was an OTA so was able to build up tight backend links with the hotels.

 

TRIP's relationship with the hotels seems weaker. Clearly the hotels are highly aware of the importance of TRIP to their business. But I don't know what TRIP is doing with the hotels, other than sending them the TripAdvisor stickers. Only with Instant Booking has TRIP started to build direct transactional relationships with the hotels.

 

 

[bargainman]

airbnb is great for families since you can get actual houses with kitchens usually at a price lower than a hotel.  Another interesting thing about their business model is that they actually force you to pay upfront even if you are not going to take a vacation for five months. And then on top of that they take a commission as well. I'm not sure what they do with that float. There is also been VRBO which just connects sellers and buyers although it does provide a secure payment system as well I believe.

 

As a data point, our family will probably never use airbnb again though. Recently they started requiring a verified user system, which means that you have to send a digital copy of your government ID to some third party which is basically a small start up that I have never heard of before, where they will permanently keep a copy of this government ID.  If you're not willing to do that you can no longer use their system on either side of the transaction. 

 

https://trustcloud.com/wp/blog/2013/06/15/whats-wrong-with-airbnbs-new-verified-id-system.html

http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/why-i-wont-be-using-airbnbs-new-online-verification-system/article19290229/

 

[Jurgis]

As a data point, our family will probably never use airbnb again though. Recently they started requiring a verified user system, which means that you have to send a digital copy of your government ID to some third party which is basically a small start up that I have never heard of before, where they will permanently keep a copy of this government ID.  If you're not willing to do that you can no longer use their system on either side of the transaction. 

 

https://trustcloud.com/wp/blog/2013/06/15/whats-wrong-with-airbnbs-new-verified-id-system.html

http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/why-i-wont-be-using-airbnbs-new-online-verification-system/article19290229/

 

That sounds wrong.

 

Never used airbnb, but I guess I'm not their target demographic. I've used some real BnBs when traveling in Scotland - they were nice - and there was lack of hotels in remote'cy places. But not looking to sleep in someone's spare bedroom when traveling to cities that have hotels. Might be just me though. :)

[JBTC]

As a data point, our family will probably never use airbnb again though. Recently they started requiring a verified user system, which means that you have to send a digital copy of your government ID to some third party which is basically a small start up that I have never heard of before, where they will permanently keep a copy of this government ID.  If you're not willing to do that you can no longer use their system on either side of the transaction. 

 

https://trustcloud.com/wp/blog/2013/06/15/whats-wrong-with-airbnbs-new-verified-id-system.html

http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/why-i-wont-be-using-airbnbs-new-online-verification-system/article19290229/

 

That sounds wrong.

 

Never used airbnb, but I guess I'm not their target demographic. I've used some real BnBs when traveling in Scotland - they were nice - and there was lack of hotels in remote'cy places. But not looking to sleep in someone's spare bedroom when traveling to cities that have hotels. Might be just me though. :)

 

Me neither.

 

But for the first time I looked into Airbnb when I found out essentially all the hotel rooms (acceptable to me) in Cape Town were booked out. Found some of the Airbnb rooms/houses did look nice and were much cheaper than hotels. The large price gap suggests to me there must be a huge market for Airbnb.

 

But I chickened out and picked a hotel that wasn't great.

 

 

[snailslug]

 

I see what you are saying. It's probably true that TRIP was able to grow exponentially by focusing on reviews. But I really don't feel content and booking have to be separate.

 

If you listen to PCLN, they believe part of their success is in content (pictures, so called verified reviews, etc).

 

To give you a sense of the differences, compare these 2 sites for the Warwick hotel (random hotel in NYC)

http://www.tripadvisor.com/Hotel_Review-g60763-d112064-Reviews-Warwick_New_York_Hotel-New_York_City_New_York.html

http://www.booking.com/hotel/us/the-warwick-new-york.html

 

Compare the language and visual cues...the booking.com site has many more conversion focused cues i.e. %off, deal, pay less, sells fast.

 

When you scroll below the fold, Booking.com shows you room types - which should lead to increased conversion, while tripadvisor shows you reviews. One of the first reviews I see on the TRIP site is titled "Not a fan", which will obviously reduce conversion.

