Tuesday, December 05, 2006

Clock ticking on Priceline.com.hk/sg/tw

Enough of rumours - fact of the day is that Asian mega-company Hutchison Whampoa have sold the last of their Priceline shares. Hutch is the majority shareholder in the Priceline Asia operation (Hong Kong, Singapore and Taiwan).

The Reuters article says
"Priceline.com said it continued to do business with Hutchison Whampoa through a joint venture, Hutchison-Priceline in Asia"
but almost certainly this means that joint venture is on life support - soon to be put out of its misery. As I discussed earlier Priceline Asia has unfortunately been in trouble from the start, never living up to its promise in Asia. Priceline has not had much luck in Asia. In addition to the troubles of Priceline Asia, it's efforts in Australia went through a lot of money - mainly largest teleco Telstra's - under a different name (www.myprice.com.au - domain name now belongs to a car company) before shutting down moments after launch in a barrage of expensive post/early bubble bust redundancy payments.

Priceline should take this chance to close down its Asia JV and relaunch efforts under Bookings.com brand (I would have liked to have said the Activehotels brand but no more).


Anonymous said...

Hi Tim!

Thanks for sharing this info. In your opinion, do you think there are still some opportunities in Asia and Australia to launch a hotel booking portal based on the commissionable model (vs. merchant)? Are Asian customers more keen to prepay their hotel room than paying at the check-out?



Tim Hughes said...

Thanks for the comment Guillaume. Both Asian customers and many Asian hotels much prefer this model, even the quasi merchant/commission mix where you pay the commission up front to the merchant and the balance (ie net rate) to the hotel. RatesToGo have been using this for years. Asia-hotels also used a variation of it prior to their acquisition by Cendant/Flairview. The challenge of a straight commission model is of course the large fulfilment/compliance/collections costs that need to be met once you achieve scale. This forces you to set up operations in low cost countries such as the Philippines or Thailand and to have rigorous (often vicious) collections methodologies - such as calling the customer and the hotel at the same time to confirm check in. I would therefore adopt combinations of the regular merchant model and part pay merchant model instead.