Contrary to popular belief, Priceline Group is not a travel company. Not anymore, at least.
With the announcement of its acquisition of OpenTable, Priceline is now officially taking its expertise into new markets.
The name "Priceline" was predicated on taking distribution models across verticals, yet while it has taken more than a decade to follow-through on the vision, there is no time like the present.
At last year’s PhoCusWright Conference, Brad Gerstner of Altimeter Capital succinctly summarized the online travel industry by pointing out that a vast majority of value created in travel over the last ten years had been "wiring up the world’s hotels".
And there is nobody on earth better at that than Priceline and its Booking.com subsidiary, with a market cap of $63 billion to prove the point.
Anyone in hospitality could point out that restaurants aren’t dissimilar from hotels:
- huge number of them
- some chains but mostly fragmented, independent owners
- low-tech distribution and marketing
- perishable inventory
- discovery challenge for customers.
My bet is that Priceline is now going to take all it knows about wiring up and distributing hotels and put it to work for restaurants with OpenTable as an extremely worthy start worth $2.6 billion.
Twenty years ago, plenty of people showed up at hotels without a reservation, or had to call around to many hotels to check prices and see where they wanted to stay before booking.
Only a few years ago, the process was the same for restaurants.
OpenTable has changed that dramatically, but is still only a drop in the bucket with major growth opportunities, especially in Europe where (just like hotels) fragmentation is even more prominent.
The company is far smaller in restaurants today than Priceline is in hotels globally, demonstrating the almost incalculable upside of doing this right.
Imagine a world where every restaurant was wired to reserve a table from your mobile phone, and even if you were only five minutes away from showing up, why not reserve a table on your mobile device to avoid a line and make sure the table was ready?
This works equally as well in casual, inexpensive restaurants as it does in haute-cuisine, and this is the world Priceline is going to deliver on.
Priceline’s M&A model has always been to acquire companies, run them separately, and integrate expertise only.
In that way, it is a holding company with know-how and best practices.
This is not about trying to shoe-horn OpenTable into travel tools, nor make a big play in in-destination services.
In fact, this has little to do with travel at all.
It is everything to do with what Priceline really knows: wiring up independent hospitality vendors for a new world order of distribution – powered by mobile and technology that makes what was once unthinkable not only possible, but inevitable.
NB:Restaurant technology image via Shutterstock.