Acquiring Buuteeq says a lot about how Priceline sees direct hotel bookings. It’s the future, it wants in but at what cost?
NB: This is a viewpoint from Thibault Lecuyer, vice president, ecommerce and marketing communication, Fastbooking.
"Too big to fail" is an expression more used to describe banks than tech companies. Everyday a new article explains how Facebook/Twitter/Microsoft/Apple will fail and be replaced by something smarter.
Priceline’s diversification strategy seems to be trying to prevent such a fate. Following the acquisition of Kayak in November 2012 for $1.8 billion, the Connecticut-based firm has just acquired another piece of the puzzle by adding US-based direct-booking specialist Buuteeq.
Priceline is looking at a vertical concentration. The main alternative to booking through an OTA is to book directly on the hotel’s website (Buuteeq’s playing field). By setting foot in this business, Priceline is looking several years ahead, when OTAs will experience what happened to dinosaurs.
A quick look at the history of the internet helps understand why Priceline knows it must prepare for the next move before losing its leader position, the web loves to create intermediaries, and then slash them.
Yahoo! went from internet superstar to internet has-been by standing too much in the way - watch the news on my website, check the weather on my website, check your e-mail on my website, register your website on my website.
Google and Twitter replaced Yahoo! by standing out of the way and promising "Go through me, I’ll let you go."
Craigslist and Price Minister winning vs traditional retailers online, Paypal winning vs banks on payments or Amazon Marketplace winning vs Amazon store show that the future is for platforms, not intermediaries that won’t let you go off their own product.
Priceline has understood that.
Booking.com and Agoda can be immensely successful, they are pretty aware that the metasearch user review model answers better the users’ needs to search, compare, book. They’re platforms, not intermediaries that stand in the way.
This may be why Google Hotel Finder is going after Tripadvisor, not after Booking. This is why Priceline bought Kayak, and why Expedia bought Trivago.
Priceline has also understood that the only business that cuts out even more intermediaries than metasearch is direct booking on the hotel’s website.
It implicitly validates the direct sales strategy that more and more hotels implement.
What’s in it for hotels who do or will work with Buuteeq? Priceline keeps expanding vertically, and as a Tnooz reader commented:
"Basically they were the people rescuing us from being kidnapped, and like some surreal horror movie the people rescuing us are taking us back to the kidnappers."
By adding hotel websites and a booking engine to the OTA service, Priceline can increase control over hotels that were just managing to get their independence back. Hotels should beware of witches offering candy.
Priceline was standing right on hotels’ doorstep. With this acquisition, plus its deal to buy property management serviceHotelNinjas earlier this week, it comes behind the counter.
NB: This is a viewpoint from Thibault Lecuyer, vice president, ecommerce and marketing communication, Fastbooking.
NB2: Shoes image via Shutterstock