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Priceline now worth $100B (google.com)
230 points by seanlinehan on July 26, 2017 | hide | past | web | favorite | 214 comments

If you were to tell a non-HNer that Kayak, Booking, Priceline, CheapFlights, OpenTable, and other large websites are worth 100B combined, I don't think they would even blink an eye.

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.

In my experience in tech (only a few years, I came from finance, and before that construction, weirdly) people are super cynical and often believe that they know more about _any_ business because they can write some code or something similar. I have never been around more people who consistently think they know better than everyone else. This was a surprising thing for me because I assumed engineers would be more curious and thusly more humble. It's actually a really unappealing part of my experience in the industry that often makes me wonder how long I'll last in it.

No - it is just about age. HN readers are younger thus they think they know more. Old people will just say: "I don't know about that" [1]

[1] https://www.youtube.com/watch?v=YvT_gqs5ETk

HN commenters, the more visible ones, are not that young (by young I presume you mean anywhere in the 20s).


I think the median age in the top 10, for example, is around 40.

This reminded me of a chunk from an [interview with Linus Torvalds](http://spectrum.ieee.org/computing/software/linux-at-25-qa-w...)

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.

I work with quite a few "old people" who will happily explain everything to you in the most definitive manner possible.

I would've thought it's more that HN'ers tend to have first or second hand experience tech boom/busts, and each subsequent sky-high validation brings back memories and feelings that are hard to ignore

This is true of many groups: bankers, consultants, doctors, PhDs, and journalists.

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.

Yeah I agree. There's also a general proclivity to discount boring, but effective solutions to problems.

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.

You know, a bishop is stronger than a pawn, but a bishop never can became a queen, while a pawn has a slim but real chance.

Hence be the boring bishops and exciting pawns paradox.

See: craigslist

Seasoned programmers who have worked on software across several industries are probably pretty good at understanding and translating day to day business tasks into automated code. To do that you almost have to understand a business inside and out. That's their job. If more people were humble, less would get done

That make's plenty of sense but I have a hard time believing that so many of the commenters here have the experience you just described. I know it is certainly not true of the people I interact with offline on a regular basis.

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.

Honestly, I've seen so many truly awful managers that I'd trust that the engineers "know better about how a business should be run"... from an operational standpoint.

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).

Humble is opposite to arrogant, not to decisive or knowledgeable.

See also: Dunning-Kruger effect.

Well, the "techies" often have better insights about the technical parts of a product and tend to prefer code over business-politics.

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.

the other side of the same coin is fresh perspective and unbiased application of engineering approach to any problem which results in disruption when it works. Sometimes it doesn't work, e.g. Theranos and others. Money made when it works keeps everybody as believers in that "church of disruption".

What? Wasn't Theranos a scam from the start?

yes, indeed all the techies are the same and consistently think they know better. Keep labeling people, MR. Finance-Constructor, it's the sure way to the success.

I'm not sure that's what I said at all but I'm sorry if that is what was communicated. It was not my intention.

Really it's booking.com is worth ~$95B and the rest of those brands combined are worth ~$5B (OpenTable just got written down from an accounting perspective).

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.

To further corroborate, I'm working in hotel software at the moment and these sites drive a _ton_ of traffic. 10-15% commissions on every booking they process.

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.

Usability on booking.com is decent, search, filters and map view are useful. Things have been getting better elsewhere, so it probably doesn't stand out as much as it did years ago.

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.

To corroborate your statement, i worked at Booking ~4 years ago, and the internal rumours were that Booking represented ~85% of the PCLN value.

I'm sure it fluctuated since, and from friends still working there, i would guess upwards.

I wonder how much the domain name played in their favor. I recon expedia is older and I'm surprised how far behind they're valuation is to priceline. (Or maybe I'm reading valuation wrong).

>If you were to tell a non-HNer that Kayak, Booking, Priceline, CheapFlights, OpenTable, and other large websites are worth 100B combined, I don't think they would even blink an eye.

...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.

You know people that would not recognize any of those brands?

FWIW I've heard of one of those (Kayak), plus Priceline - and I only used Priceline a few times in college (they turned me off of using these tools).

Yes, beside Booking.com I never heard of any of them. They may be a thing in the US, outside not really.

I only know Booking (never used it personally, but my relatives do; well... did, I think they stopped for ethical reasons: the 'middlemen' thing), I've never heard of any of the others and I have no idea about what they provide.

