FOR PROFESSIONAL RESEARCH WRITER ONLY

The Priceline Group, Inc. – 2015

A. Case Abstract

With its unique Name Your Own Price service, travelers can name their price for airline tickets, hotel rooms, car rentals, and vacation packages. Customers can select a general location, service level, price, hotel, rental car company, and airline. However, customers cannot cancel after the purchase has gone through. Priceline’s mobile products have been featured multiple times by Apple in iTunes, highlighted by Google, and voted as some of the best tools for travelers by several leading media reports, including Travel+Leisure, Conde Nast, and USA Today.

Priceline owns and operates six major brands that include, Booking.com, Priceline.com, Agoda.com, KAYAK, Rentalcars.com and OpenTable. About 85 percent of revenues come from the booking.com segment. In total over 200 nations are served. Priceline has continued its acquisition strategy acquiring firms in Brazil and Australia in 2015.

B. Vision Statement (proposed)

Our vision at Priceline is to provide the widest range of travel options possible to value-conscious customers.

C. Mission Statement (proposed)

Our mission is to provide world-class service to travelers, diners, and vacationers worldwide (1, 3). Through our Name Your Own Price Tool (7) and our user-friendly online travel websites (2, 4), we are committed to rapid growth (5), for our customers, shareholders, employees (9) and communities that benefit from our services (8). Everything we do is with the highest level of integrity (6).

1. Customers

2. Products or services

3. Markets

4. Technology

5. Concern for survival, growth, and profitability

6. Philosophy

7. Self-concept

8. Concern for public image

9. Concern for employees

D. External Audit

Opportunities

1. Independent hotels may not have the means or expertise to market themselves to international travelers, including the use of other languages, building and operating effective desktop and mobile websites.

2. Among US travel industry revenues, about 50% of revenues are derived from international-based travel.

3. The global car rental industry is expected to reach a value of $67.4 billion by the year 2017.

4. Technological advances have made online shopping more secure, providing a greater sense of security for online transactions.

5. Mexico was the top US international destination in 2013, with 20.5 million travelers.

6. Hotels are increasing offering nonrefundable room bookings, often at a discount.

7. Many customers plan and research their trip for weeks before booking.

8. About 40% of customers book deals at the last second with little planning ahead, indicating a sweet deal could sway someone not totally committed to making travel arrangements.

9. There were many increased transparency measures taken in the internet-based travel booking industry throughout 2015.

10. Over 50% of travelers in 2015 said they would select a travel destination based on social or environmental impact their expenses would help.

Threats

1. Priceline faces strong competition from online travel services including Expedia, Hotwire, Hotels.com and others.

2. Rapid consumer adoption and use of mobile devices globally creates new challenges for Priceline because such trends enable device companies such as Apple, Google, Facebook and others to offer travel services.

3. There are over 10,000 travel agencies in the United States.

4. Many customers traveling overseas for the first time prefer a traditional travel agent.

5. Travel industry growth rate remains sluggish, with growth of less than 2% expected through 2020.

6. Tour packages account for 30% of total revenues, and, like international travel packages, they are routinely booked through traditional travel agencies.

7. Typically, hotels make available only a limited number of hotel rooms for opaque services such as Priceline’s, especially during periods of high occupancy. As a result, recent high hotel occupancy levels in the United States have had an adverse impact on its access to hotel rooms.

8. Apple, Inc. has the patent for "iTravel" and "Passbook;" Apple could enter the travel reservation business.

9. Hotels are increasingly not letting customers cancel rooms as easily as before, with many hotels offering nonrefundable rooms outright.

