We value Priceline's stock with a $506 Trefis price estimate, slightly below its current market price.
Priceline's new Hotel Bid Alerts feature is part of its Winning Bids service, which until now only showed the actual successful Name Your Own Price hotel bids made in the past by other customers. Customers can now create a personalized Hotel Bid Alert by entering the city, neighborhood, hotel star rating and bid amount, and whenever someone else's bid meeting the criteria gets accepted, the customer receives an e-mail alert so that he can use it as a reference to refine his bid.
This seemingly insignificant e-mail alert feature hints at how online travel agencies are willing to adapt their systems and business models from simply offering the so-called "best deal" to customizing offers that meet each customer's budget constraints and specific requirements.
OTAs Partnering with Airlines
Leading OTAs have entered into private-label partnerships with the airlines under which they provide hotel bookings on the airlines' websites. Expedia recently partnered with AirAsia and South African Airways.
Priceline entered into a similar partnership with Jetstar Airways (QUBSF) while Orbitz won the contract for Eurostar, the high-speed rail network between the U.K. and continental Europe, from Expedia. Expedia also announced a partnership with the leading daily deal site, Groupon, to provide deals on travel.
OTAs have also targeted loyalty programs: Priceline has partnered with Delta Airlines' (DAL) SkyMiles Frequent Flyer Program, allowing travelers to earn SkyMiles whenever they book hotels through Priceline's Agoda.com.
The Future of OTAs
Leveraging established brand names with million of hits on their websites every month, the leading players in the online travel industry can match the travel deals with their registered members' specific requirements in the future.
We foresee online travel agencies collecting information about preferred travel destinations, budgets and preferred travel times from their registered members, matching the criteria with their existing inventory of travel options and even renegotiating the terms with the travel suppliers (hotel chains and airlines) in an attempt to help liquidate the inventory of hotel-night stays and air tickets through a more dynamic and real-time process. Put simply, the online travel business would gradually shift from the customers looking for travel options to OTAs looking for customers' preferences.
View our detailed analysis for Priceline
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