Come here and the top discussion thread is about how little Priceline does, how they're "just middlemen", and that they don't add any value.
It's clear that HN (and techies as a whole, I assume) highly discounts the value of users, marketing, brand, and distribution.
Really is fascinating how different perspectives can be.
I think the median age in the top 10, for example, is around 40.
Stephen Cass: You’re a much more experienced programmer now versus 25 years ago. What’s one thing you know now that you wish your younger self knew?
Linus Torvalds: Actually, I credit the fact that I didn’t know what the hell I was setting myself up for for a lot of the success of Linux. If I had known what I know today when I started, I would never have had the chutzpah to start writing my own operating system: You need a certain amount of naïveté to think that you can do it. I really think that was needed for the project to get started and to succeed. The lack of understanding about the eventual scope of the project helped, but so did getting into it without a lot of preconceived notions of where it should go.
Or maybe, it is true of people who choose to comment.
People who believe they don't know much about a subject may choose to remain silent on the matter.
I'm writing a hotel property management system right now for a hotel chain. In its first year, it will move more money than most startups will make in their lifetimes. Somehow, that isn't "cool", though.
Hence be the boring bishops and exciting pawns paradox.
Also, I'm not sure I really buy the argument that because you can automate some "day to day business tasks" means you know better about how a business should be run. Automating a process that already exists is not the same as deciding which processes need to exist and which don't. Certainly, there are people who can both but I'd be lying if I said any significant number of engineers I know could really do both.
However, there's the magical "sales" and "public relations" side which those same awful (operationally) managers usually excel at.
When those managers have a strong CIO or operations guy by their side they're a killing team, but I've seen cases where they get sweet-talked by an atrocious ignorant CIO (and they can't see it because they're not knowledgeable themselves).
I've also seen strong, well rounded CEOs... and many were engineers transitioned to management roles (with MBAs, etc).
See also: Dunning-Kruger effect.
Code is pure, while business tends to get nasty and diabolical at times. Also, "code" self-proves its value, "business" simply doesn't.
Let's not forget the people who started this whole personal-computer revolution were hippies, geeks, techies, and nerds who cared about the "code" and how this could make "peoples' lives" better.
There is a huge general misunderstanding in the profitability of directing hotel bookings vs flight bookings or other types of travel consumables. Rate parity and high commission rates mean that directing hotel rooms is hugely profitable and Expedia (hotels.com, trivago, expedia) and Priceline (booking.com) operate as a duopoly in most markets. They are both marketing machines that turn brand + paid traffic into highly profitable room nights.
booking.com is such a piece of shit in so many ways: strip-mall aesthetics, horrible data quality (firsthand knowledge here), huge commissions for hotels, and yet, it's a fantastic business.
Probably a good lesson or two here.
Either way, if prices are roughly the same on most sites, I'll go for something that just lets me get the job done. I couldn't care less about aesthetics and commissions if other places can't give me a much better discount while also not getting me angry using their site.
I'm sure it fluctuated since, and from friends still working there, i would guess upwards.
...is that because you don't think non-HNer's don't have an appreciation for how much something like Walmart is worth (~$250B)? Or because you think they believe that $100B is a reasonable valuation?
>Really is fascinating how different perspectives can be.
My personal experience is that "most people" wouldn't recognize that Kayak, Booking, CheapFlights, and OpenTable were businesses / websites, let alone use them.
All you have to do is reword it in programmer talk and HN gets it.
Are we incorrectly discounting marketing, brand, etc when we notice that the top booking service is valued triple the top actual provider? That the value they add might not actually be triple the value of the actual flight?
Hotel bookings are the real meat.
Few barriers to entry, really?? Sorry, but this sounds a bit like an inexperienced developer saying "Hey, I could build most of Facebook's functionality in 2 weeks." Booking.com is THE largest spender of advertising on Google. They have giant teams that A/B test the living shite out of every pixel on their screens, and huge teams of data scientists squeezing out every last bit of optimization on their site. It's a huge barrier to entry. This answer from Quora's CEO explains it well: https://www.quora.com/What-are-some-important-internet-compa...
As are Uber/AirBnb and internet advertising giants Google and Facebook.
Really? I think most people would be shocked.
> It's clear that HN (and techies as a whole, I assume) highly discounts the value of users, marketing, brand, and distribution.
That isn't what give pcln "value". The value is just a reflection of the boom stock market and a handful of hedge funds/etc bidding up the price of the stock.
Once the recession starts and a few of the hedge funds decide to cash out, the "value" could shrink considerably.
