Priceline boss as assesses European rivals

Jeffery Boyd, CEO and president of parent company Priceline Inc, has shared his thoughts on how Ebookers, and TUI are fairing in the European accommodation-only market.

Boyd was speaking at last week’s Bank of America Merrill Lynch Conference in New York.

Priceline’s non-US operations are a bigger part of its overall business than for other US OTAs, accounting for around two-thirds of its EBITDA. The vast majority of Priceline’s international business is

During the presentation, Boyd was asked directly about how rival OTAs were faring in Europe. He was candid in his response. “ebookers has lost a bit of momentum over the past three,four years since Orbitz bought them.

“At this point they are not a big player in the pan-European hotel market, but they are addressing that with better inventory and tools, so we’ll see what happens.”, he said, “has had some success as a broad travel brand but hasn’t had a huge success building  a pan-European business outside the UK, France, and maybe Spain a little bit.

“I think they are playing catch-up with and also Expedia, to a degree.”

He also suggested that ebookers and lastminute were suffering as a result of private equity ownership:  “It seems that they have cut their marketing spend and [because of their debt service requirements ] don’t have the same free cash flow that we have to invest internationally.”

These observations were followed up in the Q&A by a question about the challenge from tour operators in Europe. “It has been difficult for them to get a lot of traction with their online applications because they have mixed motivations,” Boyd said.

“They rely on their bricks and mortar travel agents for a large part of their business, and their online channels are ultimately in conflict with their offline travel agents.

“It’s proved a real obstacle in building online businesses, but that doesn’t mean that they won’t continue to try.”

He also explained why it had no plans to bring its successful opaque business from the US to Europe. “We tried ‘name you own price’ in the UK and our experience was that is it a difficult sell.

“You have to spend a lot of money teaching people how to name their own price for airlines and hotels, and we had access to very low cost capital during the internet boom so we could spend $100m with William Shatner teaching people how to name their own price. In Europe it’s harder to do that, with a number of countries, cultures and languages.”

As well as the marketing costs, he also pointed to a structural drawback. “Hotel inventory is fragmented in Europe,” he said, “It’s hard for consumers to deal with opacity when the hotels are so different.”

Finally the opaque model in Europe represents “a much smaller opportunity” than its current accommodation-only focus, Boyd said.

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