 

I believe that Priceline sources the majority of its traffic from paid SEM traffic (they may be Google's biggest single advertiser), and on this type of traffic, the OTAs will always win because they can convert their landing pages better than any individual hotel, or TRIP. Another important source of traffic that is probably quite defensible is the email database they've built up -- again their emails will convert better than TRIP due to structural reasons.

 

On organic SEO / free traffic, TRIP wins because their content is richer, leading to better results on the regular search.

 

The place where TRIP has a great chance of displacing the OTAs is on the phone. If more and more bookings move to the phone and more travelers begin their travel searching in the TRIP app rather than starting with Google, as they do on desktop, then that's a problem for PCLN.  Probably makes sense for PCLN to get more aggressive on app installs and encourage usage of the Booking.com app, but it's going to be a battlefield on the phone.

 

The fact of the matter is TRIP was content in making ad revenue in the past, while PCLN was an OTA so was able to build up tight backend links with the hotels.

 

TRIP's relationship with the hotels seems weaker. Clearly the hotels are highly aware of the importance of TRIP to their business. But I don't know what TRIP is doing with the hotels, other than sending them the TripAdvisor stickers. Only with Instant Booking has TRIP started to build direct transactional relationships with the hotels.

 

Yes, I believe the PCLN sales force is an underrated aspect of their success...it's probably harder to build a sales flywheel that keeps working than it looks from the outside.

[JBTC]

 

I see what you are saying. It's probably true that TRIP was able to grow exponentially by focusing on reviews. But I really don't feel content and booking have to be separate.

 

If you listen to PCLN, they believe part of their success is in content (pictures, so called verified reviews, etc).

 

To give you a sense of the differences, compare these 2 sites for the Warwick hotel (random hotel in NYC)

http://www.tripadvisor.com/Hotel_Review-g60763-d112064-Reviews-Warwick_New_York_Hotel-New_York_City_New_York.html

http://www.booking.com/hotel/us/the-warwick-new-york.html

 

Compare the language and visual cues...the booking.com site has many more conversion focused cues i.e. %off, deal, pay less, sells fast.

 

When you scroll below the fold, Booking.com shows you room types - which should lead to increased conversion, while tripadvisor shows you reviews. One of the first reviews I see on the TRIP site is titled "Not a fan", which will obviously reduce conversion.

 

I believe that Priceline sources the majority of its traffic from paid SEM traffic (they may be Google's biggest single advertiser), and on this type of traffic, the OTAs will always win because they can convert their landing pages better than any individual hotel, or TRIP. Another important source of traffic that is probably quite defensible is the email database they've built up -- again their emails will convert better than TRIP due to structural reasons.

 

On organic SEO / free traffic, TRIP wins because their content is richer, leading to better results on the regular search.

 

The place where TRIP has a great chance of displacing the OTAs is on the phone. If more and more bookings move to the phone and more travelers begin their travel searching in the TRIP app rather than starting with Google, as they do on desktop, then that's a problem for PCLN.  Probably makes sense for PCLN to get more aggressive on app installs and encourage usage of the Booking.com app, but it's going to be a battlefield on the phone.

 

The fact of the matter is TRIP was content in making ad revenue in the past, while PCLN was an OTA so was able to build up tight backend links with the hotels.

 

TRIP's relationship with the hotels seems weaker. Clearly the hotels are highly aware of the importance of TRIP to their business. But I don't know what TRIP is doing with the hotels, other than sending them the TripAdvisor stickers. Only with Instant Booking has TRIP started to build direct transactional relationships with the hotels.

 

Yes, I believe the PCLN sales force is an underrated aspect of their success...it's probably harder to build a sales flywheel that keeps working than it looks from the outside.

 

snailslug,

 

I like some of your observations.

 

By the way, what is SEM vs. SEO?

 

Clearly some differences between the two websites are by design. The traveler looking at the hotel page on TRIP is still deciding if that hotel is what he wants, which is why he is on TRIP. Whereas the person looking at the same hotel on booking.com may have already decided it's the right one and so ready to book. That would cause a difference in conversion rates.

