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It isn’t often that a company launches a new business to disrupt itself but that’s essentially what happened when the Priceline Group’s Rentalcars.com spawned Rideways, which is a private car service aimed at international travelers and small groups.
When arriving at Dublin Airport, instead of renting a car from Hertz, Avis, or Enterprise through sister-company Rentalcars.com, some travelers are opting to use Rideways to get a private driver in a Skoda Octavia for the $52 ride to the Hilton Dublin Kilmainham.
Hikmet Babayev, the managing director of Manchester, UK-based Rideways, joined Rentalcars.com in 2014 and was charged with exploring ways that the car rental business might get disrupted in the following three to five years by on-demand car services and driverless cars, for example.
As a backdrop, big car manufacturers such as General Motors, Ford and Volkswagen have been partnering or investing in various ride-sharing services in a bid to learn and ensure a hedge against sharing-economy upstarts.
In early 2015, Babayev and his team got the green light from then-Priceline Group CEO Darren Huston to launch Rideways, courtesy of $2 million in seed funding from the Group, as a taxi service geared to attract international travelers looking for airport transfers and other point-to-point ground transportation.
For now, Rideways is partnering with local ground-transport services and offers private car services through partners in 800 cities across 120 countries, although most of the business is in Europe.
“We thought this is the right time, before this settles, to do this so we don’t miss the boat,” Babayev says.
The service doesn’t aim to be the low-cost provider in each market but a reliable and attractively priced option for international travelers when renting a car might not be particularly ideal. For instance, it’s impractical to rent a car in China, where a Chinese driver’s license is required, or in India, where traffic can be horrendous, Babayev says.
A private car service offered by a trusted brand could fill the gap.
Babayev says the Rideways service is typically 15 percent cheaper than aggregators but 10 percent more expensive than the lowest-price providers in any given market.
It therefore isn’t as cheap as summoning an Uber or a Lyft but Rideways hopes to provide a reliable, lower-than-market service for international travelers.
“I would think that while competing with Uber at this stage may not seem like a wise idea, Priceline has an opportunity to make recommendations to its travelers with ride services that are local and perhaps more accustomed to airport taxi and other requirements,” says Ken Sena, managing director and Internet analyst at Evercore Institutional Equities. “Therefore, the effort here stands to be value-added to both passengers and drivers.”
Evan Konwiser, vice president, digital traveler, at American Express Global Business Travel, was also upbeat about Rideways as an indicator that the ground transport space is changing in multiple ways.
“It’s clear consumers — business and leisure alike — are still looking for perfect solutions in ground transport and so I’m excited to see any and all innovations,” Konwiser says, referring to Rideways. “We are pursuing own strategy at Amex GBT which includes all types of providers with the goal of making ground transport a more seamless and frictionless part of the travel ecosystem.”
Brian Harniman, co-founder and managing director of strategic advisory firm Brand New Matter, views Rideways as merely an incremental improvement over standard airport shuttle services.
“It seems like this is a low-risk step towards Priceline offering on-demand black car service,” Harniman says. “It’s neither more efficient nor cheaper than Uber, but simply an improvement on shuttle service. If it gets any traction in the Priceline booking ecosystem, perhaps they’ll scale it up.”
Rideways gets net rates from local ground-transport partners and marks them up, leveraging some of Rentalcars.com’s price-optimization acumen when setting the fares.
Rideways, Babayev says, isn’t an on-demand service yet and isn’t recruiting drivers individually, although both would be logic options in the future.
Available on desktop and the mobile web, about 40 percent of Rideways’ customers are unmanaged business travelers, 40 percent are families or small groups, and the remainder are couples and solo travelers, the company states.
Rideways is going direct-to consumer with its business but is also pursuing partnerships with airports, airlines and hotels. Among its partners are Asia Miles and Tigerair, for example.
Being part of Rentalcars.com and the larger Priceline Group gives Rideways a big heads-up compared with a run-of-the mill ground-transport startup because of all the cross-promotion and distribution options.
Rideways, Babayev says, has been testing placing its ads on sister company Booking.com and other Priceline Group brands. Rideways and Rentalcars.com have thus experimented with ads touting both services.
One important concern was whether Rideways, as represented in the above “airport transfer,” would take away bookings that ordinarily would have gone to Rentalcars.com’s “car hire” service. Babayev says that tests showed that fewer people clicked on the rental car option when both choices were placed side by side but rental car bookings didn’t decline.
Possible cannibalization of bookings and revenue — Rideways hurting the Rentalcars.com business — is something that would have to be an ongoing concern.
“Customers decide whether they want to drive or not,” Babayev says. “They make their decisions based on the kind of journey.”
Bookings, which are growing 30 percent month to month, are primarily in Europe although more U.S. business should be in the offing because Rideways is integrating its service with the Group’s Priceline.com and Kayak, Babayev says. About two years old, Rideways currently employs about 30 people in Manchester, UK.
T.J. Clark, co-founder and CEO of TurnKey Vacation Rentals and formerly CEO of Limos.com, believes Rideways can achieve profitability fairly quickly.
“I like it and I think that pre-scheduled car service still gives a segment of the market more peace of mind in their planning,” Clark said. “It’s a good option for groups. Moving into on-demand is a whole different game.”
“And I’m sure this service will be profitable quickly — and not losing $800 million per quarter as revealed about Uber Tuesday.”
Expedia, meanwhile, is believed to be working on a concept similar to Rideways but decline to comment about it.