Priceline widens WebHouse Club reach

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NORWALK, Conn. -- Priceline.com is diversifying faster than consumers can name their own prices.

With sluggish growth in airline ticket sales, Priceline.com's licensee, the Priceline WebHouse Club, is broadening the reach of its grocery and gas operations.

Priceline.com also announced Aug. 1 that Microsoft co-founder Paul Allen's Vulcan Ventures Inc. and John Malone's cable programming company, Liberty Media Corp., pumped $190 million into Priceline.com stock, which has been turbulent this year.

Priceline.com founder Jay Walker, who sold the companies a forward contract to buy 8 million shares, said he plans to use $125 million of the proceeds for the next financing round of the Priceline WebHouse Club, which is active in 10 markets and scheduled to expand nationally.

Some analysts see the commitment to the WebHouse Club as a way to balance Priceline.com's slowing growth in travel sales.

Priceline.com spokesman Brian Ek challenged the notion of sluggishness in travel sales, saying the company's "travel services," which include airline ticket sales, car rentals and hotel rooms, "are going strong."

In the second quarter, Priceline.com sold 1.29 million airline tickets, 432,500 hotel nights and 429,000 car rentals.

So is there slowing growth in Priceline.com's airline ticket sales, which posted marks of 700,000 for the 1999 fourth quarter, 1.25 million for the 2000 first quarter and 1.29 million for the second quarter?

"Depends how you look at it," said Ek, who noted that the first quarter is usually among the company's strongest for ticket sales and that mark was eclipsed in the second quarter.

Priceline.com's further diversification beyond airline tickets comes as Hotwire, a San Francisco-based company with six airline partners, is poised to enter the competition over discounted fares. (See related story.)

Asked if his company is too big to get pushed around by a newcomer, even if Hotwire has airline investors, Ek said the issue isn't Priceline.com's dimensions.

"It's also about brand recognition, advertising support for the product, consumer word of mouth, global presence, the ability of other product categories on our site to yield air customers," he said.

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