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| Priceline – the $60bn travel titan you may never have heard of | Priceline – the $60bn travel titan you may never have heard of |
| (1 day later) | |
| It is worth more than Yahoo, Twitter or Netflix, it is the world’s largest online travel agent and it owns the biggest internet business in western Europe – yet few people outside the US will have heard of Priceline Group. | It is worth more than Yahoo, Twitter or Netflix, it is the world’s largest online travel agent and it owns the biggest internet business in western Europe – yet few people outside the US will have heard of Priceline Group. |
| Much better known, however, are the brands this $60bn (£40bn) online giant operates, including restaurant booker OpenTable, hotel finder Booking.com and Manchester-based Rentalcars.com. | Much better known, however, are the brands this $60bn (£40bn) online giant operates, including restaurant booker OpenTable, hotel finder Booking.com and Manchester-based Rentalcars.com. |
| The group’s success is based on 14,000 staff in call centres and offices around the world, speaking 42 languages collectively, and is evident in earnings forecasts 10 times the size of of Airbnb’s this year – yet it receives a fraction of the attention of its more recently hatched competitor. | The group’s success is based on 14,000 staff in call centres and offices around the world, speaking 42 languages collectively, and is evident in earnings forecasts 10 times the size of of Airbnb’s this year – yet it receives a fraction of the attention of its more recently hatched competitor. |
| “The size of our vacation rental business is as big as the whole of Airbnb,” says Priceline’s chief executive, Darren Huston. “We are a Dutch company so we don’t go in the press a lot, we are less built around hype.” | “The size of our vacation rental business is as big as the whole of Airbnb,” says Priceline’s chief executive, Darren Huston. “We are a Dutch company so we don’t go in the press a lot, we are less built around hype.” |
| Huston has two jobs, managing the group while also remaining head of Priceline’s largest business, Booking.com, which is headquartered in Amsterdam. The vast majority of the group’s revenues come from outside the US. It employs 2,500 people in Amsterdam, 2,000 in the UK, 3,000 in the US, and the rest are spread around the world, with hubs in Berlin and Bangkok, where Priceline’s Asian travel brand, Agoda, is headquartered. | Huston has two jobs, managing the group while also remaining head of Priceline’s largest business, Booking.com, which is headquartered in Amsterdam. The vast majority of the group’s revenues come from outside the US. It employs 2,500 people in Amsterdam, 2,000 in the UK, 3,000 in the US, and the rest are spread around the world, with hubs in Berlin and Bangkok, where Priceline’s Asian travel brand, Agoda, is headquartered. |
| “Vacationing is far more important to Europeans than it is to Americans,” says Huston. “People here get five weeks, the average American gets two weeks, and only takes one. If you look at destinations, Europe holds a commanding lead collectively over any other part of the world.” | “Vacationing is far more important to Europeans than it is to Americans,” says Huston. “People here get five weeks, the average American gets two weeks, and only takes one. If you look at destinations, Europe holds a commanding lead collectively over any other part of the world.” |
| It is reflected in the figures – Priceline took $50bn in bookings last year, of which nearly 87% was outside the US. Its profits come from charging a commission – typically 15%. | It is reflected in the figures – Priceline took $50bn in bookings last year, of which nearly 87% was outside the US. Its profits come from charging a commission – typically 15%. |
| Although its online presence means Priceline is regarded as an internet stock – it is listed on the Nasdaq in New York – its defining feature is its big offline presence. The company operates much like a traditional travel agent, with three-quarters of the workforce dedicated to interacting with people – be they travellers or hotel and restaurant managers. | Although its online presence means Priceline is regarded as an internet stock – it is listed on the Nasdaq in New York – its defining feature is its big offline presence. The company operates much like a traditional travel agent, with three-quarters of the workforce dedicated to interacting with people – be they travellers or hotel and restaurant managers. |
| “It’s not the kind of work that Microsoft would be naturally attracted to, or Google,” Huston says. “They hope that somebody out there is doing this. They deal with ones and zeros and this is more the laying of the plumbing that allows all of that stuff to ultimately work. Fortunately we’ve found a way to make what we do work. Because we do it at scale.” | “It’s not the kind of work that Microsoft would be naturally attracted to, or Google,” Huston says. “They hope that somebody out there is doing this. They deal with ones and zeros and this is more the laying of the plumbing that allows all of that stuff to ultimately work. Fortunately we’ve found a way to make what we do work. Because we do it at scale.” |
| Using people rather than computers to deal with customers may not be fashionable for internet companies, but Priceline has shown it can be profitable. The group’s revenues were $8.4bn last year, and its income after tax $2.4bn. | Using people rather than computers to deal with customers may not be fashionable for internet companies, but Priceline has shown it can be profitable. The group’s revenues were $8.4bn last year, and its income after tax $2.4bn. |
| Type “Booking.com customer service” into a search engine, and the first thing that appears is not the dreaded list of frequently asked questions, but a phone number. During this summer’s peak, Priceline Group will be directly employing about 5,000 people in call centres. And they are not based in Bangalore. In January, a 270-person centre opened in Canary Wharf. It is a 24-hour, seven-day operation, and every employee speaks English plus at least one other language. Priceline telephone operators can hold conversations in Icelandic, Estonian, Catalan, Serbian, Latvian or Slovak. | |
