Motley Fool on eLong, Ctrip, Home Inn and more in China

It is definitely China week here are the BOOT. Two posts on Ctrip last week one on an interview with their CFO Jane Jie Sun and one on their acquisition war chest plans.

This week I came across another interesting post for China watches to read. Rick Munarriz over at the Motley Fool site published a post titled "Panoramic View of Chinese Travel Plays" In the story Muarriz discusses the performance of online travel company eLong (Nasdaq: LONG) , budget hotel chain Home Inn (Nasdaq: HMIN) (interesting side bar - Home Inn was founded by CTRIP founder) as well as Ctrip (Nasdaq: CTRP) itself and even Priceline (Nasdaq: PCLN) and AirMedia (Nasdaq: AMCN).

Good comparison on performance of eLong and Ctrip. Worth a read. Interesting note on eLong. Though it is profitable, more than half its market cap is explained by the $139mm in cash in the bank.

thanks to steve webel for the great photo care of flickr

Priceline talking Asia and growth but still quiet on Agoda results

Three articles/posts this week with information on Priceline's strategy for Asia. They are all good reads and I recommend them to you. Playing to my bias for comments on Asia/Australasia, I poured through the posts to look for details on Priceline's investment in Agoda and plans for Booking in the region. Unfortunately Priceline continue to closely guard the details on Agoda's performance.

The three posts are:

• Tnooz's Dennis Schaal "Priceline CEO on metasearch swan song, private sales, Expedia, Asia strategy";
• Reuters "Online travel bookings shift overseas"; and
• seeking alpha's "Priceline.com Inc. Q4 2009 Earnings Call Transcript"

Key extracts are:

• Priceline likes the dual strategy of brands in Asia - Agoda and Booking.com according to CEO Jeffery Boyd (Schaal's post)
• Two thirds of Priceline's bookings are non- US. "We expect to have higher growth in the international markets, from new markets like Asia that are less well-penetrated and are currently enjoying higher levels of economic growth," Boyd said. International bookings were up 81 percent in the fourth quarter compared to 20.6 percent in the US. (Reuter's story). In the same story Expedia's Khosrowshahi said that said he expects non-U.S. bookings to account for at least half of Expedia's business within five years, up from 37 percent currently. He went on "We're aggressively investing in China and Australia, India and Brazil,";

• There are lots of details on the quarter's numbers bu very slim pickings from Boyd in the earnings call on Agoda (seeking alpha) on Agoda. Boyd is very tight on the message of growth but will not be drawn on details.
  

1. "International gross bookings benefited from growth in new markets, growth in hotel supply and results from Agoda";
   

2. "Agoda also reported improving growth rates resulting in an improved merchant growth rates on a consolidated basis.";

3. "gross booking growth rates improved for Agoda"; and

4. "with respect to Agoda, we’ve consistently seen their business do well in Asian countries outside of China and India in particular, that’s been their focus. Thailand is a big market for Agoda."

Agoda and Booking start to integrate inventory - first steps

Thanks to a reader who sent through a screen shot of the search results from a Booking.com page for a secondary destination in China. The page shows 15 Booking.com contracted hotels at the top of the sort order then a line/marker that says

Hotels below are offered by other companies in the Priceline Group

Below this line is a list of hotels in the same destination but provided by Agoda not Booking.com. A click on one of those pages sends you to the Agoda booking system (ie link relationship and white label not full inventory integration).

This is the first hint of integration between the Priceline owned Asian based Agoda and Euro based Booking.com. This is not a full back end integration like we have just seen for AsiaRooms and LateRooms. Mainly because it will be much harder with Agoda and Booking operating on different models (merchant vs commission) and I think that Agoda's owners are still in the earn out process part of the sale to Priceline. When the sale was announced in 2007 the earn out period was listed as three years. Integrations during earn outs are hard as the business working under the earn out is completely focused on achieving the earn out targets rather than internal integration needs. As the earn out period starts to close (ie end of this year), I expect to see even more integration between the two businesses.