Do they advertise on TV? If they do, then there's a decent chance my parents (in their 60s) know about them, otherwise it's very unlikely.

I had only heard of kayak out of the lot.

I recently met an older dude who hadn't heard of Craigslist!

There are all kinds of people who have never heard of Craigslist within the United States. There are also plenty of children under 18 who have never heard of Craigslist. Despite its popularity and relative staying power, Craigslist belongs/belonged to a specific sub-generation.


"just middlemen" == abstracting away complexity

All you have to do is reword it in programmer talk and HN gets it.

HN might also be aware of the market caps of the airlines Priceline books for:

Delta: 34.4B

Southwest: 30.2B

American: 22.1B

United: 18.7B

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?

This is a common misconception based on Priceline's history. The vast, vast majority of Priceline's value is Booking.com, which does hotel bookings. The margins on flight bookings are razor thin and probably only add value by enabling travelers to add hotels to their flights.

Flights are only part of the picture - hotels, car rentals, et al. Anything, basically, to do with travel.

Margins on flights are slim.

Hotel bookings are the real meat.

They are priced almost 50 times their earnings do they really have that much room to grow in the next several years?

I have serious doubts they have any room to grow. Seems like their entire business model depends on retaining monopoly pricing power in industries with very few barriers to entry.

> retaining monopoly pricing power in industries with very few barriers to entry.

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...

In fairness, it also comes from the fact that booking is especially huge in Europe. So it is hard for a very US based audience like HN to realize how big they are. It is like Whatsapp. 60 billion messages a day, but it doesn't look that big from the US.

> how they're "just middlemen"

As are Uber/AirBnb and internet advertising giants Google and Facebook.

> If you were to tell a non-HNer that Kayak, Booking, Priceline, CheapFlights, OpenTable, and other large websites are worth 100B combined, I don't think they would even blink an eye.

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 don't need 99% of software written in the world. Then I know 80% of everything is crap. Try to sell me something I will be polite but some people are not.

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.

This is stupid. Really. Here we are in a world where the companies that own the assets (you know, the things that cost a lot of money) are worth less than the things that don't own anything. This doesn't seem "right" or "fair" in the sense that Priceline should be a middleman, unable to exercise any or all pricing power because it does not control the assets producing the revenue. I wonder how long this can last?

If you work backwards from what generates revenue (purchases) in the travel industry you'll find that marketing drives decision making more than the underlying airplanes, trains etc.

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.

Right. Another way of highlighting the absurdity of dismissing things like Priceline as non-assets is to look at the history of computing. Microsoft commoditized PC hardware, and became tremendously valuable selling the dominant OS. Google is doing the same thing with Android.

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?

> Microsoft commoditized PC hardware

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.

I think OP meant that Microsoft commoditized PC hardware through software, in other words by making Windows the thing that people wanted to have, and the hardware under it could be interchangeable.

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.

I personally didn't read it like that, but your interpretation makes sense. After thinking about it, I think your interpretation of the post is superior.

Yes, that's what I meant. Windows was a commoditizing force on PC hardware makers. Microsoft did the commoditizing here by taking their market power that came from controlling the thing people wanted most, and enforcing standards that hardware makers had to meet in order to reach the market MS controlled.

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.

Brands have no inherent value though; they're the consumer equivalent of religious icons. They cease to have meaning if they're not kept alive by advertising and can be destroyed by a single screw up or undermined by a clever emme.

Marketing people sell value, they don't create it.

In the eyes of who?

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.

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.

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.

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?

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.

My comment was not to say that there are not situations where brand plays less of an influence, only to provide a counterpoint to the parent's comment that "brands provide no value." There are certainly industries or products where brands are less valuable, but that doesn't diminish those industries or products where brands do provide real value to both the buyers and sellers (although not always both each time and certainly not in equal amounts).

Maybe brands could be tied to momentarily moments of happiness for some people. But the modern branding and marketing, but also mass media, is a pretty bad environment to grow a child, to be a female, and for people and societies in general. So i highly doubt the positive value of marketing.

But sure, they do help extract higher margins.

>to be a female


don't tell that to Warren Buffet

Warren Buffett is a wonderful person but he's the product of a mixed economy with strong institutions. My point (which could have been better made) is that brands depend heavily on social infrastructure for their survival

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.