I am tech guy but when I think of above I know I need salesman so he sell stuff that I build. Also you cannot scale sales infinitely so having middleman and getting 5% and not having middleman and getting 0 is win situation.
Physical assets are a known quantity for better and for worse. They intrinsically depreciate. On the other hand, Brands grow over time from word of mouth and other marketing, so long as their final product is at least average.
Is Windows or Android not an asset? Is it not the dominant asset in terms of value, even if manufacturing electronics at scale is larger in physical terms?
No. Tandy (aka Radio Shack), Dell, Compaq, and so forth commoditized PC Hardware.
Microsoft made the OS a commodity, reducing the cost of an OS from thousands of dollars to only $100. Android / iOS have done the same thing except reduced the cost to $0.
The hardware manufacturers don't make as much as the software guys. Because people and habits are tied to the software, not hardware.
Most people didn't care if they had a Dell or a Compaq, as long as it ran Windows.
So in this case: I don't care what hotel I stay in or who rents me a car, as long as I know that through Priceline I'm getting a good deal.
It's the same in travel, where the airlines and hotels are selling commodity products, and the high value is in the brokers people trust to select among the commodities. But the brokers here are also in still competitive positions, because it's still easy for consumers to switch compared to something like an OS or social network.
Marketing people sell value, they don't create it.
To the company and its owners, if my brand allows me to sell an equivalent widget for a higher margin, how is that not value? Just because value can be created or destroyed by a single action doesn't mean that value is somehow less valuable.
To the user, if I derive greater pleasure because I believe I have bought a more valuable product (attributable only to the brand), just because there is an equivalent widget out there, does that somehow discount my pleasure?
What even, is the basis on which, in this hypothetical scenario, we have determined the widgets are equivalent? Surely there is some subjectivity that would be driven by people's opinions, influenced directly or indirectly by brands, in that decision.
Soap bubbles are beautiful but you wouldn't pay money for one because you know how ephemeral they are. The value in brands is the expectation of future revenue that will inure to them. I'm saying that not only is this fragile, if it's destroyed then it's not good for anything else. By contrast, suppose the Fancy Hotel Company goes bankrupt through mismanagement; you still have an actual fancy hotel - an aesthetically pleasing building, comfortable furniture, experienced staff, logistical relationships with suppliers etc. Changing the name on the building to the Cosy Hotel Company would be a sales problem in the short term, but would have zero impact on the actual operation of the hotel itself.
Yes. Let's take a simple example - processors. I'm sure you can think of reasons why some prefer Intel and others prefer AMD, and why those different choices might be valid depending on the users' criteria. But which processors do you think HN runs on?
You probably don't know or care because it makes no functional difference to you. You might still have preferences about the next computer you buy but only insofar as you can imagine it making a quantifiable difference to you.
As a consumer, your contribution to brand value is only as good as your knowledge of what makes a branded offering unique and irreproducible.
But sure, they do help extract higher margins.
Put it this way, suppose the C-suite and the board at Priceline went insane and wiped all their own servers before leaping out of their penthouse windows. It would disrupt the travel industry, but it wouldn't be that difficult to build another price aggregation network - the infrastructure is already there. And a year later, nobody would care.
Consumers aren't nearly as invested in brands as marketing people like to imagine, they're just lazy and stick with whatever works OK. Can you imagine consumers feeling sad about the demise of Priceline or any other major brand? If Geico went out of business I'd feel a little bit of nostalgia for those animated gecko commercials and might reminisce that they were a good company to do business with, but that's about it.
Therefore, we should be looking for industries where connecting buyers to sellers is the big question! (Or owners to leasers, or lenders to borrowers.)
We should also be looking at why apps that are supposed to do this connecting fail.
I guess marketing is at play there.
It's nice to have solidly built furniture, but not everybody cares enough to pay a premium for that. If the demographic you're looking at is "YouTube tech reviewers" then it's especially unsurprising. Those are people who place value on having fancy tech. I wouldn't blame marketing, just a question of limited budgets and personal priorities.
I've seen some pretty cool DIY computer desks, like one where the computer components are spread out and visible over a glass top, or it's hidden away in a cabinet on the side, but it's a comparatively small number of people who care.
That said, if you're capable of producing high quality furniture with expensive materials, with the right marketing I imagine you could make quite a bit. People pay boatloads of money for reclaimed/exotic wood desks with attractive aesthetics.
The only thing easier might be an Alexa app or chat bot or something. Even then people that shop on priceline are probably more cost sensitive etc..