Here is a screenshot of the search (Zhuhai China)

Priceline on Agoda - extracts from Q3 earnings call

As always Seeking Alpha have posted a very useful transcript of the Priceline (PCLN) Earnings (Q3). With no other source of information the performance of Priceline's Asian based Agoda.com I will keep on with my program of extracting and sharing with you Agoda information shared in the earnings call

PCLN CEO Jeffrey Boyd on Agoda results

"Agoda also reported improved growth in excess of 100%, which contributed to the sequential improvement in worldwide merchant gross bookings growth from 22% to 33%. Agoda's growth rates reflect weakness in the prior period due to economic conditions and civil unrest in Thailand, and there are also signs of economic improvement in Asian markets."

PCLN CEO Jeffrey Boyd on hotel numbers- asked " I think you only added 2,000 hotels in the quarter. Any reason that might have slowed down a bit?. "

"...we don't look at the absolute hotel count as defining the market. Our counts on a year-over-year basis are still up significantly. And it is still an important part of what we're doing not just internationally but here in the United States to add hotels to all of our programs, and potentially more important to make sure that we've got the right rates and availability from the hotels that do participate with Priceline and Booking.com and Agoda. That can be as meaningful to the output of the business as adding new hotels."

PCLN CEO Jeffrey Boyd on competitors- asked "anything new on the competitive front that you're seeing in Europe or Asia? "

"From a competitive perspective, I think that you have heard in the conference calls of the two competitors that are publicly traded that they're very focused on the international hotel opportunity, that Expedia is making an agency product available to hotels, and Orbitz is really trying to reorient its organization to focus primarily on hotel bookings. So it continues to be very competitive out there. And we work very hard to keep track of what's going on with the competition, but we also try very hard to make sure that we're doing what we think is right for our business and not necessarily trying to map what they're doing."

"And if you look at the great results that we're seeing in Asia from Agoda and from Booking.com in its new markets, what you're seeing is that every time we enter into a new market we are doing it from a stronger position than we did in the last new market. And so it just gets us very excited about Asia and the Pacific and what we're doing in the Middle East and South America and in North America for Booking.com and the international traveler. "

Priceline on Agoda "Agoda had a very good quarter despite the fact that they’ve been running into several headwinds"

SeekingAlpha is carrying a transcript of the recent Q2 earnings call for Priceline (PCLN). Not much was said on the Asian based subsidiary Agoda. There was this exchange between Mark Mahaney of Citigroup and Bob Mylod of Priceline (Vice Chairman and Head of Worldwide Strategy and Planning). Mylod indicates that Agoda is experiences challenges due to declines in the Thai market from general instability and H1N1/swine flu fears. Instead of triple digit growth for Agoda he points to "significant double digit growth". Here is the exchange (thanks again to SeekingAlpha where you can find the entire transcript).

Mark Mahaney - Citigroup

...any qualitative comments on the Agoda growth? I think you had in the past couple of quarters talked about triple digit growth -- anything there? ...

Robert J. Mylod Jr.

...we don’t disclose Agoda separately. It’s part of our international gross bookings which as you can see were very strong during the quarter but I would also say qualitatively Agoda had a very good quarter despite the fact that they’ve been running into several headwinds, significant headwinds at least in terms of how it affects their business individually. They’ve had currency headwinds. They’ve had political instability in their home market, Thailand and they have also had probably a little bit more impact related to swine flu concerns than we’ve had in the United States. But despite all of that, they continue to grow at very significant double-digit rates and we are very happy with how they are doing so far.

"The AsiaRooms of 2009 is not the AsiaRooms of 2005": Interview with John Fearon, AsiaRooms Head of Marketing

AsiaRooms is one of the region's largest online hotel retailers. With 81, 908 hotels and counting (according to the site today) and a parent company that is the largest travel company in Europe (TUI), AsiaRooms is clearly a player that the BOOT should be paying attention to. Historically the company has made this hard as it has been very secretive with its numbers and plans and (to be frank) was not a company we wanted to pay attention to. Prior to TUI buying the company, AsiaRooms built up an unwanted reputation on online customer care forums for complaints and among the trade for scoffing at rate parity and associated price guarantees. Rumours of wholesale group rates being market up $5 and sold online became the standard trade fair post-session beer story when AsiaRooms came up in the conversation. The brand buzz was all bad. In fact the customer and industry complaint forums became the only source for profile information on the secretive company.

