The success of Priceline and Booking.com isn't all about business models and search-engine marketing spend. A good part of the winning formula pertains to a company that eschews PowerPoints, worries about often-overlooked things such as the "cost of coordination" among its brands, and puts effort into maintaining the culture that got it here.
Darren Huston, the Priceline Group’s CEO-in-waiting, wants to ensure that its Booking.com unit, which is king of the hill in the online global hotel business, doesn’t get arrogant.
Huston would never put it into words like this, but he clearly seeks to avoid the fate of Expedia Inc., which has been deeply resented, sometimes despised, by hoteliers over the years for seeking to squeeze every penny it can out of them with its higher-margin merchant model hotel business.
Huston, speaking at the PhoCusWright conference in Hollywood, Florida yesterday, said he spends a lot of time with Booking.com and Agoda employees advising them to “stay humble” with hotel owners, hotel managers, and hotel revenue managers in “making sure success doesn’t lead to arrogance.”
He said Priceline needs to ensure that its salespeople and other employees in the field “are living the culture that we built.”
Booking.com built its hotel business on using the agency model and building scale with it as it took lower margins from hotels than did Expedia with its more complicated and higher-margin merchant model.
Huston said continued success for Booking.com is based on “win-win partnerships,” meaning avoiding partnerships where a hotel walks away and feels ripped-off.
When Huston describes “win-win partnerships” somehow the over-used cliche doesn’t sound like a cliche.
“The biggest issue we have is that we’ve been winning for such a long time,” Huston says. “We could get lazy.”
PhoCusWright’s Lorraine Sileo interviewed Huston and current Priceline CEO Jeffery Boyd, and got some fascinating tidbits out of them, some of which point to the contrarian ways Priceline does its thing.
For example, the Priceline Group has five brands — Priceline, Booking.com, Agoda, Kayak, and Rentalcars.com — and there is some, but not many, customer referrals among them.
For instance, a Priceline customer might see a link to Rentalcars.com, but there is not a lot of that going on among the brands with the exception of Kayak, where they all advertise.
Huston said the company thinks hard about “the cost of coordination” in such cross-selling practices, and will only do it if it makes sense for both brands.
The Priceline Group is also renowned for letting the brands operate mostly independently.
Boyd said there is inter-brand competition and “creative tension” at times that the Priceline Group executive team manages, but the benefits outweigh the disadvantages.
For example, Boyd said the Priceline Group is doing better in the U.S. with both Priceline.com and Booking.com competing in the market, and Priceline.com and Agoda now have the opportunity to pick some new markets and attempt to break into regions beyond their historical focus on North American and Asia, respectively.
Kill the PowerPoints
There are many other reasons that the Priceline Group likes to run its brands independently, but one of them is it enables a company to take quicker action.
Huston said that part of the company’s culture is not to do a lot of PowerPoint presentations, or to have endless strategy discussions.
“We go out and do our job,” Huston said.
He said he doesn’t spend much time looking at the competition because history has shown that companies that execute on their missions are the ones that succeed.
Like a tag team partner, Boyd weighed in on the subject, as well: “This is an execution game. Companies in our space that execute well, they grow. If they don’t, not so much.”
Tags: booking.com, expedia, priceline
Photo credit: Priceline's incoming CEO Darren Huston. World Travel and Tourism Council / Flickr