A hotel can have a website where people can directly book a room.
But people want to compare prices, shops around, hence a new form of ... middleman :D
If the hotel offered the lesser rate themselves, they would effectively be pricing their "free" amenities, and they don't want to do that.
Generally they are paying around 20% of the booking fee to the listing service. So in theory the hotel would be able to charge 15% less on their own site and make a larger profit. But if they did they would no longer get listed on the popular sites where people go to easily price compare and then book.
It's turtles all the way down.
- Computing infrastructure
- Domain expertise
- Deals and relationships with business partners
- Mountains of proprietary data, including historical pricing/availability and user behavior.
It's not impossible though:
1. One of the other big tech players could decide to enter this market.
2. Alternatively a site with huge demand could start to feature hotels (airbnb for instance).
3. A technology shift or a shift in the right advertising strategies to create demand could leave room for startups to enter this market.
So there's a big difference still.
Said another. The company technology that powers the whole travel industry is worth less than 10% of just Priceline.
Disclaimer: I work for one of these.
Not true at all, they own the attention of people who would be paying the asset holders. That is (obviously) very valuable.
Great word, hadn't heard that before (or at least forgot it).
Also, Coca-Cola, Nike etc... would disagree with the idea that brands don't last.
What they own is as real as anything a car insurance company owns. It's as real as crypto-currencies. It's as real as Amazon.com's store, which is now 1/2 inventory not owned by Amazon; or eBay for that matter, or any other offline auction service that has ever existed. It's as real as cloud computing.
There are dozens of other common business examples, from the present and past.
However, financial statements don't consider data as something of value, or brand names (unless they are purchased), so the company might be "worth" much more than this.
If you want the lowest prices on all the big hotel chains (Marriott, Hilton, IHG, Choice, Wyndham, Best Western, etc), then use www.roomkey.com I have no idea why they don't advertise it, but their loyalty pricing (you have to be a free member of their rewards system), and in exchange for the discount you get, the hotel doesn't have to pay commissions to Priceline/Expedia/other travel agents.
If you can legitimately find an advertised price lower than the hotel's actual website (roomkey.com is owned by the hotel chains themselves), then you can even get free and deeply discounted nights:
Additionally, comparing hotel pricing does put major pressure on prices, as most travelers know that they want to stay in the most reasonably priced hotel with a certain number of stars.
So to value Priceline at $100B is insanity.
They may be overvalued, however they blatantly are providing an extremely valuable service. And if it were easy to replace or compete with (ie something of low actual value), the airlines etc would have already cut out Priceline and would keep the $2+ billion in annual profit for themselves (they've tried and failed repeatedly to cut out Priceline, which further speaks to its immense value to consumers).
I'm more surprised that you're holding up Tesla as a counter example to fluff valuations given their present valuation versus other car companies with actual immense profit such as GM or BMW.
But then again PE on stocks seem to have been getting higher and higher in this latest tech boom (bubble?).
This is like being surprised that corporations have a higher market cap than the sum of the net worths of its employees; it's not really a sensible thing to compare.
Priceline and others own mindshare and access to a community, and its infrastructure is cheap. Marketplaces and money transmitters are valuable, but eventually will be decentralized as you can see with bitcoin.
Apple and Microsoft build actual stuff. But Tencent, Alibaba, etc. are markeplaces and shipping.
priceline and companies like it sell convenience
therefore priceline and companies like it sell you your time back. Specifically, they are selling back the time to people who derive greater value from doing something other than trying to book tickets cheaply. Middlemen sell you time you'd spend searching in a search space they specialize in.
General Motors produced 10 million cars in 2015 (per Wikipedia). Tesla produced 47,000 so far in 2017.
I understand the stock market is 'forward looking'...but huge difference there.
In a world where there is a expanding numbers of producers/assets and expanding number of consumers (of those assets) coordination (ordering, filtering) can become more valuable. It all depends on what you're integrating over.
This comment is only on survival costs and age.
Legacies are outside the scope of this comment.
William Shatner's survival costs, having been paid-for long ago, are outside the scope of this comment.
Plus, he's Kirk. He can still get the public's attention when he wants to.
What are they going to spend money on? William Shattner is 86 years old.
> Even if they do have one foot in the grave, they have a right to legacy.
Uh... Who cares? You are talking about something that has no value.
I'm sure shattner would trade all of his money to be 20 years old again.