John Fearon the (relatively) new Head of Marketing for the Pattaya based AsiaRooms is determined to change all that. Determined to build on the TUI brand and infrastructure support to change the market perception of AsiaRooms and to bring the company out from behind the secrecy curtain. As John told me “we are not the AsiaRooms of 2005”. I had a chance this week to (virtually) sit down with Fearon and hear his plans for changing the reputation of AsiaRooms, overhauling their marketing plans, ditching meta-search and taking on all comers in a press to be number one in Asia.

In marketing, John's first target is to change the approach to paid search marketing. SEM and SEO is the frontier that John believes will sort out the winners from the losers in Asia (I agree). Is also the place he was happy to share numbers and metrics with me. After only three months of work Fearon is claiming to have doubled the amount of business coming form the search engines on the same level of spend. Not much of a metric to share but an indication of his marketing plans. He had a lot less praise for and desire to continue to invest in meta-search. Has pulled AsiaRooms out of Kayak and has no plans to go with hotelscombined. For the moment is sticking with Wego but as general rule does not believe that meta-search builds a brand or helps the business. Claims it forces you into “killing yourself” on pricing at the expense of the consumer experience. This is an interesting point. I am working on a separate post on my thoughts on the meta-search model but from what I am seeing the arbitrage gap (difference between price meta-search players buy traffic from Google and sell it to suppliers) is narrowing.

In supply the plan is to continue to gain access to cheap inventory - but with less (he did not say none) of the rate rule breaking.

Asia is a tough place to play but Fearon is not worried. AsiaRooms claims that profitability and support from the rest of the TUI nline Destination Services (ODS) group will prove another important factor. [FYI the TUI ODA group includes the UK based LateRooms and Spanish Hotelopia].

They will need more than good paid search plans and mothership support to make it in this market. Fearon says he is aware of this, especially with the Global F’n Crisis hitting Asia hard. He predicts the GFC will bring down a number of smaller brands (we off the record speculated which ones). But for Fearon this is the opportunity to bring AsiaRooms out and take competitors head-on. He has not been impressed by any of the marketing activities of competitors from the big four (Expedia, Orbitz, Travelocity and Priceline). "There is nothing they have done that made me say Wow".

Was interesting to finally hear a (confident) voice from AsiaRooms and one not afraid to admit to the reputation. He acknowledged that AsiaRooms broke a lot of the pricing rules in the past (and maybe that they still do) but is now looking to invest in brand and customer satisfaction (heck they even have a facebook fan page now!).

So what do you think? The consumer forums still don’t paint a pretty picture for AsiaRooms but the company is claiming a lot of changes since 2005. Either way the Asian online travel market war has moved to a different level.

Q4 for Priceline, Expedia and Orbitz care of Seeking Alpha

Once again - if you are struggling to keep up with who made how much in online travel in Q4 Sramana Mitra at Seeking Alpha has done all the hard work for you. Her post "Online Travel: Priceline, Expedia, Orbitz" summarises the announcements and resulting share movements for each of EXPE, PCLN and OWW. Is this week's BOOT recommended read.

Photo from @jasoncalacanis

Priceline Singapore is still alive and claiming 10% growth

The headline above does not make for that interesting a read, unless I tell you more of the background. First to the story and then to the background. I came across an piece on the Nanyang 100 website with an announcement from Pauline Chian - a manager at Priceline Singapore - that sales are up 10% at Priceline Singapore (despite the recession). She attributed the success to (primarily) the absence of a booking fee on flights and (less importantly) the name your own price model.

The reason I found this interesting is that it is the first news report I have come across in years referring to Priceline Asia. Priceline Aisa is a not a wholly owned part of Priceline Incorporate (PCLN). It is a joint venture between PCLN and Hutchison-Whampoa - with Hutch as the major partner. Hutch is Asia's biggest company - into everything from property, ports and telecommunications. Up until 2006 Hutch was also the largest shareholder in PCLN. The JV is not related to Priceline's other businesses in Asia (Agoda and Booking.com offices).

