Priceline's (
PCLN
) market share of global hotel room bookings has been on the rise -
from an estimated 0.6% in 2007 to 1.9% in 2010 - driven by growth
in international hotel bookings. Priceline's market share is
calculated as the number of hotel nights sold through Priceline.com
and its subsidiary websites and is expressed as a percentage of
total hotel room bookings worldwide. We expect Priceline's market
share in the hotel bookings business to continue its upward climb,
although at a slower pace, led by international markets like
Asia. Priceline's direct competitors include Expedia (
EXPE
), Travelocity and Orbitz (
OWW
).
While we anticipate that Priceline's hotel bookings share will
touch 3% by the end of our forecast period, Trefis members predict
a slightly higher level of about 4%, implying potential stock
upside of close to 20%. Priceline's stock is very sensitive to its
hotel bookings share as this business segment constitutes over 90%
of our price estimate for PCLN stock.
We maintain a
price estimate of $452 for Priceline's stock
, in line with market price.
Large and Underdeveloped International Markets
While the market for travel services is large, the percentage of
online sales is relatively lower in international markets than in
the United States. This is because Internet adoption rates for
commercial use in these regions have been lower, particularly in
emerging markets. However, Internet penetration in international
markets has been growing at a substantially greater pace than in
the United States and offers Priceline a larger addressable market
to increase its hotel bookings.
Strong Footing in International Markets with Existing
Brands
Priceline made three key acquisitions, among others, in the past
five years. It acquired Booking.com in 2004, Booking.com BV in 2005
and Agoda in 2007. Booking.com has driven most of Priceline's hotel
bookings growth since its acquisition and provides the company with
a foothold in the European hotel market. The acquisition of Agoda
will help Priceline tap into Asian markets and will be a
substantial driver of Priceline's expected hotel bookings market
share increases in the years ahead.
See our full analysis and $452 price estimate for
Priceline
Trefis Community Forecast
Trefis community members expect Priceline's market share of
occupied hotel rooms to increase from about 2% in 2010 to nearly 4%
by the end of our forecast period, compared to the baseline Trefis
estimate of an increase to 3% during the same period. The member
estimates imply an upside of almost 20% to our
$452
price estimate for Priceline stock.