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There’s a lot of candor about the Priceline Group’s acquisition strategy in Huston’s statements, and there is plenty of cash to back it all up. His passing reference to business travel as a potential big opportunity is extremely interesting.
There are five brands in the Priceline Group, namely Booking.com, Priceline.com, Agoda, Kayak and Rentalcars.com, and CEO Darren Huston says he is spending a lot of time thinking about the next acquisition or two.
Huston says he’s “constantly” thinking about “extending” the largest piece, Booking.com, mostly by organic means by adding vacation rentals, mounting offline advertising campaigns, and even “looking at business versus leisure bookers.”
But over a year and a half after the Priceline Group stunned the travel industry and announced it would acquire Kayak for $2.1 billion, Huston says he’s pondering the fact that “we have five companies sitting around the Group table. You know, who might fill the sixth or the seventh seat in the future?”
Speaking at the Goldman Sachs Lodging, Gaming, Restaurant and Leisure Conference June 3, Huston pointed out that the Priceline Group historically hasn’t been a company doing a lot of acquisitions.
However, Huston did give a shout out to Glenn Fogel, Priceline’s head of worldwide strategy and planning, who Huston said made “some of the best acquisitions in the history of the Internet.”
Huston was referring to Priceline’s 2004 acquisition in Europe of Active Hotels and 2005 acquisition of Bookings B.V., the building blocks of Booking.com.
“We are not rushing out to buy growth,” Huston said, referring to the Group’s potential sixth or seventh seats at the table.
“There are a lot of very large opportunities to build organically off the core [brands], and acquisitions in a way will be used in a way to either complement one of those organic core strategies or to add another seat at the table,” Huston said.
CFO Dan Finnegan was on hand to discuss the cash available — $7 billion, $5 billion of which is outside the U.S. — for acquisitions and things like stock buybacks.
The company believes there are international opportunities “for properties we can potentially acquire,” Finnegan said. “Our intention is to keep that cash overseas.”
International acquisitions would potentially be more attractive than domestic ones because of the heavy tax burden a U.S. acquisition would entail.
“We will continue to look at acquisitions that provide additional services for us, additional geographies, or accelerate our expansion into a geography,” Finnegan said.
Of course, there has to be a cultural fit with any acquisition.
“We will look to the team that comes with that business to make sure they are like-minded, analytical and very profit-oriented, and a good balance between growth and profitability,” Finnegan said.