Formed in 2001, the JV spent a lot of money in the early days on staff and marketing. A lot of the marketing was in kind with related Hutch companies providing in-store and media contra marketing. A large investment, lots of momentum, unmatchable buzz .....and near zero results. The business soon had to reduce staff, dramatically scale back marketing and bring in other products in addition to the Name Your Own Price model. The Asian market place simply did not take to the NYOP model. One insider told me that they believed that the discounts were simply not enough. That campaigns advising consumers of a potential 20% saving for NYOP did not provide enough of an incentive for the consumer to risk opacity in suppliers in Asia. Another theory was that NYOP needs a very large domestic market with relative similarity between air suppliers and star rating certainty in hotels - factors which do not exist in Hong Kong, Singapore and Taiwan. Either way the business fell of the radar screen of observers like me and travel suppliers and customers that I spoke with.

I can't recall the last time I saw and announcement or marketing piece from Priceline Asia. I haven't even heard them mentioned in those now ubiquitous press releases from meta-search companies announcing a distribution deal with an intemediary like they were M&A deals.

Thus my curiosity is piqued. If Priceline Asia is growing and starting to make industry noise again, then are they trying to make a come back? Or is it just that by adding more and more news feeds to my reader I am simply coming across more stories that I used too? Any Singapore, Hong Kong or Taiwan based readers able to tell me if they have been hearing any Priceline Asia noise recently?

Alfonso Castellano Interview - current TripSay Board member, ex Travelocity and Lastminute (part 1)

Last week travel social network and planning site TripSay put out a press release announcing that former Travelocity Senior Vice President Alfonso Castellano (pictured) was joining the TripSay Board. Castellano spent nine years with lastminute/Travelocity and before than ten years with TUI. An impressive online travel resume.

I had a great chance to speak Alfonso last week about this new venture. This is the first in two posts from that discussion. In this post I will share with you the discussion we had around the online travel industry in general. In a later post will go through our discussions on TripSay and the travel content model.

Firstly to the OTAs

We started our conversation around the challenges facing the major online travel companies (OTAs). As Castellano said “Most [of the OTAs] are losing money in air” Castellano identified three themes/scenarios confronting OTAs today:

1. Complexity

The world is complex, the law, technology, fragmentation, environment, globalisation etc all ad complexity and with it costs to the big four OTAs (Expedia, Orbitz, Travelocity and Priceline).

According to Castellano, this globalisation investment bu the OTAs is not showing the benefits and gains in scale and volume and efficiency that were hoped. Instead this globalisation effort is bringing so much complexity that it is becoming a drag for the big four, placing increasing pressure on margins. Leading to theme 2…

2. Pressure on margin

Even in this economic demolition derby the OTAs are still under pressure from suppliers on margin. Castellano concedes that this pressure “might move a little now but underlying dynamic will remain. Car, air and even tour operators are becoming more and more discriminating in the on online channel.” This margin pressure is made worse due to the third theme…

3. Increasing cost of marketing

The global demand pressure will put pressure on margins but marketing costs will sill be there.

And….in a frightening prediction. Castellano is not surprised by the CEO changes recently “and am expecting more and more traumatic announcements out of the big four.”

Then to the Meta-search companies

He does not spare the bad news for other, newer players. Castellano also expressed views on the meta-search model. If we had talked months ago he would have said that the meta-search future was secured because meta-search supported the direct push by the suppliers.

Prior to this eco-madness (my words), the suppliers were able to be “discriminating about distribution”. Meta-search could play to this as “a marketing tool for supplier direct distribution rather than a complementary distribution” (ie unlike an agent). This meant suppliers could hold back from intermediaries. Today however, the “suppliers are running back to any player with distribution”. Castellano is expecting a shift “like the post 9/11 world”. Suppliers will be “desperate to pay for an extra bed to get back to profitability.” I found the discussion around the impacts on the industry of 9/11 versus this downturn very interesting. It was after the tragedy of 9/11 and resulting decimation in demand that the online merchant hotel business was born.

Finally to suppliers

I asked Castellano what advice he would give suppliers during this crisis to not repeat some of the mistakes of 2001 and 2002 where too much power was given to the intermediaries. He had even more grim news. This time for the suppliers (hoteliers). He sees a “fantastic future for hotel distribution for OTAs.” He goes on “If a hotel does not control big chunk of distribution today and is still dependent on high yield and hight cost distribution models [like agents]. It is too late, they have no room to maneuver. If they have not been building up distribution for the last 3 or 4 years, then the only option they [hoteliers] have is to keep ­ feeding the beast [online agents] then to come back and fight the bigger beast subsequently…Only a handful of hotel companies can get out of this.” Grim words indeed.