Competitive Profile Matrix

	Priceline	Expedia
Critical Success Factors	Weight	Rating	Score	Rating	Score
Goodwill & Intangible Burden	0.07	2	0.14	1	0.07
US Plane and Hotel Market Share	0.15	4	0.60	2	0.30
Outside US Plane and Hotel Market Share	0.15	4	0.60	2	0.30
Restaurant Booking Market Share	0.08	4	0.32	1	0.08
Market Capitalization	0.10	4	0.40	2	0.20
Current Ratio	0.10	4	0.40	1	0.10
Stockholders' Equity	0.10	4	0.40	2	0.20
Sales 2014 Percent Change	0.10	4	0.40	3	0.30
Income 2014 Percent Change	0.10	3	0.30	4	0.40
Debt Ratio	0.05	4	0.20	3	0.15
Totals	1.00	3.76	2.10

There are only two major players in the travel booking industry, Priceline and Expedia. Orbitz used to be a third firm, but was acquired by Expedia in 2015. Many of the other firms have been acquired by either Priceline or Expedia. The CPM reveals that Priceline is significantly better positioned than Expedia on all measures analyzed other than increase in net income. Expedia’s much lower net income adds bias to this number however. New competition from Apple, Google, and Facebook may be right around the corner for both firms, so certainly an external threat that must be monitored by each moving forward.

EFE Matrix

Opportunities	Weight	Rating	Weighted Score
1.	Independent hotels may not have the means or expertise to
	market themselves to international travelers, including the use of other languages, building and operating effective desktop and	0.04	4	0.16
	mobile websites.
2.	Among U.S. travel industry revenues, about 50% of revenues are derived from international-based travel.	0.07	4	0.28
3.	The global car rental industry is expected to reach a value of $67.4 billion by the year 2017.	0.04	3	0.12
4.	Technological advances have made online shopping more secure, providing a greater sense of security for online transactions.	0.04	4	0.16
5.	Mexico was the top US international destination in 2013, with 20.5 million travelers.	0.04	3	0.12
6.	Hotels are increasing offering nonrefundable room bookings, often at a discount.	0.06	3	0.18
7.	Many customers plan and research their trip for weeks before booking.	0.04	3	0.12
8.	About 40% of customers book deals at the last second with little planning ahead, indicating a sweet deal could sway someone not totally committed to making travel arrangements.	0.08	4	0.32
9.	There were many increased transparency measures taken in the internet based travel booking industry throughout 2015.	0.04	3	0.12
10.	Over 50% of travelers in 2015 said they would select a travel destination based on social or environmental impact their expenses would help.	0.03	2	0.06

Threats	Weight	Rating	Weighted Score
1.	Priceline faces strong competition from online travel services including Expedia, Hotwire, Hotels.com, and others.	0.08	3	0.24
2.	Rapid consumer adoption and use of mobile devices globally creates new challenges for Priceline because such trends enable device companies such as Apple, Google, Facebook and others to offer travel services.	0.06	3	0.18
3.	There are over 10,000 travel agencies in the United States.	0.04	3	0.12
4.	Many customers traveling overseas for the first time prefer a traditional travel agent.	0.04	3	0.12
5.	Travel industry growth rate remains sluggish, with growth of less than 2% expected through 2020.	0.05	3	0.15
6.	Tour packages account for 30% of total revenues, and, like international travel packages, they are routinely booked through traditional travel agencies.	0.05	2	0.10
7.	Typically, hotels make available only a limited number of hotel rooms for opaque services such as Priceline‘s, especially during periods of high occupancy. As a result, recent high hotel occupancy levels in the United States have had an adverse impact on its access to hotel rooms.	0.07	3	0.21
8.	Apple, Inc. has the patent for "iTravel" and "Passbook;" Apple could enter the travel reservation business.	0.04	2	0.08
9.	Hotels are increasingly not letting customers cancel rooms as easily as before, with many hotels offering nonrefundable rooms outright.	0.07	3	0.21
	TOTALS	1.00		3.13

Priceline is doing excellent addressing external issues with a total EFE score of 3.13. The firm likely should focus on key areas that include addressing the threat of customers waiting until the last day to make travel arrangements by offering incentives for early bookings. With industry growth rates less than 5%, Priceline may wish to consider advertising its rental car booking business further.