| A defining moment for Booking.com came five years ago, when its staff helped manage the travel chaos caused when an ash cloud from the Eyjafjallajökull volcano in Iceland grounded air traffic across Europe for a week. More recently, staff have been dealing with the fallout from the Tunisian massacre. | A defining moment for Booking.com came five years ago, when its staff helped manage the travel chaos caused when an ash cloud from the Eyjafjallajökull volcano in Iceland grounded air traffic across Europe for a week. More recently, staff have been dealing with the fallout from the Tunisian massacre. |
| Huston says: “People say: ‘What are you thinking, why are you sticking a call centre in Canary Wharf or Amsterdam?’ But what we need is multilingual people from many parts of the world. We can pretty much recruit all 42 languages in London, which you can’t say about anywhere else in the world.” | Huston says: “People say: ‘What are you thinking, why are you sticking a call centre in Canary Wharf or Amsterdam?’ But what we need is multilingual people from many parts of the world. We can pretty much recruit all 42 languages in London, which you can’t say about anywhere else in the world.” |
| The other half of the business deals with suppliers – helping hotels, car hire firms and restaurants come online. Its 165 offices around the world are busy signing up restaurants, hotels and car rental firms, handling pricing disputes, and helping small businesses smarten up online. “We tell them: ‘You need this many high-definition photos, take a picture of the bathroom, don’t take a picture of the girl lying on the bed with all the rose petals’,” says Huston. | The other half of the business deals with suppliers – helping hotels, car hire firms and restaurants come online. Its 165 offices around the world are busy signing up restaurants, hotels and car rental firms, handling pricing disputes, and helping small businesses smarten up online. “We tell them: ‘You need this many high-definition photos, take a picture of the bathroom, don’t take a picture of the girl lying on the bed with all the rose petals’,” says Huston. |
| OpenTable, acquired last summer for $2.6bn, is preparing for an international push. It operates in the US and the UK, where most high-end restaurants taking bookings use its software. Sales staff go door to door, visiting six or seven restaurants a day, offering to replace the handwritten reservations book with a computer. Previously this involved hooking up a screen and a small server; today the software is in the cloud and can be accessed from a tablet. | OpenTable, acquired last summer for $2.6bn, is preparing for an international push. It operates in the US and the UK, where most high-end restaurants taking bookings use its software. Sales staff go door to door, visiting six or seven restaurants a day, offering to replace the handwritten reservations book with a computer. Previously this involved hooking up a screen and a small server; today the software is in the cloud and can be accessed from a tablet. |
| Headquartered in Connecticut, Priceline was founded in 1997, during what Huston refers to as the “gimmicky, sock puppet” era of the internet. Priceline’s gimmick was letting the consumer name their price, and then have suppliers bid to meet it. In those days, the company sold everything from petrol to groceries and insurance. After the dotcom bubble burst, it narrowed its scope to airline tickets, hotels, car rentals and holiday packages, but expanded internationally, eventually buying Booking.com in 2005. Priceline.com became a subsidiary of a larger group, in which all six brands are run independently. | Headquartered in Connecticut, Priceline was founded in 1997, during what Huston refers to as the “gimmicky, sock puppet” era of the internet. Priceline’s gimmick was letting the consumer name their price, and then have suppliers bid to meet it. In those days, the company sold everything from petrol to groceries and insurance. After the dotcom bubble burst, it narrowed its scope to airline tickets, hotels, car rentals and holiday packages, but expanded internationally, eventually buying Booking.com in 2005. Priceline.com became a subsidiary of a larger group, in which all six brands are run independently. |
| So independently, in fact, that only 30 staff are employed by the overall group, and Huston spends just a third of his time on group functions as opposed to running Booking.com, which is by far the largest beast in the Priceline menagerie. | So independently, in fact, that only 30 staff are employed by the overall group, and Huston spends just a third of his time on group functions as opposed to running Booking.com, which is by far the largest beast in the Priceline menagerie. |
| Having held senior jobs at Starbucks and Microsoft before joining in 2011, Huston took over as group chief executive in January 2014, succeeding Jeffery Boyd, who turned Priceline around after the dotcom bust. | Having held senior jobs at Starbucks and Microsoft before joining in 2011, Huston took over as group chief executive in January 2014, succeeding Jeffery Boyd, who turned Priceline around after the dotcom bust. |
| “I’m like the guy who got appointed to run the family, but the family runs very independently,” says Huston. “We haven’t tried to over-integrate our acquisitions. We let entrepreneurs lead these companies for better or for worse. The cost of that is synergy potentially, but we have an allergy to coordinating. Synergy is a great word but it often comes as a distraction from the core purpose.” | “I’m like the guy who got appointed to run the family, but the family runs very independently,” says Huston. “We haven’t tried to over-integrate our acquisitions. We let entrepreneurs lead these companies for better or for worse. The cost of that is synergy potentially, but we have an allergy to coordinating. Synergy is a great word but it often comes as a distraction from the core purpose.” |
| Many of the founders have stayed on. The entrepreneurs who launched Kayak, Agoda, Booking and Rentalcars all still work for the group. | Many of the founders have stayed on. The entrepreneurs who launched Kayak, Agoda, Booking and Rentalcars all still work for the group. |
| What keeps them in the company? Not just the generous stock options. Priceline may be less famous than its internet peers, but the business has its attractions. “We are in the consumer internet, in travel. I mean, why would I want to do something different?” | What keeps them in the company? Not just the generous stock options. Priceline may be less famous than its internet peers, but the business has its attractions. “We are in the consumer internet, in travel. I mean, why would I want to do something different?” |