 

Still, maybe there are things TRIP could do to make its pages more actionable.

 

Do you have any idea what portion of PCLN's customers are from TRIP vs. Google vs. email list etc?

 

 

[rishig]

Have the same question, there was a good writeup over here http://www.jnvestor.com/otas/ .

 

Where you see following numbers:

 

Monthly visitors

 

Tripadvisor advertises on their about page that they are getting 350m monthly unique visitors in Q3/2015.

 

I couldn’t find reliable data on booking.com and expedia brand site metrics, so I ended up using this skift article written last year with travel site traffic metrics. Takeaways:

 

Booking.com + Agoda etc. – ~210m visitors / month

Tripadvisor – ~160m visitors / month (likely too low)

Expedia + hotels.com etc. – ~120m / month

And here are Alexa rankings:

 

booking.com: 112

tripadvisor.com: 196

hotels.com: 511 (Expedias most popular site)

These metrics aren’t reliable, but I believe they give some indication on the relative popularity of these sites.

 

To reiterate my point: EXPE and PCLN both use billions in advertising, over 2-3 times more than Tripadvisor has in revenues. Yet, Tripadvisor is still pulling roughly as much traffic.

 

I believe that there’s significant overlap with people visiting Tripadvisor and people who book their rooms through EXPE/PCLN.

 

Is quite the difference in visitors.. I'm wondering if management is able to do short term pain for long term gain.. Any thoughts?

 

Trip's direct booking is a long term threat to PCLN's model, but I think it is further away than it appears. There are a few reasons why I think it is further away:

1) PCLN's business is predominantly international in fragmented markets. Trip's direct booking is mainly focused on US. It is easier for Trip to start in the US because you simply need to sign up the 5 dominant US chains and get a large market share. Others would follow. Not the same in international. If Trip wants to go after the international market, it needs PCLN's help and PCLN has the leverage in this case.

2) Trip's current business is dominated by revenues from OTAs. It needs to walk into the direct business carefully in order to not cannibalize its existing business. Can you imagine an executive going to the board and saying they think the direct business is huge and they should go after it and alienate their largest customers (OTAs) today? That's exactly why the search engine companies have not succeeded in the booking business (should we cannibalize our large recurring ad revenues today to go after a new business?).

3) Also, note from Trip's InstantBooking FAQ's on how the pricing works:

 

"Instant booking works on a simple “Pay for Stays” commission basis, with a choice of two commission rates: 15% or 12%. The share of “Book on TripAdvisor” traveler views (see above) you receive is determined by the commission level you choose. With a 15% commission, you claim half of all “Book on TripAdvisor” traveler views, as well as any resulting bookings those views may generate. With a 12% commission you claim a quarter of all traveler views and any resulting bookings.

 

For example, if “Book on TripAdvisor” is displayed 100 times for your property, and you’ve signed up at a 15% commission, your rates and availability will show at least 50 times out of the 100. At the 12% commission, your rates and availability will show at least 25 times.

 

What happens to the remaining views? They are allocated to other distribution partners (such as Online Travel Agents) who are also participating in instant booking, and are able to share rates and availability for your property.

 

Keep in mind: To give travelers the best possible booking experience, your rates must be the same or better than those of your other distribution partners. You must also provide clear, complete room rate and description details for travelers. If you don’t have availability, your pricing isn’t competitive, or you’re providing room and rate details that are incomplete – your rates may not appear. Also, you’ll only pay a commission after a traveler completes a stay with you."

 

Trip's InstantBooking commissions are same or higher than OTAs. And the model is designed in a manner that OTAs can continue to get half or more than half of the views. So, its not a complete wash when a hotel is listed on InstantBooking. This is how Trip is slowing entering this space without upsetting its customers (OTAs)

 

One important point to note is that when a customer books through Trip's InstantBooking, the hotel owns the customer relationship i.e. gets their email address. This is unlike the OTAs. So, may be hotels are willing to give up higher commissions to "acquire" the relationship. I think it will be interesting to watch how this all works out. But I am not selling my PCLN yet (although I reduced the position size when it hit 1400 last year).