E. Internal Audit

Strengths

1. William Shatner of Star Trek fame has remained a constant, enduring celebrity spokesman for Priceline as “Priceline Negotiator.”

2. Priceline provides travel-related services in 200 countries, through six popular brands: Booking.com, Priceline.com, Agoda.com, KAYAK, Rentalcars.com and OpenTable.

3. Agency revenues in 2014 increased 32.5% compared to the prior year, mainly because of the growth in the business of Booking.com.

4. Priceline has established widely used and recognized e-commerce brands through aggressive marketing and promotion campaigns.

5. Priceline’s net income is over 5 times that of Expedia.

6. Priceline has partnered with over 235,000 hotels internationally.

7. With Priceline, if you find cheaper prices online, including taxes and fees, and for the same itinerary, Priceline will refund you 100% of the difference after you've already booked.

8. Priceline has a free mobile app that allows Priceline users to book flights, hotels, and rental cars, see exclusive last minute mobile offers, and access important upcoming trip details.

9. Priceline acquired AS Digital in 2015 giving the company an established footprint in the Australian restaurant booking market.

10. Priceline in 2015 started “Tonight-Only” pricing promotions to hedge against people waiting until the last second to book.

Weaknesses

1. The firm’s goodwill increased 88% to $3.3 billion in 2014.

2. Priceline’s year-over-year growth rates have generally decelerated in recent years. For example, in 2014, Priceline’s accommodation room night reservation growth was 28%, a deceleration from 37, 40, and 53% in the years prior, respectively.

3. Their brand identity of being able to "name your own price" is no longer unique in the industry.

4. With Priceline, all sales are final in comparison to Expedia that offers cancellation without having to pay a cancellation fee.

5. They do not have very loyal customers, because customers are more concerned with finding the lowest price than being loyal to an online travel agency.

6. Over half of Priceline’s customers survived in 2015 claim they wait until the last minute to book, yet plan for weeks.

7. Booking.com was forced to abandon its price availability operating platform in Europe as hotels forced the firm to remain true to its former commitments. Resulting in less bargaining power for Priceline and more open information for travelers.

8. Merchant revenues for 2014 decreased 1.1% compared to 2013, because of decreases in revenues from priceline.com's Name Your Own Price reservation services.

Financial Ratio Analysis

	Priceline	Expedia
Current Ratio	3.82	0.39
Quick Ratio	3.82	0.39
Long Term Debt / Equity	0.45	0.98
Total Assets Turnover	0.57	0.64
Accounts Receivable Turnover	10.59	1.38
Average Collection Period	34.46	265.12
Gross Profit Margin	76%	69%
Net Profit Margin	29%	7%
Return on Total Assets (ROA)	16%	4%
Return on Equity (ROE)	28%	23%

Priceline’s financial ratios are better than Expedia’s across the board especially with respect to liquidity and profitability ratios.

Net Worth Analysis (in millions)

Priceline

Stockholders' Equity - (Goodwill + Intangibles)

Net Income x 5

(Share Price/EPS) x Net Income

Number of Shares Outstanding x Share Price

Method Average

$2,906

$12,105

$68,732

$64,643

$37,096

Expedia
Stockholders' Equity - (Goodwill + Intangibles)	($3,461)
Net Income x 5	$1,990
(Share Price/EPS) x Net Income	$7,858
Number of Shares Outstanding x Share Price	$17,355
Method Average	$5,936
Priceline is worth over 3.5 times Expedia based on market capitalization.	It is important to note, when

accounting for goodwill and intangibles, Expedia’s has a negative valuation for the first measure reported above.