The Internet has facilitated the age of the middleman. Owning stuff is expensive. It's much easier to leverage network effects to tie consumers to producers. Why make or build anything when you can control the market by controlling the app at the end of the distribution chain?

The Internet has facilitated the age of the middleman. Owning stuff is expensive.

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.

We should also be wondering about the lack of incentive to be a producer/owner when being a middleman is so comparatively lucrative. If capital and talent starts shifting to middlemen in pursuit of higher returns it could cause a lot of markets to stagnate with only the big players having the resources to make a profit off of producing.

Thank you for this interesting thought. My first thought was this. Why wouldn't I make furniture and sell directly to customers. Which is something I've been thinking of doing. One problem is that the computer desks I'm thinking about might not be what people want. Why? They will be expensive and it seems like the whole world thinks the IKEA desks are what they really want/need. Check some YouTube tech reviewers, the build game PC's worth thousands but they're nearly always put on IKEA desks because they're cheap (ish).

I guess marketing is at play there.

Or because a $1000 gaming PC is objectively better at running games than a $500 gaming PC on every single metric (except maybe power consumption), but a cheap Ikea desk can hold my keyboard and monitor at 28.5" off the floor just as well as an expensive one can.

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.

The issue there is part marketing part economies of scale. A small shop won't be able to compete with IKEA on price. You basically have to do what Tesla, Craft Breweries and other relatively small fish do and start out on the high end where cost is less of a concern and scale doesn't matter as much. Unfortunately that's a tall order in and of itself as it takes a lot of time, talent and money to produce a truly top-shelf product and, as we're discussing here, you're probably better off financially being some sort of broker for current goods than producing new/innovative goods yourself.

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.

yep, marketing turns a commodity into something cherished and desired. Literally everything is a commodity unless marketing has put gloss on it

It also allows for mom-and-pop shops selling direct to end users around the world. I used to run a video education business and that was pretty game changing when you have access to the world market via the internet. The key for priceline seems to the aggregation function that makes it a worthwhile middleman.

I think aggregation is a winner take all business basically. It's easier to do one priceline query vs go to each airlines website.

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..

So it's the means of distribution that need seizing.

Wasn't the Internet supposed to eliminate the middleman?

It did when it comes to distribution channel.

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

Yeah, and they these middlemen also give hotels a way to sell lesser service and blame the middleman. Going through the third-party often loses membership perks and amenities and generally also makes cancellation much harder, in exchange for a lesser rate.

If the hotel offered the lesser rate themselves, they would effectively be pricing their "free" amenities, and they don't want to do that.

It's not that they "don't" want to do that - in fact they'd very much like to. It's that they can't do it. Their agreements with listing services prohibit this. And if they don't get listed then they simply won't get the same rate of bookings.

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.

The loophole in those agreements is that the best price that listing services show is the best "public" price. Larger hotel chains are working around that by offering lower prices to their loyalty club members.

On the contrary, cancellation and purchase is easier. And also middle men add visibility to a lot of small hotels.

Hell, there are aggregator aggregators already. Sites that compare prices between aggregators.

It's turtles all the way down.

Not eliminate, replace

Of course Priceline has assets:

- Software

- Computing infrastructure

- Domain expertise

- Deals and relationships with business partners

- Mountains of proprietary data, including historical pricing/availability and user behavior.

You forgot Brand and a whole wack of Users!

The last three are the ones that have the real value.

It seems as though they have a very sustainable advantage. Getting all the hotels connected is expensive. Because they have such a large number of hotels in place with a good revenue share they probably have some of the highest conversion rates in the industry. The higher conversion rate and deep pockets allow them to buy demand and brand awareness. Very hard to see how someone would enter this market and try to compete with them. I imagine they also have exclusive deals in place with some hotels making it even harder.

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.

Also, the total hotel revenue is roughly $500 billion a year. https://www.statista.com/statistics/247264/total-revenue-of-... (revenue not market cap)

So there's a big difference still.

While I don't completely disagree with you in the large discrepancy between the two, I believe it's a gross over-simplification to state Priceline owns nothing. In the same over-simplification you could state that newspapers are worthless as a middleman to the actual events that happen. However what you are actually accessing is talent, resources, and services to compile that list of recent events every day (or in the case of Priceline: hotels, airlines, rental cars.)

It's a market. Difficult to find in the ocean of more or less poor sites...