 

rishig,

 

Two questions:

 

1) When Darren Huston said TRIP represents low single-digit percentage of PCLN's business, what did he mean? Was he saying of only low single-digit percent of PCLN's customers come from TRIP? That would seem surprisingly low.

 

2) Understanding your view that TRIP's Instant Booking would take a long time to be material, do you have any guess as to the relative competitive position between TRIP and PCLN say 10 years out? It just seems TRIP is the natural one-stop shop for everything related to hotels, from reviews to direct booking.

 

Thanks.

 

1. Yes, that's what I understand. Why is it so unbelievable? TRIP is a much smaller business overall.

2. I don't know what the world looks like 10 years from now. It's what you pay for what you get. TRIP is at a considerably higher valuation than Priceline.

[scorpioncapital]

I would not be opposed to Expedia or Priceline adding mid to long term housing inventory such as from Craigslist, padmapper, zillow, etc.. They should just be an aggregator of all data and organize it neatly. Even with all that you'll walk down the street and see a 'vacancy' ad for a building that nobody online has in their inventory or a motel by the side of the road. There is still much more to go to aggregate the world's living space, for travel or long term living.

[JBTC]

 

1. Yes, that's what I understand. Why is it so unbelievable? TRIP is a much smaller business overall.

 

Any idea how to quantify PCLN's customers by source?

 

If TRIP is low single digit, I imagine other meta search engines can't be bigger than TRIP.

 

That leaves Google search, PCLN's email marketing, repeat customers coming back without being prompted, anything else?

 

Any clue how big these pieces could be?

 

[rishig]

 

1. Yes, that's what I understand. Why is it so unbelievable? TRIP is a much smaller business overall.

 

Any idea how to quantify PCLN's customers by source?

 

If TRIP is low single digit, I imagine other meta search engines can't be bigger than TRIP.

 

That leaves Google search, PCLN's email marketing, repeat customers coming back without being prompted, anything else?

 

Any clue how big these pieces could be?

 

TRIP's revenue comes from OTA marketing costs, plus other display advertising. In 2015, TRIP reported hotel revenue of $1.2B, off which ~50% came from North America. So that gets you hotel revenue of $550M from rest of the world.

 

In 2015, PCLN reported online advertising expense of $2.8B. Hard to say where all this is going, but certainly seems likely TRIP is getting less than $200M.

 

These are just my best educated cases.

[JBTC]

 

1. Yes, that's what I understand. Why is it so unbelievable? TRIP is a much smaller business overall.

 

Any idea how to quantify PCLN's customers by source?

 

If TRIP is low single digit, I imagine other meta search engines can't be bigger than TRIP.

 

That leaves Google search, PCLN's email marketing, repeat customers coming back without being prompted, anything else?

 

Any clue how big these pieces could be?

 

TRIP's revenue comes from OTA marketing costs, plus other display advertising. In 2015, TRIP reported hotel revenue of $1.2B, off which ~50% came from North America. So that gets you hotel revenue of $550M from rest of the world.

 

In 2015, PCLN reported online advertising expense of $2.8B. Hard to say where all this is going, but certainly seems likely TRIP is getting less than $200M.

 

These are just my best educated cases.

 

Thanks for that.

 

I recall PCLN suggested Google search is its biggest source of customers.

 

If I google San Francisco hotels, the first three links are OTA ads (expedia, booking, hotels.com). Followed by three seemingly random hotels (Fairmont, W, Omni, could also be ads, but if so Google doesn't say it). Then the first organic site is Tripadvisor.

 

What I don't quite understand is why do most people still google for hotels? Essentially all hotels are now on TRIP, booking, hotels.com, expedia. Shouldn't over time most people automatically go to these vertical sites, leaving only the first-time travelers to google search?

 

[snailslug]

What I don't quite understand is why do most people still google for hotels? Essentially all hotels are now on TRIP, booking, hotels.com, expedia. Shouldn't over time most people automatically go to these vertical sites, leaving only the first-time travelers to google search?

