The acquisitions of Active Hotels and Bookings B.V., which led to the creation of Booking.com, transformed parent company Priceline.com, and online travel history. Take a look at Priceline's fourth quarter of 2005 financial results, and you'll be able to see the journey in process.
What was the financial impact of Priceline.com’s serial acquisitions of Active Hotels and Bookings B.V., as it was known?
Consider that in 2003, before either deal had taken place, Priceline, which was mostly doing its Name Your Own Price business, did $863.6 million in revenue. It was a weak rival to IAC Travel — primarily Expedia and Hotels.com — which notched $2.41 billion in revenue, and Orbitz at $1.65 billion.
Travelocity, owned by Sabre and once the leading online travel agency, which had fallen from grace, notched just $395 million in revenue that year.
We detail the acquisitions and the merger of Active Hotels and Bookings to create Booking.com in Skift’s latest oral history, The Oral History of Travel’s Greatest Acquisition Booking.com.
In 2006, the folding of Active Hotels into Bookings, leading to the creation of Booking.com as the parent company’s go-to consumer brand, radically changed the competitive landscape in online travel.
As Skift detailed in 2012, Booking.com leveraged the easier to implement and more customer-friendly agency model, with lower commissions than merchant-model loving Expedia. And Booking.com used its best-in-class search engine marketing and conversion skills, which enabled ever-greater online advertising spend, to overtake all of its competitors.
For example, by the fourth quarter of 2005, with both Europe-focused Active Hotels and Bookings in its portfolio, parent company Priceline notched 88 percent organic growth, greater than all of its competitors. In the United States, Priceline grew at a mere 5 percent clip in that quarter.
In Priceline.com’s fourth quarter of 2005 earnings call on February 16, 2006, CEO Jeffery Boyd characterized 2005 as “a transformational year for Priceline.”
Fast forward to today, and the aptly renamed Booking Holdings is the largest and leading online travel agency in the world.
Consider that in 2017, Booking Holdings bested Expedia in revenue $12.7 billion versus $10 billion, net income $2.34 billion versus $378 million, and net income margin 18.5 percent versus 3.8 percent.
Although Booking Holdings could face emerging challenges in the long term from Airbnb and possibly hotel-direct booking, its reign as the largest and leading player among online travel agencies is unchallenged for now — and that can overwhelmingly be attributed to its most important brand, Booking.com.
Send us your feedback, suggestions, bouquets and brickbats about this oral history project. Write to us at: [email protected]
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Photo credit: Glenn Fogel (left), who was the business development and mergers guy when Priceline.com bought Active Hotels and Bookings B.V. more than a decade ago, is pictured with Skift Executive Editor Dennis Schaal at Skift Global Forum in New York City on September 26, 2017. Skift