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Much has been written about how Expedia Inc.’s Hotwire business has suffered at the hands of Priceline’s knock-off product, Express Deals, but as it turns out Expedia has been hitting Priceline right back on another front.
While Priceline has made gains in its semi-opaque business — you know the hotel price up-front but not the hotel name — Expedia has been taking share from Priceline’s bidding feature, Name Your Own Price.
In its annual 10-K filing with the Securities and Exchange Commission, filed February 20, Priceline says that Expedia’s own semi-opaque feature, Expedia Unpublished Rates, has been taking market share away from Priceline’s Name Your Own Price by offering “steeper discounts through lower margins.”
In other words, Expedia’s Unpublished Rates have allegedly been engaged in some low-balling on rates in order to grab market share.
That’s great for travelers, and bad for Priceline’s Name Your Own Price.
“We believe these offerings [including other competitors providing hotel rooms on an opaque basis], in particular Expedia Unpublished Rates, have adversely impacted the market share and year-over-year room night reservations growth rate for our Name Your Own Price opaque hotel reservations service, which began to experience a decline in the third quarter of 2011,” Priceline states.
In its fourth quarter earnings call February 20, Priceline CFO Daniel Finnegan said Priceline’s own Express Deals service, which has benefitted from a prolonged TV advertising blitz that included the near-death and resurrection of William Shatner’s The Negotiator character, also has contributed to a decline at Name Your Own Price.
Meanwhile, Expedia CEO Dara Khosrowshahi said recently that the Hotwire operation has “stabilized” under new leadership, and although it hasn’t fully recovered, the track it is on is a positive one.
Khosrowshahi has said that Hotwire must pivot to focus more on mobile and last-minute hotel deals.