CHICAGO -- Priceline.com intends to add cruises and vacation
packages to the burgeoning list of products and services Internet
users will be able to bid for in the near future.
Addressing attendees at Travel Weekly's Technology 2000
conference here, Trey Urbahn, senior vice president, revenue
management for Priceline.com's Travel Group, said a service
specifically aimed at selling directly to travel agents also is
being considered.
Urbahn did not give an exact time frame for the launch of the
cruise and package services, but one Priceline representative said
it would be "shortly".
Priceline already markets airline tickets, car rentals, hotels,
financial services and new cars. In some markets it also allows
Internet users to bid on groceries and gas.
Urbahn said Priceline.com has achieved relative success compared
with other Web-based companies, by introducing a retail model that
essentially takes full advantage of the flexibility and reach of
the Internet.
"Our challenge is to create value across all three dimensions"
that link together to make the retail chain, Urbahn said.
Those links encompass the buyer, the seller and Priceline's
stockholders.
Urbahn said the "traditional travel agency" is "very focused on
for customers. Sellers are questioning whether they can do the same
thing for less."
Urbahn said many Internet companies today probably will fail in
the future because most focus on only parts of the chain.
"You've got to do all three," he said. "You've got to create
value for your customers. You've got to create value for your
seller-partners. And ultimately, you have got to create value for
shareholders."
Priceline, particularly as it relates to airline tickets,
apparently allows all three links succeed.
Priceline users post a specific price for traveling to a
particular destination. Airlines can accept the bid and provide the
ticket.
Importantly, Urbahn said, unlike marketing tickets through
consolidators, for instance, airlines do not have to sell the
tickets as if they are distressed merchandise. The bidder doesn't
know what the price of the ticket is, only that the airline
accepted the bid.
The same goes for other products such as cars, gas and soon
cruises and tours.
Urbahn said Priceline's retail marketing model, which has been
patented, "leverages" the Internet's unique ability for mass
communication and commerce without the restrictions of geographic
borders.
But ultimately, Urbahn said, Priceline is similar to a lottery.
And like a lottery there are no guarantees.
"I choose the price, but I also give up quite a bit in order to
do that," Urbahn said.
Indeed, buyers on Priceline essentially relinquish certainty,
brand choice, convenience, flexibility and the ability to get a
refund in order to bid the various products, such as airline
tickets.
Additionally, there is a significant probability that bidders
won't get what they want at the price they offer. Urbahn said,
about 70% of Priceline users come away empty handed.
"This is not for everyone," Urbahn conceded.
Nevertheless, despite the constraints and uncertainty associated
with the bidding process, Priceline sells about 100,000 tickets
each day for most major airline lines.
Urbahn wouldn't discuss whether Priceline has been profitable,
however.
"It is a complicated question," he said.
Urbahn did volunteer that the company makes money selling
airline tickets, and anticipates doing the same with hotels.
Overall, Urbahn predicted Priceline will be profitable sometime
in 2001.