And to compound this, Sabre - which nearly everyone in the industry uses to actually get there hotel/airline/car rental inventory from only has a $6B market cap.


Said another. The company technology that powers the whole travel industry is worth less than 10% of just Priceline.

Sabre is one of three. I think more of Priceline is powered by a competitor.

I believe they are Galileo and Apollo.

The three: Amedeus, Sabre, Travelport(Galileo, Apollo, Worldspan).

Disclaimer: I work for one of these.

Do you know where can i read more about the software and infrastructure of any of those companies?

Booking.com has spent a huge amount of money aggregating inventory at mom and pop hotels throughout the world, especially in Europe.

the things that don't own anything

Not true at all, they own the attention of people who would be paying the asset holders. That is (obviously) very valuable.

No they don't. That's not fungible, tangible, or reliable. In the zero-sum world we're heading towards right now, where normal institutional procedures are in abeyance, expect brands to topple like dominos. Remember that salmonella outbreak that killed all those people.


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.

It's not stupid. They do own something, an extraordinarily valuable something. What they own is as real as a billboard company. They own as much as a catalog company (for sale aggregation) in a past era might have.

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.

From a different perspective Priceline is an outsourced, commission-only marketing & sales team that every airline, hotel and rental car company may participate in freely.

Just yesterday, someone on HN was moaning that they wished they could just hire someone to do their marketing for them!

What thread, if I may ask? Biz opportunity right there.

On their wikipedia page, it states this: Total Assets: US$17.42 billion (2015) I wonder if Priceline group companies act as middlemen then how come the assets they own total to almost $18 billion? Someone can please explain.


As per their most recent (unaudited) financial statements released May 9, 2017, they had almost $22 billion in assets. The large majority of them ($13 billion) are investments, $2.4 billion in cash and a paltry $400,000 in property plant and equipment. So from this perspective, they are really an investment company that happens to let you compare prices for things.

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.


What are the investments? Does that mean the various companies in the group, or some kind of outside investments?

Cash is an asset. Undoubtedly they own offices/real estate in multiple locations. The corporate entity might even own some of it's own shares. There's probably a lot of mundane things that count as assets, I'm sure if you're super curious you could go lookup their assets on some SEC filing somewhere.

Isn't this essentially the defintion of a service economy ?

Priceline doesn't have pricing power, they are just reaping the rewards of their branding and whatnot. There may also be some value for the consumer in that Priceline can consolidate their travel plans for flights/hotel/rental car in one place. However, I find I get better service when I transact directly with the vendor, whether it be hotels, airlines, or rental car agencies.

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.

Is this a joke? I searched roomkey on a couple of marriott hotels and they offered $5 off (about 2% off). I got much better price on priceline.

You might be looking at different room types, or different rates. Or, I frequently find that Priceline and Expedia show a certain rate, but once you click it, they will actually ping the real rate and say something like "rates have changed recently" or something like that.

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:




Intermediaries can be great businesses, and good for the market. See the existence of wholesalers, brokers, etc. Just because the internet makes it easier to disintermediate a business doesn't mean the market forces that created intermediaries in general aren't valuable. News aggregators, price comparators, and online stores like amazon all aggregated various "productive" businesses and produce value for themselves and their customers in the process. Sometimes, DIY isn't the answer for everything; see https://en.wikipedia.org/wiki/Comparative_advantage

Priceline's value is no different than the value provided by Airbnb. They make the vast majority of their money being a middleman for hotels, not flights, and in turn have made it much easier for people to package everything together and get a better deal though the partnerships their partners already have with each other.

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.

Let's talk about value here for a moment: I recently stayed in Airbnb where the host provided everything: dishwasher, washer and dryer, full-fledged kitchen with all utensils, all the necessary stuff from which I can make a good breakfast, upwards of 10MBPS speed wifi internet, and the entire place is private to me. All this in just ~$55/night. If I were to live in hotel (which I don't even think is easily available) with similar amenities then it might cost me more than $200 per night. So that's the difference in value provided by Airbnb and Priceline IMO.

I have tried booking Airbnb many times. In my case, each time it was much more expensive than the hotel room I could find via priceline (even more once I include the extra fees from the Airbnb's fine prints).

I have a hard time with the idea that SpaceX sits somewhere around $12B and Tesla around $50B (with most people arguing even that is absurd).