 

Habits! It's easier to just type something into the search bar that is built into your browser than it is to remember which site conforms to which vertical. We search for general things maybe dozens of times a day, while we only plan travel a few times a year. If, on a given day, I'm searching for driving directions, recipes, that quote from a book, etc., it's only natural that I start with google for trip planning as well.

 

Now, for a hard core traveler, they may start at TRIP but for the normal/average traveler, google is where I start for everything.

[JBTC]

What I don't quite understand is why do most people still google for hotels? Essentially all hotels are now on TRIP, booking, hotels.com, expedia. Shouldn't over time most people automatically go to these vertical sites, leaving only the first-time travelers to google search?

 

Habits! It's easier to just type something into the search bar that is built into your browser than it is to remember which site conforms to which vertical. We search for general things maybe dozens of times a day, while we only plan travel a few times a year. If, on a given day, I'm searching for driving directions, recipes, that quote from a book, etc., it's only natural that I start with google for trip planning as well.

 

Now, for a hard core traveler, they may start at TRIP but for the normal/average traveler, google is where I start for everything.

 

That's an interesting insight. So people use Google for everything because they are lazy.

 

At least in this case (hotels), Google offers neither data nor analytics but can still maintain its dominance. Considering PCLN/EXPE are possibly its biggest advertisers, those billions of dollars of ad revenue come so very easily.

 

[rishig]

CEO Darren Huston steps down:

http://ir.pricelinegroup.com/secfiling.cfm?filingid=1075531-16-93&CIK=1075531

[physcdisp]

What is your take on PCLN quarterly numbers and forward guidance.  Looks like stock is over reacting.  Thoughts anyone?

[rishig]

What is your take on PCLN quarterly numbers and forward guidance.  Looks like stock is over reacting.  Thoughts anyone?

 

Numbers were fine. Management projected Q2 numbers to be lower than Q2 last year. This is the first time numbers are projected to be lower. Management said that the core business is fine, but it's due to timing on Ramadan and Easter. Wall Street did not like it / believe it and reacted with the stock down 10%.

[fareastwarriors]

Price is coming down due to Brexit. Hopefully it gets below 1000.

[fareastwarriors]

Hotels Turn to ‘Member’ Discounts to Battle Travel Websites

 

Chains aim to cut commissions paid to Expedia, Priceline by getting travelers to book directly

 

http://www.wsj.com/articles/hotels-turn-to-member-discounts-to-battle-travel-websites-1467907475

[hooplaer23]

I think there are a few factors that should help mitigate this push for direct bookings from hotel brands.  Overall, chains (including regional chains) makeup a small percentage of Priceline's business, somewhere in the range of 10-15%.  Chains like Marriott and Hilton have a stronger presence in the U.S. than in Europe, where Booking.com historically has been strongest.  Also, it seems to me that travelers that are most loyal to specific brands are less likely to use OTAs in the first place, whereas OTA users (typically leisure travelers) are more likely to want to compare different hotel options within a city.  Finally, there is a long-term argument that the increased presence of the internet in travel bookings decreases the power of hotel brands (despite consolidation of brands i.e. Marriott-Starwood).  If a traveler can use TripAdvisor to read reviews and look at pictures of a property in a new city, they are less likely to need to rely on the implied standard of quality that comes with a Hilton or Marriott branding of a hotel.

[rishig]

PCLN reported Q3 results. Stock up 5% after market. Data for last quarter + 10 year data:

https://docs.google.com/spreadsheets/d/11XzvbPSE8JSyFW3p-4t_nVa-_rjTqoFL9LKAUieKIaA/edit#gid=1321537161

 

 

[Liberty]

PCLN reported Q3 results. Stock up 5% after market. Data for last quarter + 10 year data:

https://docs.google.com/spreadsheets/d/11XzvbPSE8JSyFW3p-4t_nVa-_rjTqoFL9LKAUieKIaA/edit#gid=1321537161

 

Thanks rishig! Seems like a solid Q at first glance, haven't had a chance to listen to the call yet. Impressive growth in rooms booked.