IFE Matrix

Strengths	Weight	Rating	Weighted Score
1.	William Shatner of Star Trek fame has remained a constant,
	enduring celebrity spokesman for Priceline as —Priceline	0.06	3	0.18
	Negotiator“
2.	Priceline provides travel-related services in 200 countries, through sixpopular brands: Booking.com, Priceline.com, Agoda.com, KAYAK, Rentalcars.com and OpenTable	0.11	4	0.44
3.	Agency revenues in 2014 increased 32.5% compared to the prior year, mainly because of the growth in the business of Booking.com.	0.09	4	0.36
4.	Priceline has established widely used and recognized e- commerce brands through aggressive marketing and promotion campaigns	0.11	4	0.44
5.	Priceline‘s net income is over 5 times that of Expedia.	0.07	4	0.28
6.	Priceline has partnered with over 235,000 hotels internationally.	0.05	4	0.20
7.	With Priceline, if you find cheaper prices online, including taxes and fees, and for the same itinerary, Priceline will refund you 100% of the difference after you've already booked.	0.07	4	0.28
8.	Priceline has a free mobile app that allows Priceline users to book flights, hotels, and rental cars, see exclusive last minute mobile offers, and to access important upcoming trip details.	0.03	3	0.09
9.	Priceline acquired AS Digital in 2015 giving the company an established footprint in the Australian restaurant booking market.	0.03	3	0.09
10.	Priceline in 2015 started —Tonight-Only“ pricing promotions to hedge against people waiting until the last second to book.	0.05	3	0.15

Weaknesses	Weight	Rating	Weighted Score
1.	The firm‘s goodwill increased 88% to $3.3 billion in 2014.	0.03	2	0.06
2.	Priceline‘s year-over-year growth rates have generally decelerated in recent years. For example, in 2014, Priceline‘s accommodation room night reservation growth was 28%, a deceleration from 37, 40, and 53% in the years prior, respectively.	0.03	2	0.06
3.	Their brand identity of being able to "name your own price" is no longer unique in the industry.	0.05	2	0.10
4.	With Priceline, all sales are final in comparison to Expedia that offers cancellation without having to pay a cancellation fee.	0.05	1	0.05
5.	They do not have very loyal customers, because customers are more concerned with finding the lowest price than being loyal to an online travel agency.	0.05	1	0.05
6.	Over half of Priceline‘s customers survived in 2015 claim they wait until the last minute to book, yet plan for weeks.	0.03	2	0.06
7.	Booking.com was forced to abandon its price availability operating platform in Europe as hotels forced the firm to remain true to its former commitments. Resulting in less bargaining power for Priceline and more open information for travelers.	0.05	1	0.05
8.	Merchant revenues for 2014 decreased 1.1% compared to 2013, because of decreases in revenues from priceline.com's Name Your Own Price reservation services.	0.04	2	0.08
	TOTALS	1.00		3.02

Priceline is performing extremely well on addressing internal issues as well, as evidenced by a 3.02 IFE Score. One key area Priceline needs to address is promoting its services in a clear manner. In 2014 and 2015, many nations in Europe cracked down on Priceline and other online booking agencies for not being transparent in their pricing operations. The result takes away one of Priceline’s competitive advantages and risks tarnishing the brand image.

F. SWOT

SO Strategies

1. Start an advertising campaign with William Shatner to promote destinations with social and environmental friendly impacts (S1, S5, O10).

2. Invest $100 million in a new data mining system to send likely customers last second deals for travel (S2, S6, S8, O8).

3. Invest $200 million into the Priceline app and advertising to ensure customers think of Priceline and its app, over potential new rivals, Apple, Google, Facebook and others (S8, O4, O7, O8).

WO Strategies

1. Invest $100 million in a new data mining system to send likely customers last second deals for travel (W6, O8).

2. Advertise advising customers since many hotels are nonrefundable, the trustworthiness of Priceline (W4, O6).

3. Invest $200 million into the Priceline app and advertising to make shopping for vacations as easy and fun as possible (W2, W5, O4, O7, O8).

ST Strategies

1. Spend $100 million advertising reassuring customers of Priceline’s price assurance (S7, T1).

2. Invest $300 million to design a better platform for offering tour packages (S2, S4, S6, T4, T6).

3. Advertise $100 million to promote Priceline’s car rental options (S4, S8, T6).

WT Strategies

1. Avoid further acquisitions that create excessive goodwill on the balance sheet (W1, T1, T6).

2. Invest $300 million to design a better platform for offering tour packages (W2, W5, W6, T4, T6).

3. Spend $100 million to develop an incentive plan to help create customer loyalty (W5, T1

QSPM

.