So to value Priceline at $100B is insanity.

Priceline has generated $7 billion in net income the prior three fiscal years combined.

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.

So at least in traditional accounting their valuation would be 10 * 7/3 = $23B

But then again PE on stocks seem to have been getting higher and higher in this latest tech boom (bubble?).

That was my point with Tesla; it's absurd at $50B and they build real things and develop real technologies.

"Worth" in the case of stock market cap is a direct reflection of perceived current and future profitability. It is not just a simple summing of assets minus debts = net worth. In fact, the thing you're talking about is simply comparing apples to oranges.

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.

The tech middlemen are simply way more efficient than their brick and mortar counterparts. Surely this argument was put to rest years ago.

No they're not. The technology is more efficient. When travel agents ruled the earth most people didn't have personal computers, nor was there a global communications network that was trivially easy to access and operated at high speeds.

If you go into any local store, you wont find a single one that produces their own goods. Some people like making stuff, other people like selling it, and selling it is actually a lot of work. Now what if we could make a discovery service so that makers could sell directly to the buyers, without the middle hands !?

Owning stuff comes with actual upkeep costs.

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.

time = money

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.


To add to that...Tesla is worth more than General Motors. The market cap for Tesla is $57 billion. General Motors is $52 billion.

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.

Not it isn't.

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.

It's been this way for much of history. Middle men, such as merchants before the industrial age, were the wealthy class. They were also despised by many who thought it was 'unfair'.

The merchants in this are the airline companies that have planes and sell services. Priceline is like the person that owns the bazaar that the merchants sell in. I'd wager that person has historically been wealthier than the merchants, too.

No surprise. The value of Physical stuff is approaching zero, while virtual stuff is becoming more valuable.

Isn't that why Rockefeller went into the railroad industry? He was sick of seeing the transportation layer take all of his profits.

All about leverage points. Being the middleman is a great leverage point on the internet - fb, amazon, google.

they own something more valuable than "things." they own the customer

Yuval Noah Harari would call this a "shared hallucination".

William Shatner asked for stock instead of cash when he started advertising for Priceline.com twenty years ago. His shares are now worth $4 billion.

I don't know if they are still his shares =) https://en.wikipedia.org/wiki/Priceline.com#William_Shatner

He sold his shares at a very low price a long time ago

So he "only" made $600m. Although apparently the numbers are disputed. Heck, even 1/10th of that is a tidy sum.

Being frugal, you could live indefinitely off the interest on 1/1000th of that sum.

I'm guessing he doesn't really need the money at this point, especially given his age.

I really don't understand this line of thinking. Are old people incapable of spending money? Is what they chose to do with capital of less consequence? Even if they do have one foot in the grave, they have a right to legacy.

I think the point was that he was already a wealthy famous actor, and at 86 the difference between "many millions" and "many more millions" is not that material.

The line of thinking on age is as follows: As you age, you have a probably smaller number of future years for which you need to worry about survival costs. And by "probably" I mean the probability is pretty well established based on millions (billions?) of data points. Death is coming for your ass. If you're 102 years old, you might live another 20 years, but I'm not wagering heavily on that. And if you're 15 you might die tomorrow in a car wreck, but the odds are that you can "expect" your "life" to be a certain length - your life expectancy.

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.

I believe the line of thinking is that assuming they would have the same yearly expenses of a younger person, they have less total expenses because they have, on average, less years left to live and thus spend money on.

It's not really about his age, it's that he has enough money where he really doesn't have to give a damn.

Plus, he's Kirk. He can still get the public's attention when he wants to.

They have less time to spend it themselves. Sure, they can give it to some charity, or their kids, but when you have a lot of money when you're young, you have far more time to do stuff with that money yourself. Someone with one foot in the grave doesn't. No one's saying they don't have a right to the money if they earn it, just that they likely won't be able to make as much use of it.

> Are old people incapable of spending money?

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.

I used to code for a hotel chain, and I remember that Priceline had some sort of weird legacy deal that made them essentially the only OTA (online travel agent) that was able to undercut the hotel's lowest price.

It's not exclusive to Priceline, and it's called Opaque pricing:


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.

Good to know, but I know they were on the other sites that do that, and specifically mentioned Priceline as having some sort of contract that allowed them to undercut them, and I can't find anything online to back that up.

What "kind of guest" does this attract?

