NORWALK, Conn. -- Priceline.com's stock price plunged after a predicted
third quarter revenue shortfall, and several analysts concurred
that upstart Hotwire will be the beneficiary as competition
intensifies in the distressed inventory sector.
In separate interviews, travel analysts Henry Harteveldt of
Forrester Research Inc. and Krista Pappas of Gomez agreed that
airlines may be taking a dimmer view of the Priceline.com option
while moving more of their supply to Hotwire, the site in which
several airlines are passive investors.
"Priceline's day in the sun is over," said Harteveldt. "Clearly,
there is a falloff of consumer interest and also a decline in
accepted airline ticket offers.
"We saw Northwest reevaluating its business relationship with
Priceline and owner/investors in Hotwire are no doubt
quality-shifting inventory from Priceline to Hotwire. Some of the
airlines are no longer seeing the value in Priceline that they once
did and consumers are not seeing the same value. If it doesn't
improve customer relations, it will see a continued falloff," he
said.
Pappas said Priceline.com's fuel sales "kick butt" but agreed
that Priceline.com will have to put greater emphasis on customer
service and should include all of the various taxes and airport
fees in the ticket price when consumers weigh buying tickets.
"Priceline has a lot of potential," Pappas said. "They have a
huge database of customers. Our studies show that consumers go to
Priceline to do research even if they're not buying on line."
Priceline.com shares slipped below 11 last week, down from a
previous 52-week low of 18 3/16 and a high of 104 1/4.