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William Shatner’s Priceline Negotiator character died awhile back, but the reincarnated Shatner, teaming with actress Kaley Cuoco in a series of commercials, have become Hotwire’s worst nightmare.
That tidbit emerged as Expedia Inc. today reported that its first quarter net loss widened dramatically as Priceline’s recently launched Express Deals and the accompanying Shatner-Cuoco ad campaign, along with car-rental consolidation, put pressure on Expedia’s Hotwire unit.
Expedia officials said Hotwire, which offers hotels and car rentals on a semi-opaque basis — consumers know the price up-front, but not the supplier identity — will provide a $20 million to $30 million adverse hit to EBITDA in 2013.
Hotwire’s “incremental weakness” and “compression” is tied to Priceline’s heavy advertising of its Express Deals, which is a Hotwire-like service launched last June, and consolidation of car-rental companies and their decision to raise prices and limit fleet capacity, Expedia CFO Mark Okerstrom said during the company’s first quarter earnings call.
“The competitive intensity picked up,” Okerstrom said, referring obliquely to Priceline’s Express Deals’ advertising, and its impact on Hotwire.
For the first quarter, Expedia Inc. saw hotel room nights grow 28%, which is a tad slower than the 24% growth it notched in the first quarter of 2012.
Expedia’s net loss in the first quarter widened to $104.2 million, compared with a net loss of nearly $3.3 million a year earlier.
Revenue climbed 24% year over year to a little more than $1 billion for the quarter. Corporate travel agency VIA Travel, acquired in late April 2012, and hotel-metasearch company Trivago, which saw Expedia take a controlling interest in the company on March 8, 2013, contributed 5.5 percentage points to the revenue growth in the first quarter.
On Trivago, Expedia CEO Dara Khosrowshahi said Expedia’s priority for Trivago is revenue growth, and the plan calls for Trivago to add geographies “aggressively.”
In other news, Khosrowshahi said nearly 25,000 hotels have signed up for its Expedia Traveler Preference program, and more than half are currently using it. Under ETP, consumers have the choice to pay Expedia at the time of booking or to pay at the hotel.
Participating hotels in Europe have seen room night growth of 500 basis points on average when implementing ETP, Khosrowshahi said.
The impact of the program isn’t certain, although it may lead to “lower blended revenue margins,” offset by higher conversions, Khosrowshahi said.
Khosrowshahi also reacted negatively to Google’s proposed concessions to the European Commission related to Google’s search practices.
Expedia’s initial reaction, Khosrowshahi said, is that the EC hasn’t gone far enough, and that Google would be permitted to continue to favor its own internal products over those of its competitors.
“We think that’s bad for consumers,” Khosrowshahi said.