More from our discussion soon.

Priceline CEO Jeffery Boyd on PhoCusWright Center Stage

Philip Wolf has just finished interviewing Priceline CEO Jeffery Boyd at PhoCusWright 2008.

Here is my summary.

On US v International

• Already have more than 50% of business outside of US (see Expedia CEO's comments from yesterday). The international hotel business overtook US in terms of size at the end of 2006; and
  
• International split is reflected in staff numbers with 1,600 total staff but only 340 in the US (but note another 6-700 more in outsourced US customer service).
  

On moving away from the opaque model and doing acquisitions in Europe

• Was an easy decision to move away from the opaque model and air reliance as the business was shrinking. Now down to less than a third of the business being the merchant model and the largest part of that merchant model is hotel;
  
• (not surprisingly) very happy with 2004 acquisition of Activehotels and 2005 acquistion of Bookings.com. There was some unhappiness at Active when the brand was dropped in favour of Booking.com but believes it was the right business decision. Boyd did not provide a direct answer to questions on whether he would expand the Booking brand to the US but did say "with a product in English and the strength of Google we can sell to anyone";

On Asia and Australia

• (again) very happy with Agoda acquisition. It generated $30mm in gross bookings in Q3
• Boyd was asked about the strength of Wotif in Australia. He reiterated that there is a lot of opportunity for more competition in Australia. Booking.com are opening an office in Australia with through "a person based in New Zealand" (I assume he means Agoda Chairman Adrian Currie Update - received a message from inside Priceline that Boyd was referring to someone else. Adrian Currie is based in NZ but is the Chairman of Agoda and head of Asia for Booking.com) .
  

On Mobile

• In the US - about service and support, not transactions for now;
  
• In the rest of the world - likely to be much faster to transactions on mobile; and
• Generally -"have a mobile site that is caveman in its advancement but are focused on it".
  

On the Year ahead

Paraphrasing Boyd he said the following: There will be a shake out in the coming year. Companies that are well capitalised and watch expenses will do a little better. The industry survived and grew post 9/11 so we will get through this.

Struggling to track EXPE, PCLN and OWW? Thankfully Seeking Alpha has a summary

Three big earning releases last week in the online travel industry. Made for a lot of material to listen to, read and digest. Thanks to Sramana Mitra at Seeking Alpha you don't have to fret. She has put together a one page summary of the highs and lows of the releases from each of Expedia (EXPE), Priceline (PCLN) and Orbitz Worldwide (OWW). Is this week's BOOT recommended read.

Hotelsbycity acquisition rumour (started by Google)

I learnt a long time ago to trust Google search traffic as a source of acquisition rumours. Search traffic to the BOOT hinted at both the Worldspan acquisition by Galileo/Travelport and the Asiarooms acquisition by TUI.

Now my traffic logs are picking up search traffic under the headings "hotelsbycity acquisition" and "hotelsbycity priceline". This is hardly definitive but is certainly enough to start a rumour that Hotelbycity is about to be acquired.

Hotelsbycity is a content/review site (with booking functionality) where consumers post real photos of hotels. Hotelsbycity combine all these photos into an almost room by room map of the hotel. I reviewed them back in January last year. My main comment was that the content was great (especially the jumping on bed PR campaign) but that booking did not work very well. The booking path has improved with support (in my search of San Francisco) of wctravel.com (ie Travelocity).

Anyone out there heard anything about a possible deal? Anyone from Hotelsbycity want to comment?

UPDATE - I cannot find an announcement by Priceline that this deal happened or a reference on the Hotelsbycity website that they are owned by Priceline. But Thompson Financial M&A are claiming that the deal happened in Jan 2008 for a price of CAD$4mm. In July 2008 Gavin O'Malle at Online Media Daily refers to the deal in an article about Travel Ad Network. PIrclien do have Hotelsbycity listed as a partner on their Priceline Parnter Network site but that is about it. Anyone out there know the real story???

