June 25, 2007: Witness Priceline the Web travel firm that pioneered the "name-your-own-price" approach to booking travel online.
Jeffery Boyd, chief executive of the Norwalk, Conn.-based firm, gave what some analysts called a bullish and persuasive view of Priceline´s prospects in Europe at a Bear Stearns tech conference in New York last week. That gave the latest boost to what has been one of the best-performing stocks of the year.
"I was really taken by the number of compelling points Boyd made about why Priceline´s European business has legs for what may be years to some," said Standard & Poor´s analyst Scott Kessler.
Boyd, at the conference, said Priceline´s European travel business can keep going strong.Priceline Europe runs one of the fastest-growing hotel booking sites, its Booking.com unit. It also runs two other travel sites: Activehotels.com and priceline.co.uk.
In all, Priceline offers customers in Europe and the U.S. access to about 34,000 European hotels. But the company´s also keen on expanding its airline ticket, rental car and other travel services in Europe.
Priceline´s shares have been hitting seven-year highs on its improved outlook. Its shares are up about 7% since May 23, when the company raised the high end of its guidance for 2007 gross travel bookings to $4.25 billion. Priceline had earlier forecast $4.1 billion to $4.2 billion as its high end. The stock trades near Tuesday´s close of 66.42, its highest close since October 2000.
Boyd made several points about Priceline´s European growth.
His first was that the European market for online travel is still a couple of years behind the U.S. in terms of maturity. Boyd says this means Priceline has more chances to gain new users there.
His second point is that Europe is a fragmented, but potentially lucrative market for Priceline. Boyd noted that Europe´s hotel sector isn´t dominated by big chains as is the U.S. Analysts say two-thirds of Europe´s hotels are run by smaller, independent operators.Some hotels don´t have their own Web sites where they can sell rooms online. Many might chose to sell via Priceline, Boyd says.
Priceline also sees an opportunity to sell more tickets for low-cost European air carriers such as Ryanair (RYAAY) and EasyJet in Europe. Ditto Europe´s rental car business, which doesn´t have a large Web presence.
"There´s no clear brand that´s a major travel provider in Europe, so it´s an easier market for smaller tech companies like Priceline to gain a quick hold," said Matthew Bennett, a travel consultant who runs firstclassflyer.com, an information Web site for air travelers.
More growth for Priceline is hinted by what´s happening in the ex-Soviet bloc countries of Eastern Europe. Boyd said at the conference that the travel and tourism industries in countries such as Poland and the Czech Republic are growing fast. Many are expanding their civilian jet fleets and are getting ready to start selling travel product on Web sites like Priceline.
Bennett says Priceline still faces challenges in penetrating different European markets. "It´s a tough market to aggregate," Bennett said. "There are so many complexities based on language and culture."
Priceline keeps pushing. Its flagship U.S. Web site last week axed booking fees for all domestic and international flights purchased by July 4, for travel within 330 days of purchase. Those fees typically range from $5 to $20 per ticket.
