Darren Huston lacks the name recognition of Yahoo’s Marissa Mayer or AOL’s Tim Armstrong, but he runs an internet company of similar vintage that is worth more than Yahoo and AOL combined.
The US-listed Priceline Group, run by the Canadian for the past year, evoked memories of the dotcom companies of the late 1990s, when it advertised its discount airfare-finding service with cheesy commercials featuring former Star Trek actor William Shatner. “The internet started out with a lot of gimmicks, then it scaled,” Mr Huston remarks.
Today, Priceline makes most of its revenue from Booking.com, the European accommodation site it bought in 2006 — hence the group’s Amsterdam headquarters — and owns other sites catering to travellers including Kayak.com and RentalCars.com.
With a market capitalisation above $50bn, more than four times that of rival Expedia, it bills itself as Europe’s largest internet company. It took in almost $40bn in gross bookings in 2013, its last reported full year, raising GAAP income by a third to $1.9bn on revenue of $6.8bn.
Mr Huston attributes the group’s low profile (”the elephant behind the tree problem”) to Dutch modesty, the fact it did not grow up in Silicon Valley and the fact that “travel bookings are not a super frequent thing”.
With a small fraction of the $1.2tn market for travel and related services, Priceline under Mr Huston has been trying to catch more of customers’ wallets. Last summer, he announced a $2.6bn all-share acquisition of OpenTable, the US restaurant reservation site.
Growth in the share price has stalled since then, weighed down by investor scepticism about the diversification and Priceline’s own cautious fourth-quarter guidance.
Kevin Kopelman, a Cowen & Co analyst, lowered his share price target from $1,475 to $1,375 in November, saying competitors Expedia and TripAdvisor appeared to be “ramping up ad spend” and currency could lower earnings by 4-5 per cent in 2015.
Priceline, which makes 88 per cent of its revenue outside the US, has economic headwinds to navigate. A strong dollar and slowing European economy mean the region’s travellers are staying closer to home and trading down.
But Mr Huston — who joined Booking.com from Microsoft in 2011 and remains its chief executive — says loosening visa restrictions elsewhere offset this as do the surge of Chinese tourists.
Even the relaxation of US relations with Cuba will be “a big deal for us”, he says, adding that it has hotel chains “salivating”.
He is more wary about the disruption wrought by “sharing economy” services such as Airbnb, which allow tourists to rent private homes as easily as they book hotel rooms.
Priceline has widened its selection from hotels to villas and bed and breakfasts — “even igloos and boats” he adds — but finds “the pyramid gets messy at the bottom,” where travellers have to negotiate with individual homeowners, with the regulatory backdrop often unclear.
As regulators weigh up the likes of Airbnb and Uber, Mr Huston says Priceline sometimes finds itself dragged into European authorities’ debates about US technology companies, not least their tax tactics.
Priceline’s acquisition of Booking also gave it a European jurisdiction, long before some of Luxembourg’s more contentious arrangements with the likes of Amazon.
“Europe is just realising we’re a European tax company. That’s taken some education,” he says. “We’re Dutch because we were born there, not because of some double sandwich.”
Like others in his field, Mr Huston is seeking to exploit the rapid growth in reservations on mobile devices. Almost half of all Booking.com reservations made within 48 hours before a stay begins are now booked on a smartphone or tablet, compared with under 10 per cent four years ago, he says.
To tap that, Priceline last week launched a booking app that combines GPS data and information on users’ preferences to make recommendations from Booking.com’s 580,000 properties in more than 200 countries.
“If you walk into a hotel and say ‘I need a room’, you’re kind of a captive rate, but standing in the middle of Times Square looking at 12 hotels, as a consumer you have tremendous power.”
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