501 not out

Time has passed and the posts keep flowing. Time for my "not out series" - a regular summary of the last 100 posts that I first started with 101 not out and continued with 201 , 301
and 401.

Just like the 401 update it has been deals, deals, deals that has dominated the last 100 BOOT rants:

• Wotif evenutally managed to by Travel.com.au/Lastminute.com.au despite a fight from Webjet and a cunning move from AOT. Followed up almost immediately buying Asia Web Direct;
• TripAdvisor launched a new version and continued its targeted site buying spree with HolidayWatchdog;
• TravelCLICK was sold to Genstar and the BOOT called it first;
• The Asian acquisition bonanza continued as Priceline returned to the market though an acquisition of Agoda, ;
• Sidestep disappeared in a flood of newly raised Kayak cash; and
  
• Venere bought Worldby.
  

Cash flowed into online travel:

• Fastbooking took Euro35mm;
  
• Worktopia grabbed $5mm;
  
• Bezurk got "an undisclosed sum" from News;
  

I spent some interesting times on the phone doing start up interviews with:

• Yen Lee of Kango;
  
• Gregg Brockway of TripIt;
  
• Martin Symes of Bezurk; and
• Kellie Pelletier of Kayak.

In the weird world of quirky news:

• bags fell from the sky;
  
• The president of Sri Lanka got bumped and was not happy about it;
  
• Man fired dog and bragged about it; and
  
• nobody, I repeat nobody is doing anything naughty naughty in the new Singapore Airlines double bed suites.

Oh and Qantas turned from being the flying Kangaroo to the thieving Rat.

But I saved my most angriest post for number 400 - the last in this seasons. When the new Australian government said they were doing me a favour by continuing to allow Qantas to over charge me on flights to America.

If you're still reading then I'm still writing.

Priceline back for more in Asia with acqusition of Agoda

Announcement today just ahead of the Priceline earnings release that they have acquired the Thailand based merchant hotel website Agoda. No hint as to price in statement but includes a comment that Agoda's 2007 YTD gross bookings (to 31 Oct) were US$31mm up 122% on the previous year. This is Priceline's second go at the Asian market. The joint venture with Hutchison Whampoa is still active in Singapore, Hong Kong and Taiwan under the name your own price model. Had established a JV in Australia under the brand MyPrice but it folded within days of launch at the height of the dotcom boom years. Is also a model shift for PCLN as Agoda is a pay upfront business, not retail model.

UPDATE - have just seen the 8k filing which puts the purchase price at US$15,074,693 up front (with some in escrow) and potential earn out for three years (or more if "disruptions in the Asian travel market") for up to $141.6mm based on gross bookings and earnings targets (not disclosed)

UPDATE 2 - 7 Jan 08 e-tid are reporting the transaction as closed (reg'd required) and giving the first hints at the integration plans. The article says that the Agoda business will continue to be run independently which we can assume means no brand or business model change (ie merchant to retail). Is inevitable that we such a large earn out component that integration activities will be limited.

Travelzoo AU and NZ launch imminent with appoint of new GM - Brad Gurrie

First there was an advertisement in the newspaper giving a hint of Travelzoo's arrival in the the Australian/New Zealand market. Now we have word that current Lastminute.com.au GM Hotels Brad Gurrie has been appointed as Travelzoo's Australian and New Zealand General Manager- starting next month.

The AU site is in beta already - as you can see from this shot - so Brad starts with something to work on.

For those of you that don't know Travelzoo are a NASDAQ listed company with a market cap of about US$320 based on revenues of $75mm. Their difference is that they are neither a retailer or a pure review/content/network site. They are a deal hunter. They use screened advertiser driven content to provide consumers with deals and specials.

If the rumours prove true, Brad may find himself working for Priceline. Would be the first Priceline employee in Australia since they shut down the Myprice joint venture with Telstra during the boom.

Congratulations to Brad on the new job. Not sure yet what this will mean for Lastminute staff retention post the Wotif acquisition.

UPDATE - Hotelmarket.com are reporting that the Sydney office will open on Nov 15 to be followed by a Taipei office on December 1

UPDATE 2 - Reliable rumours that in January at least one maybe more US based Travelzoo staff will be seconded to Sydney for an extended time to help Brad with the set up.