Increase Advertising by $800 Million	Initiate a New Data Mining Program
Opportunities	Weight	AS	TAS	AS	TAS
1.	Independent hotels may not have the means or expertise to
	market themselves to international travelers, including the use of other languages, building and operating effective desktop and	0.04	1	0.04	3	0.12
	mobile websites.
2.	Among U.S. travel industry revenues, about 50% of revenues are derived from international-based travel.	0.08	4	0.32	3	0.24
3.	The global car rental industry is expected to reach a value of $67.4 billion by the year 2017.	0.04	4	0.16	3	0.12
4.	Technological advances have made online shopping more
	secure, providing a greater sense of security for online	0.04	0	0.00	0	0.00
	transactions.
5.	Mexico was the top US international destination in 2013, with	0.04	4	0.16	3	0.12
6.	Hotels are increasing offering nonrefundable room bookings, often at a discount.	0.06	2	0.12	1	0.06
7.	Many customers plan and research their trip for weeks before booking.	0.04	2	0.08	4	0.16
8.	About 40% of customers book deals at the last second with little
	planning ahead, indicating a sweet deal could sway someone not	0.09	2	0.18	4	0.36
	totally committed to making travel arrangements.
9.	There were many increased transparency measures taken in the internet based travel booking industry throughout 2015.	0.04	0	0.00	0	0.00
10.	Over 50% of travelers in 2015 said they would select a travel
	destination based on social or environmental impact their	0.03	4	0.12	3	0.09
	expenses would help.

Threats	Weight	AS	TAS	AS	TAS
1.	Priceline faces strong competition from online travel services including Expedia, Hotwire, Hotels.com, and others. Rapid consumer adoption and use of mobile devices globally creates new challenges for Priceline because such trends enable device companies such as Apple, Google, Facebook and others to offer travel services. There are over 10,000 travel agencies in the United States. Many customers traveling overseas for the first time prefer a traditional travel agent. Travel industry growth rate remains sluggish, with growth of less than 2% expected through 2020. Tour packages account for 30% of total revenues, and, like international travel packages, they are routinely booked through traditional travel agencies. Typically, hotels make available only a limited number of hotel rooms for opaque services such as Priceline‘s, especially during periods of high occupancy. As a result, recent high hotel occupancy levels in the United States have had an adverse impact on its access to hotel rooms. Apple, Inc. has the patent for "iTravel" and "Passbook;" Apple could enter the travel reservation business. Hotels are increasingly not letting customers cancel rooms as easily as before, with many hotels offering nonrefundable rooms outright.	0.08	4	0.32	3	0.24
2.
		0.06	3	0.18	4	0.24
3.		0.04	3	0.12	1	0.04
4.		0.04	3	0.12	2	0.08
5.		0.05	3	0.15	4	0.20
6.
		0.05	4	0.20	3	0.15
7.
		0.07	2	0.14	4	0.28
8.		0.04	0	0.00	0	0.00
9.
		0.07	2	0.14	1	0.07