I sometimes do this, especially in ski towns. I also sometimes negotiate at rural hotels to get a fade rate. Do hotels hate me?

Not the commentor but I imagine those that are willing to find out the name of the hotel after they pay (to save some money) are not the type of customer that orders room service, get's spa treatments etc etc. Basically the opaque booking customer doesn't result in upsells during their stay.

The big problem is it attracts hookers/pimps/drug dealers, and a lesser problem is that it attracts price conscious customers, but that's fine since if you are opening up that channel for customers, then you need their business. But it's not worth it if you're also getting the aforementioned problem parties.

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"....

Not rich ones like Shatner.

Nice, who would've thought that kayak, opentable and booking were worth north of $100Bn a couple of years ago. Kudos to the folks that made this a reality.

As a European I find it amazing I hadn't even heard of this $100bn company till now.

Aside from Booking.com, they also own KAYAK, Cheapflights, Rentalcars.com and Open Table (the restaurant booking app).


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).

I don't know how skyscanner continues to manage to fly under the radar. I've never found cheaper prices on any other aggregator.

Google flights is the best airline aggregator.

Region specific. Good luck for flights in Asia/Australia/Pacific.

I was about to say "I don't know anyone who uses Priceline" but I didn't know they owned all those other companies and sites as well.

that I did not know. Good leveraging of similar applications.

Booking.com is part of Priceline group

Ah yes. Even used it a fair bit. It's pretty good. Didn't know that was the same company.

UK here, heard of it, never heard anyone mention it nor seen anything of it in traditional media however.

Presumably they're a USA only company?

Booking.com is very popular in Europe. In fact for years it was pretty much only in Europe. It was founded in the Netherlands and stuck to the continental European market initially. Now it's global, but Europe is still one of its bigger markets, and it's still headquartered in Amsterdam, though now as a subsidiary of an American company.

They're the biggest OTA in the UK, probably a little bit above Expedia, and with a wider gap between the top 2 and Agoda and LateRooms. They're also the biggest OTA in Europe at large. Priceline (really, Booking.com) is much bigger in Europe than the US.

booking.com is ginormous, at least everyone I know in the Netherlands using it to book hotels.

They do exist in the UK, they're a competitor to LateRooms. They regularly have adverts on the TV. They never seem to have cheaper inventory than LateRooms though.

You've probably heard of Booking.com

Actually no. Why is it so popular? It seems to have fewer features than hipmunk....

Not to knock them, though, it's a hard problem to solve well from an interface and integrations perspective.

Personally, I reach for Booking.com because they're simply better than most competitors.

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.

Depends. The search is good though, easy to filter, upfront prices and information. It's just that I feel like every time I book somewhere, I'm being rushed into finding that one hotel in the whole of <capital city> that might have a spare bed. It's very smart up-selling because it makes you feel like you're really clever for beating the crowd. The whole experience is designed to make you wish you'd booked yesterday, it's extremely pushy.

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.

Note that the Booking.com reviews are also less obviously spammable than TripAdvisor, since you have to actually have to make a booking to review a hotel. TA reviews in general have a lot of sampling bias involved from solicited reviews (or just flat out fake reviews).

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.

> TripAdvisor comes close, but is too annoying.

Have you tried the new UI?

Why is this a throwaway account? Hipmunk is not an OTA, they are a metasearch site. When you find a price on Hipmunk, it's just a price from one of the OTAs like Expedia or Booking.com. Even when it's branded as a "Hipmunk" price - it's powered in the backend by one of the OTAs (white label).

Lots of people use them. They're very very into AB testing to the point where they have a building at HQ dedicated to user testing.

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.

Great timing, Acquired just did a podcast about their acquisition of Booking.com, which has been called the “second or third best acquisition of all-time.”


For the past 2 or 3 years i saw commercials of kayak on tv. Everytime I'd be price shopping, I'd start with their website. It never worked. I couldn't understand why they would advertise on tv and then have a broken website.

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?

There's a principle that I try to apply in situations like this: giving other developers some credit.

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?

I've never seen an ad for Kayak, however I've found some good car rental rates in the last two years using their mobile app.

Interesting, it seems like a company that had a very inflated valuation due to the dot-com bubble, was hit very hard when the bubble burst and it took almost 15 years for the stock price to get back to pre-bubble level...

> to get back to pre-bubble level

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.