401 not out

Time for my "not out series" - a regular summary of the last 100 posts that I first started with 101 not out and continued with 201 and 301.

Without a doubt this recent period of posts on the BOOT have been dominated by consolidation and deals:

• Lonely Planet admitted that it could not meet the challenges of the Internet on its own and sold out a majority stake to the enterprise division of the BBC;
• Opodo shed Karavel with the story being broken by an blogger from the inside;
• TUI made a bad decision in buying asiarooms and once again search traffic predicted a deal;
• the battle for Travel.com.au (who now own the lastminute.com brand outright in AU/NZ) is not yet over with Webjet and Wotif at each others throats and AOT sitting not so quietly on the sidelines;
  
• Rakuten made some healthy profits and set itself for further expansion by selling out of Ctrip;
• the Flight Centre privatisation fell in a heap in an embarrassing way for the Flighties board;
  
• rumours flew that Priceline want Travelzoo and the comments section filled up with a debate on the merits of this idea; and
  
• we have the as yet to be confirmed rumour that TravelCLICK are about to be bought.
  

In other general news

• every media outlet there is ran a story about how bad the US air industry is prompting me to run my own series of the Airline Industry brought to you by BusinessWeek, the Legal Fraternity, Wharton, NPR, the Economist and Pizza Hut. Conclusions were that the US air traveller is stuffed and no-one is taking responsibility. In fact Marion Blakely quit as head of the Federal Aviation Authority to join the peak airline lobby group the Aerospace Industries Association;
• the T-List is soon to be a book. The BOOT submitted three stories:
• UGC vs Editorial. What's better? What's the balance? What's more 2.0?;
• Helping Airlines Stay on top; and
• the fourth phase of online travel - "too much information"; and
• it looks like Dead Herring for Red Herring.
  

and in quirky news

• one muppet shouted at two others;
  
• a lion, a crocodile and a buffalo tried to sort out their differences the old fashioned way; and
• the BOOT saved the world by defusing a jar of olives.

I hope you're enjoying reading because I am enjoying writing.

Another deal! Priceline and Travelzoo (updated)

I cannot type fast enough to keep up with the deals that are flying around. The latest to hit the BOOT radar is the piece on Hotelmarketing.com speculating that Priceline is going to announce an acquisition bid for content/travel advertising firm Travelzoo. Travelzoo is up 22% on the news. And I thought this was going to be a slow news week.

UPDATE - on the Q3 2007 PCLN earnings call a few subtle questions were asked of the Priceline management about any interest in owning Travelzoo. The questions were subtle and the answers therefore equivocal but it seemed that there is not (public) interest from Priceline in buying Travelzoo. A reader and I agree that this constitutes a "no" for now.

Booking.com numbers broken out of Priceline results

Priceline released their numbers recently and I decided not to report on them originally. They were great numbers (even though losses widened due to litigation expenses) and analysts put up their expectations all over the place. In addition the numbers confirmed the pre-eminence of Priceline in Europe with European sales eclipsing US sales for the first time. The reason I did not report on it was because while this was a great story it did not add much to my other reports on the company. I had already commented on how they are getting it right in Europe and right in integration of Booking.com and Activehotels.com.

However the recent announcement of a new UK MD for Booking.com (Rachel Howes) has encouraged me to blog about the Priceline European results. The reason is that the report I found on Travelmole does something I have not seen from Priceline before - it breaks out sales for a brand. Specifically it states that Booking.com annual gross bookings are €1.2 billion on 12.5 million room nights sold in the 12 months to March 31. This is the first time I have seen a combined sales number for Activehotels and Bookings. Clearly puts them as the largest in hotels in Europe.

Important to remember that Booking.com charges no reservation fee or cancellation fee and takes nothing upfront from the customer. As a result there is likely to be a higher cancellation rate for Booking.com bookings versus other players. My guess is at least a quarter - increasing the total booked room nights with Booking to the 15 million room night level. I am sure that the cancellation rate it is a highly tracked metric and should have a team on it working on product and marketing ways to reduce it.