Strengths	Weight	Increase Advertising by $800 Million AS TAS	Initiate a New Data Mining Program AS TAS
1.	William Shatner of Star Trek fame has remained a constant,
	enduring celebrity spokesman for Priceline as —Priceline	0.06	4	0.24	1	0.06
	Negotiator“
2.	Priceline provides travel-related services in 200 countries,
	through sixpopular brands: Booking.com, Priceline.com,	0.11	4	0.44	3	0.33
	Agoda.com, KAYAK, Rentalcars.com and OpenTable
3.	Agency revenues in 2014 increased 32.5% compared to the prior
	year, mainly because of the growth in the business of	0.09	4	0.36	3	0.27
	Booking.com.
4.	Priceline has established widely used and recognized e-
	commerce brands through aggressive marketing and promotion	0.11	4	0.44	3	0.33
	campaigns
5.	Priceline‘s net income is over 5 times that of Expedia.	0.07	0	0.00	0	0.00
6.	Priceline has partnered with over 235,000 hotels internationally.	0.05	4	0.20	3	0.15
7.	With Priceline, if you find cheaper prices online, including taxes
	and fees, and for the same itinerary, Priceline will refund you	0.07	3	0.21	4	0.28
	100% of the difference after you've already booked.
8.	Priceline has a free mobile app that allows Priceline users to book
	flights, hotels, and rental cars, see exclusive last minute mobile	0.03	3	0.09	4	0.12
	offers, and to access important upcoming trip details.
9.	Priceline acquired AS Digital in 2015 giving the company an
	established footprint in the Australian restaurant booking	0.03	0	0.00	0	0.00
	market.
10.	Priceline in 2015 started —Tonight-Only“ pricing promotions to hedge against people waiting until the last second to book.	0.05	0	0.00	0	0.00

Weaknesses	Weight	AS	TAS	AS	TAS
1.	The firm‘s goodwill increased 88% to $3.3 billion in 2014.	0.03	0	0.00	0	0.00
2.	Priceline‘s year-over-year growth rates have generally
	decelerated in recent years. For example, in 2014, Priceline‘s accommodation room night reservation growth was 28%, a	0.03	3	0.09	4	0.12
	deceleration from 37, 40, and 53% in the years prior, respectively.
3.	Their brand identity of being able to "name your own price" is no longer unique in the industry.	0.05	3	0.15	1	0.05
4.	With Priceline, all sales are final in comparison to Expedia that offers cancellation without having to pay a cancellation fee.	0.05	0	0.00	0	0.00
5.	They do not have very loyal customers, because customers are
	more concerned with finding the lowest price than being loyal to	0.05	3	0.15	4	0.20
	an online travel agency.
6.	Over half of Priceline‘s customers survived in 2015 claim they wait until the last minute to book, yet plan for weeks.	0.03	3	0.09	4	0.12
7.	Booking.com was forced to abandon its price availability
	operating platform in Europe as hotels forced the firm to remain true to its former commitments. Resulting in less bargaining	0.05	0	0.00	0	0.00
	power for Priceline and more open information for travelers.
8.	Merchant revenues for 2014 decreased 1.1% compared to 2013,
	because of decreases in revenues from priceline.com's Name	0.04	4	0.16	3	0.12
	Your Own Price reservation services.
	TOTALS			5.17		4.72

Priceline has many options available as the market leader with excellent cash flow. The QSPM above reveals a need to focus more on advertising over data mining but in reality the two should go hand in hand. One key area the firm needs to be mindful of moving forward is acquiring substantial goodwill from its aggressive acquisition policy.

G. Recommendations

1. Start a $200 million advertising campaign with William Shatner to promote destinations with social and environmental friendly impacts.

2. Invest $100 million in a new data mining system to send likely customers last second deals for travel.

3. Invest $200 million into the Priceline app and advertising to ensure customers think of Priceline and its app, over potential new rivals, Apple, Google, Facebook and others.

4. Invest $100 million advising customers since many hotels are nonrefundable, the trustworthiness of Priceline.

5. Spend $100 million advertising reassuring customers of Priceline’s price assurance.

6. Invest $300 million to design a better platform for offering tour packages.

7. Advertise $100 million to promote Priceline’s car rental options.

8. Avoid further acquisitions that create excessive goodwill on the balance sheet.

9. Spend $100 million to develop an incentive plan to help create customer loyalty.

H. EPS/EBIT Analysis (in millions except for EPS and Share Price)

Amount Needed: $1,200 Stock Price: $1,300 Shares Outstanding: 51

Interest Rate: 3%

Tax Rate: 19%

	Common Stock Financing			Debt Financing
	Recession	Normal	Boom	Recession	Normal	Boom
EBIT	$2,500	$3,500	$5,000	$2,500	$3,500	$5,000
Interest	0	0	0	36	36	36
EBT	2,500	3,500	5,000	2,464	3,464	4,964
Taxes	475	665	950	468	658	943
EAT	2,025	2,835	4,050	1,996	2,806	4,021
# Shares	52	52	52	51	51	51
EPS	39.00	54.60	78.00	39.13	55.02	78.84