Well it's also a completely different company now with all of the acquisitions, such as Kayak. It would be interesting to know how the company's revenue is distributed amongst its companies.

When Priceline started the Execs at Travelocity laughed at them. Today Travelocity is a brand of Expedia and just serves up Expedia content.

In addition to booking.com, Priceline group owns Agoda, the OTA juggernaut in Southeast Asia.

I am amazed. In fact, I still remember when someone told me in 2011'ish that they are worth ~30b$; I had the same reaction.

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?

The main reason for Priceline's valuation is Booking.com. A lot of people tend to think of Priceline as "that name your price airfare site", but it is really Booking.com that is responsible for the lion's share of their valuation.

The big competitor is Expedia. Who owns Hotels.com, Hotwire.com, trivago, Venere.com, Travelocity, Orbitz, and HomeAway.

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.

Shit, I didn't know they bought Kayak.

So many of the travel sites are owned by Priceline. Here is wikis list:

Booking.com Priceline.com Agoda.com Kayak.com Cheapflights Rentalcars.com momondo OpenTable

I am surprised they haven't bought Expedia or the other major sites.

Newsflash: Almost all of the travel sites you've heard of are owned by Expedia or Priceline. Priceline couldn't buy Expedia because it would get killed by antitrust concerns. Expedia also owns Travelocity, Orbitz, Hotwire, Hotels.com, VRBO, HomeAway, has a majority stake in Trivago, etc.

Basically the only big travel sites not owned by Expedia or Priceline are TripAdvisor (previously spun off from Expedia) and AirBnB.

And Skyscanner! Lone little skyscanner. Still my favorite.

That's Skyscanner, acquired last year by "leading Chinese online travel agent Ctrip"?

That's because Expedia Inc owns all the others.

Wow, the stock price grew 10x in 7 years.

OpenTable & Kayak are great companies, so I'm happy to see Priceline supporting their endeavors.

Wow this chart and the comparison to its competitors made me see that travel industry is humongous.

I think the reason why some people (including me) can't fathom how Priceline can be successful is the same reason why they won't be able to start or scale another Priceline to success

The stock has been on a tear this month but without any news, makes you wonder if insiders know something.

A $550m acquisition announced 2 days ago is not news?

If you look at their 5 year, basically has been a tear forever.

I wouldn't say that. From 2014 until June 2016 it was basically flat.

wondering how something worth 100B looks like the first link i click on the web page returns 404

I have no experience in the travel industry, but I see the value in priceline (name your price). They provide hotels a way to keep the rooms filled without disclosing to the public the low rates. It also provides a way to reach a different market. Source: I use priceline (name your price) at least once a year. Pretty happy with them.

The headline should read "Priceline Group Inc. now worth $100B"

priceline.com is pretty tiny compared to the totality of the group... Mostly booking.com really.

I think it's ok for Priceline Group Inc. to be referred to as Priceline for short.

Why did you get downvoted? Priceline PR team?

Please don't insinuate astroturfing or shillage in HN comments unless you have evidence. The use of this as a standard (and toxic!) trope in internet arguments is something we definitely need to stay away from. Much more at https://hn.algolia.com/?query=by:dang%20astroturfing&sort=by... if anyone wants to read about HN's take on this.

We detached this subthread from https://news.ycombinator.com/item?id=14858440 and marked it off-topic.

Lol no idea. I used to work for one of their companies that's why I know this info.

Probably came off as trolling, now that I see how large the site is.

Not too bothered about it!

100 BIG ONES!!

I drive by their hq everyday and i can tell.

Supercars, superthots, hell i think i even seen SUPERMAN!

IMO a company's "real" value is determined by how useful it would be if the Earth had a high likelihood of complete destruction in a century. Needless to say, Priceline would probably be worth nothing in such a scenario.

Interestingly, Google and Facebook would still be pretty useful, albeit maybe not as much.

They should have split the stock way back like apple and google. Splitting have its own benefits. It would have added more value to their stock price.

Why? My understanding was that the only reason Apple and Google did stock splits was that they wanted to get onto the Dow Jones Industrial Average which is (stupidly) price weighted and not market cap weighted so without the split, they would have been a much larger portion of the Dow.

To make it affordable and easier for more people to buy their stock. This is always the biggest reason for split. Will an average person invest in a stock which is trading at $2k per share? Nope.

The average person is probably invested in their stock through a variety of ETF's.

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