UPDATE - received an email from a Priceline representative who noted that Priceline have broken out European results in their reporting for the last few quarters. This is correct. The difference I was making was between highlighting "European results" and "highlighting brand results". I had assumed that European numbers had included the sales from the Priceline branded European sites (ie Priceline.co.uk) and not included sales on Booking.com branded sites (including Activehotels.com) generated from customers outside of Europe. I have asked for clarification on whether or not the Booking.com numbers from the above are the same as European numbers or if there was a difference. Will let you know when I hear back.

Expedia Spain, too little too late or better late than never?

Expedia has announced its Spanish launch. Expedia went first to the UK and Germany but then slowed, entering France after its competitors form the early days (Lastminute and eBookers), taking a softly softly approaches to the rest of Europe. The strategy was successesful as a lot of money was thrown by the competition in smaller markets while Expedia proved itself a winner in the UK through focus. However the question remains whether they have been too cautious and waited too long for Spain. I asked Euro online travel expert, BOOT guest editor and honorary Spaniard Michael Potts of e-interactive to give us his thoughts. Here is what he had to say...

I'm a bit confused about this post, because I don't know whether to write either:

• The online travel market in Spain is buzzing, and at last the great bastion of online travel has come to this great country.or
• Nothing has really happened, except that Expedia has started pushing the PPC bid levels on Google and Yahoo up as they try desperately to deliver the volume and market share that their US bosses want to see.

So, why my confusion? Well:

I have been waiting for Expedia to launch here for 2 years - it means that the market is mature enough to support their demanding targets for success, and in other developing markets Expedia has been the explosive catalyst that made the entire online travel market go crazy.

BUT there are three reasons why Expedia will have to work harder in this market than they may think

1. Spain is different - the Spanish are more price sensitive than most Europeans and although they use the internet (a lot) to research travel, buying it online is a different thing entirely. Expedia is a lot of things but it is not cheap;
   
2. The "marketing" market is relatively mature in Spain - there doesn't appear to be a lot of partnership agreements, PPC undervalue, affiliates or cheap bus ads freely and easily available. These have traditionally been ways that Expedia has quickly gained traction in other new markets; and
   
3. Iberia.com, and some very mature OTA's already exist in this market - Iberia.com accounted for 70% of all online travel transactions in 2001 and is still a massive player in Spain. eDreams.es, Rumbo.es and Viajar.com all seem to have steady growth and market experience and hotel-only players Booking.com, HotelClub.com and RatesToGo.com are also strong here.

Clearly its not going to be plain sailing for Expedia. Whereas in Italy, for instance, they moved early, captured some great marketing agreements and set the bar for competitors to follow, they are too late to the party in Spain.

Good luck Expedia, Spain needs you, I'm just sorry it took so long.

Priceline here, Priceline there, Priceline everywhere....well..almost

Announcement today that accommodation powerhouse and Priceline subsidiary Booking.com has opened offices in Cape Town, Munich, Warsaw and Dubai. Should be and is a great story. A company that invented a new model in the US and struggled for a long time yet made two very smart acquisitions in Europe is expanding further. All good right? Yes...but...no. This makes for offices in Cape Town, Munich, Warsaw, Dubai, UK, Holland, US (of course), Amsterdam, Barcelona, Berlin, Cambridge, Dublin, London, Loulé, Lyon, Norwalk (USA), Paris, Rome and Vienna. It should sound like a list of all of the best places in the world for an online hotel provider to be. However there is a huge part of the planet missing from this list and you do not get a special prize for guessing where.

Where are the people focused on Australia, China, Japan, India, Korea, SE Asia, Hong Kong, Singapore an more. All of these countries are booming for online travel. Should you should be nervous if you are a Priceline exec in missing these markets? Surely they were were "boom fodder" markets in 2000 (places where stupid money was spend with no return) and therefore should be ignored. However each has subsequently proven itself as a destination and source for significant online travel potential. Especially in hotel only. In each of those Asian markets the number one online intemediary is a hotel only provider.

Congrats to Priceline for its expansion. With 11 million room nights a year they are a player in every market - in Europe they are a powerhouse. However there is space, profit, opportunity etc in Asia Pacific that they (and others) are missing by focusing expansion efforts in only in an easterly direction of Europe.