So… Priceline? Ian – Jolene – Dorlisa – Grace – Wei Ling

Agenda The Beginning

The Past

The Present

The Future

The End

The Beginning

What is Priceline? Priceline

“Priceline is the ultimate bargain bin of travel agencies. It takes the extra rental cars, airline seats, and rooms that travel suppliers don't think they could possibly sell, marks them w-a-a-a-y down, and gives them to you for cheap”

The Past

Evolution of the Business Model 2003: Introduction of retail pricing

2003: Introduction of retail pricing 2005: Acquisition of booking.com

Evolution of the Business Model

2003: Introduction of retail pricing 2005: Acquisition of booking.com

2006: Acquisition of Active Hotels

Evolution of the Business Model

2003: Introduction of retail pricing 2005: Acquisition of booking.com 2006: Acquisition of Active Hotels

2007: Acquisition of Agoda Hotels

Evolution of the Business Model

2003: Introduction of retail pricing 2005: Acquisition of booking.com 2006: Acquisition of Active Hotels 2007: Acquisition of Agoda Hotels

2008: Eliminated booking fee

Evolution of the Business Model

2003: Introduction of retail pricing 2005: Acquisition of booking.com 2006: Acquisition of Active Hotels 2007: Acquisition of Agoda Hotels 2008: Eliminated booking fee

2010: Acquisition of Traveljigsaw

Evolution of the Business Model

2003: Introduction of retail pricing 2005: Acquisition of booking.com 2006: Acquisition of Active Hotels 2007: Acquisition of Agoda Hotels 2008: Eliminated booking fee 2010: Acquisition of Traveljigsaw 2012: Acquisition of Kayak

Evolution of the Business Model

Further Evolution of the Business Model

Shift Towards Social Media

Emphasis on M-Commerce

Further Evolution of the Business Model

Focus on Retail Pricing

Further Evolution of the Business Model

The Present

Value Proposition?

Buyers •  Save money by trading off flexibility about brands, product features and/or sellers in return for lower prices

Sellers i.  Minimize disruption of existing distribution channels and pricing structure ii.  Maximize revenue iii.  Minimize lost sales

Value Proposition?

Transaction Broker Connecting buyers and sellers for a transaction fee

Revenue Model?

Name Your Own Price

Online Retail E-tailer Commission fees from the merchants for the sales of discounted flights and hotels

Market Opportunity?

Poor Economic Conditions

Price-Sensitive Leisure Travellers

Excess Inventory/Capacity

Competition?

Direct Competitors Similar Internet Travel Companies i. Expedia ii. Travelocity iii. Orbitz

Competition?

Indirect Competitors Online Airlines and Hotel Portals •  Budget Airlines Discount websites •  Groupon

Competitive Advantage?

1. Cost Leadership

2. Information Asymmetry

Competitive Advantage?

3. First-Mover Advantage

Competitive Advantage?

Marketing Strategy

Celebrity Endorsement

Search Engine Marketing

Online Affiliate Marketing

What is Priceline’s Impact on the Travel Industry?

Impact On Consumers

Empowers consumers by making it easier to compare prices and features

Open up a new demographic: price-sensitive, brand-ignorant

consumers who could not afford to travel previously

Impact On Industry

Increase Number of Efficient Transactions

Reduce Excess Capacity

Enlarge Market Size

Eliminating Booking Fees

Streamlined the industry and increased overall efficiency

Encourage people to book directly

through online sites, instead of

through airlines

The Future

Priceline:

Success? Or Failure?

Priceline Failure Factors

Porter’s 5 Forces •  Low barriers to entry •  Strong competitive rivalry •  Strong supplier bargaining power •  Price conscious buyers have little loyalty •  Substitute products are increasingly common (budget airlines and hostels)

Priceline Success Factors

1.  Priceline Group unique position à Greater synergy 2.  Poor economic outlook à Price conscious market segment é 3.  E-Commerce and M-commerce markets are set to grow 4.  Promising company direction (diversification and marketing efforts) 5.  Well-established brand name

Recap!

Priceline ü Unique business model ü Impacted the travel services industry in a positive way

Overall, • Sustainable competitive advantage • Strong potential to succeed