Basically, in exchange for a lower price, the hotel guest gives up their right to choose which hotel they want to stay at. And for the hotel, they get to sell lower priced rooms without advertising lower prices, enabling them to engage in price discrimination so they don't lose out on the people willing to pay them more.
However, I find that the type of hotel guest Opaque pricing attracts is not a desirable hotel guest anyway, so most decent hotels don't participate. Or if they do, only when demand is very low and they're sitting empty.
I sometimes do this, especially in ski towns. I also sometimes negotiate at rural hotels to get a fade rate. Do hotels hate me?
It would be unreasonable for a hotel to hate you just for asking for a negotiated rate, but hotels (and any business) will hate you for being annoying, especially when they bring up stupid reasons like "well I paid $x in nowhere, kansas"....
I usually use Kayak and Booking.com (because you've the option to pay when you checkout).
This comment made me realize that their only other major competitor is Expedia (fun fact: Expedia originated from Microsoft).
Presumably they're a USA only company?
Not to knock them, though, it's a hard problem to solve well from an interface and integrations perspective.
They have a huge inventory of hotels, and they have a functional, fairly responsive search interface that isn't annoying. The last part is important — there's little in terms of popups, ads, intrusive upsells, flashy UI elements, and so on. It's not the most modern, but it's very well optimized towards finding stuff. For example, the path to seeing photos is very short (Hipmunk also does well here).
Since they're very popular, they also have the benefit of having a large repository of reviews, and I find it easier than other sites to glean, from reviews and scores, how good a hotel is compared to others. TripAdvisor comes close, but is too annoying.
Hipmunk is okay, but scores lower on usability for me than Booking.com.
Things like: showing fully booked hotels in results by default, showing me how many people are looking at the booking RIGHT NOW!, popups saying where the last person booked from (that's not a flashy UI element to you?), big bold messages like "Limited supply in Madrid: 3 properties like Happy Hostel are already unavailable on our site! ", "You missed it!" next to rooms that you can't get.
As someone else commented, they AB test the crap out of that website because they know that this stuff gets hotels booked like nobody's business. I put up with it because if you ignore that stuff, the information is well laid out, and the prices and experience is otherwise good. Nowadays I check Booking.com and then go straight to the hotel.
On the other hand, do note that the Booking.com review scale is skewed - it's seems to actually be a 2.5-10 scale. The median rating is something like 8.1, so keep that in mind if you're using the review scores.
Have you tried the new UI?
It may not look like much but they know how to drive their consumers to checkout.
And another plus is that they offer free cancellation up to around 24 to 48 hours before your booking.
You know that page where it says it is doing the price comparison in the background? That's where it always stopped for me. Frozen, never updating.
Last month, I was travelling again and went to kayak just to check. I get to that page and it's frozen again. But this time i notice the little red X on the top right corner of the browser.
> Popup blocked
I went to the next website of course, but it makes me wonder. How much money have they lost because they decided to use pop-ups for no good reasons?
By which, I mean that if every Kayak search was frozen, for every user, I believe that the developers over there would have caught that and fixed it. If a meaningful number of people were experiencing freeze errors, I also expect they would have caught it.
Is it possible the problem is your browser setup, and this is not an experience other people have?
Do you mean "rebubble," or is there some reason Priceline should be worth $100bn?
They do about $400-500m in profit(?) a quarter, for $1.5-2bn/year. Is it the 22% margin that's so attractive? (https://www.google.com/finance?q=NASDAQ%3APCLN&fstype=ii&ei=...)
Such a large margin might suggest they aren't making significant hardware purchases or that their rates could be undercut by a competitor, both of which would make me nervous as an investor for the long haul.
Does anyone know how they justify their valuation? Is it mostly by acquiring other smaller companies (Kayak etc.) and who are the other big competitors to Priceline?
I think the value of these two companies is that people load up a few of these sites thinking they are price shopping but in the end the money goes to the same pot. Priceline is the same.
I am surprised they haven't bought Expedia or the other major sites.
Basically the only big travel sites not owned by Expedia or Priceline are TripAdvisor (previously spun off from Expedia) and AirBnB.
OpenTable & Kayak are great companies, so I'm happy to see Priceline supporting their endeavors.
priceline.com is pretty tiny compared to the totality of the group... Mostly booking.com really.
We detached this subthread from https://news.ycombinator.com/item?id=14858440 and marked it off-topic.
Not too bothered about it!
I drive by their hq everyday and i can tell.
Supercars, superthots, hell i think i even seen SUPERMAN!
Interestingly, Google and Facebook would still be pretty useful, albeit maybe not as much.