Priceline Group CEO Talks Direct Booking, HomeAway and Unicorns

At the ITB Berlin Convention 2016 this morning, Priceline Group CEO Darren Huston said he’s annoyed by the efforts of hotel brands to push back against online booking sites.

The conversation with Phocuswright founder Philip Wolf, which included a discussion of Priceline Group’s operating structure, allowed Huston to provide his candid assessment of why he had no interest in acquiring HomeAway before its sale to Expedia last year.

On both fronts, Priceline’s relationship with hotel chains and its decision not to attempt to acquire HomeAway, Huston was elaborating on remarks he’s made over the last few months.

Huston also questioned the viability of ridesharing giants as they begin to mature.

Here are the highlights from Huston’s comments.

Huston on hotel brand advertising that encourages consumers to book direct:

“We spent $2.8 billion [in 2015 advertising dollars] finding demand, and ads [from hotel brands] are not an effective way to tell a customer how to go through the internet. I’m a little skeptical, because the best way to reach people is to create a better experience. I find it annoying, because it is a business relationship and we bring guests to them. Only two percent of travelers stay in the same hotel twice.

“The challenge is that not every city is like St. Louis, where 90 percent of properties are branded… brands have a role in the world, but if [the hotel] experience is differentiated [online] people will book it. The internet is so democratic and punishing of bad experiences, but at the same time it rewards great experiences.”

Huston on why Priceline Group let HomeAway sell to Expedia in 2015:

“We’re trying to make booking an apartment as easy as booking a hotel. The problem with the HomeAway and Airbnb model is that they charge users fees and there’s a whole back and forth [before the transaction]. We’re trying to build a different model, but the vacation rental space is the hardest yet to crack. We’re trying to convince [homeowners] to not take deposits or charge insurance… We would have been interested in HomeAway about five years ago, but we had no interest today.”

Huston on the fate of ridesharing “unicorns” Uber and Blablacar:

“Everything goes through a lifecycle. The real question is what’s the sustainable business model for these companies. A real business is up to the cash flow you make, and if there’s no model at the end of the day, things will fall out. A lot of ideas do come through that [unicorn] space, but eventually every one of these companies has to grow up.”