	30	Percent Stock			70	Percent Stock
	Recession	Normal	Boom	Recession	Normal	Boom
EBIT	$2,500	$3,500	$5,000	$2,500	$3,500	$5,000
Interest	25	25	25	11	11	11
EBT	2,475	3,475	4,975	2,489	3,489	4,989
Taxes	470	660	945	473	663	948
EAT	2,005	2,815	4,030	2,016	2,826	4,041
# Shares	51	51	51	52	52	52
EPS	39.09	54.89	78.58	39.04	54.72	78.25

The EPS’s may seem high, but at the time of this writing Priceline’s EPS was over $44. EBIT is difficult to estimate as Priceline is growing rapidly year over year. It appears however that debt is more attractive of an option to finance than equity based on EPS maximization. However, it is important to note, even financing $1.2 billion through total equity would not have a material impact on Priceline’s total shares outstanding. In fact, the firm has over $3 billion in cash listed on its 2014 balance sheet.

I. Epilogue

Priceline made their best strategic move ever in 2005 when they acquired the Dutch online hotel reservation service Booking.com for $133 million. By 2010, Priceline had surpassed major rival Expedia, in global sales, but Expedia is still larger than Booking.com in the United States. Today (10-10-15), Priceline's market capitalization of $66 billion is four times Expedia's. For Q2 of 2015, Booking.com accounted for 85 percent of Priceline Group's $2.28 billion in revenues. Priceline had $517 million in net profit for Q2 quarter, but does not break out earnings for Booking.com. In comparison, Expedia reported Q2 revenues of $1.65 billion and $82.2 million in profit.

Booking.com now dominates the online travel market in Europe and is aggressively expanding in China and the US. Booking.com projects for Q3 of 2015 a 20 percent increase in bookings going through its website. Booking.com daily capitalizes on Europe's fragmented market of small hotels without the resources to build their own websites. Europeans generally have five weeks of vacation a year and millions use Booking's listings and telephone support in their native languages. Booking.com takes a 15 percent cut to connect buyers and sellers.

Expedia remains Priceline's biggest competitor in what is frequently called a duopoly. Expedia has an estimated 75 percent market share among online travel agents in the USA, after acquiring both Travelocity and Orbitz. Priceline's businesses, Booking.com and the original Priceline, which sells discounted travel packages—have around 20 percent. Other competitors include Google and travel review site TripAdvisor, but those two firms are also Priceline customers because Booking.com devotes much of its $2.7 billion marketing budget to buying advertisements on TripAdvisor and to place ads linked to Google searches, such as "hotels in Paris." Many analysts believe Booking.com is Google's biggest customer.

In addition to expanding globally, Booking.com is also aiming to attract more business travelers, which make up half the online travel market but only 20 percent of the firm's current business. The Booking.com site currently has 700,000 hotels and rental properties compared to Expedia's 257,000. The CEO expects Booking.com to pass a million hotels "sometime next year."

In 2014, Priceline.com paid $2.6 billion to acquire OpenTable, an online reservation service. OpenTable is experimenting with its own form of surge pricing that it calls "premium reservation," testing its new reservation policy at the high-end Mexican restaurant Cosme located in the Flatiron district of New York. On Friday and Saturday evenings, the high-end restaurant will set aside a few extra tables for people making last-minute reservations at a high price. The taxi-like, ride-sharing app Uber, “started” surge pricing policies that kick in during peak demand periods. Rides that would normally cost just a few dollars suddenly become exceptionally expensive, sometimes increasing up to hundreds of dollars. Fares simply soar as demand soars.