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IAC/InterActiveCorp Message Board

  • JesseJackster JesseJackster Apr 8, 2003 4:25 PM Flag

    Diller thinks ROOM is too expensive now

    Even Diller thinks ROOM is overvalued. If he liked ROOM's current market cap, he would snatch it up at current prices. Obiously he is going to wait for ROOM shares to take a hit before he buys.
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    http://cbs.marketwatch.com/tools/quotes/newsarticle.asp?siteid=mktw&sid=&guid=%7
    BCE544D54%2D3BF7%2D450A%2D8B49%2DFF3FC4F131B3%7D


    The travel sites are richly valued, based on expectations that fast revenue and profit growth will continue. Expedia and Hotels.com charge consumers as much as 50 percent more than they pay for the hotel rooms, a profit margin smaller rivals envy.

    "Of course over time there is going to be some margin erosion on the hotels side. It is inevitable. I don't think it is going to be significant, and I think it will be more than made up for by share" of market, Diller said.

    However, he said he would definitely acquire the rest of Hotels.com. "I just know eventually we will. I can't give a timetable," he said.

    [BUT WE'RE WAITING UNTIL HOTELS.COM WON'T COST US AN ARM AND A LEG. ROOM SHARES GOT AHEAD OF THEMSELVES WHEN THEY SPIKED UP IN SYMPATHY WITH EXPE WHEN USAI ANNOUNCED IT WAS BUYING EXPE. A PRUDENT CORPORATE TAKEOVER WOULD INVOLVE WAITING UNTIL ROOM TRADES SIGNIFICANTLY LOWER SO USAI CAN HAVE THE APPEARANCE OF OFFERING AT LEAST SOME PREMIUM FOR ROOM IN A BUYOUT.]

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    • >>>So far the different Web companies have a minimum of cross-promotion, and Expedia and Hotels.com compete for some customers. Loyalty programs, however, could help keep customers of the various sites surfing within the USA family.<<<

      If you go to the web site of bankrupt companies Toys.com or EToys.com you are making a purchase from brick and mortar compant KB toys. If he was properly running a business, Diller would acquire ROOM so he can fire everyone and turn over the URL address to Expedia. There is 100% redundancy from ROOM to Expedia. Why even keep ROOM open? To keep his fat bubble going?

      • 1 Reply to tony_bonaduchi
      • ...because combined, EXPE and ROOM sell about 60% of the hotel rooms sold on the internet. (Source, Business Week).

        Why does GM have multiple car models? Or Toyota? Or any car maker?

        Why does P&G put out several brands of detergent?

        Why does Wal-Mart own Sam's Club and Wal-Mart?

        Why does GE have divisions that compete?

        Answer: Because sometimes, scale matters, and there are advantages to owning #1 and #2 at the same time. I'd expect ROOM to also be rolled up eventually (it's too confusing for USAI's own currency) but for the past two years, it seems to have been working out just fine for investors.

    • Nor is Wal-Mart in a category (online travel) that is GROWING 40% year over year (even net of travel's overall decline).

      Cheers

    • 99.9% of WalMart's suppliers are not in direct competition with them.
      Can you go to Procter and Gamble and get a better deal than you can get at WalMart?

      You can go to NWA, SpiritAir, etc and get a better deal. You can go to Priceline and get a better deal on Cars and usually Hotels

    • In case you didn't notice this paragraph, don't you think this will cut into their profit on room sales.


      "...Six Continents plans to give Expedia access to its central reservation system. The hotel company will encourage local hotel owners to allot rooms and rates to Expedia through this centralized system, which automatically will raise rates or shut off allotments if a hotel is close to selling out. Under the old system, an individual hotel might leave deeply discounted rooms with the Web site even if it could sell rooms directly to consumers on one of the branded Web sites like Holiday-Inn.com at a higher rate...">>

    • You can buy 100% of the items you find at Wal-Mart from other stores. Sometimes, you can even find a better price on them elsewhere.

      Exclusivity isn't the issue.

      As the website traffic and sales data show, consumers strongly prefer EXPE over any other way to buy travel online.

      And together with both EXPE and ROOM, USAI accounts for 60% of hotels reserved online. That's including all the supplier sites that are in such fierce "competition" with them.

      On top of that, if you reserve a hotel room on:

      United.com (a supplier website
      AA.com (a supplier website)
      Jetblue.com (a supplier website)
      AirTran.com (a supplier website)

      or an air/hotel vacation package on

      hyattvacations.com (a supplier website)
      wyndhamvacations.com (a supplier website)

      ... YOU ARE USING EXPEDIA!

      Cheers

    • Note that this deal EXPANDED THE NUMBER OF MERCHANT HOTELS ON EXPEDIA by another 3,000, bringing it to over 10,000 hotels that are under merchant discount contract.

      Six continents moved from an agency way of doing business to a merchant way of doing business.

      In other words, the number of suppliers competing for promotion on EXPE has increased dramatically with this deal.

      Now tell me again that this will cut into EXPE's bargaining power and then in turn into its profits?

      :-)

    • when you start comparing EXPE to Wallmart your delusion gives away your partiality to that firm. EXPE will be eaten up by USAI and forgotten as a bloated prize of a rich MOTU.

      Who are you , Barry ?

    • Where did I ever claim that I wasn't "partial" toward EXPE? I most definitely am.

      In response to an analogy that somehow EXPE was like a B2B company (even though it sells to consumers), I presented my own analogy.

      In it, I specifically cited about ten parallels between EXPE and WMT. There are more if you'd like. If you disagree with each of them, let me know why.

      True, they are different companies. I am not saying they are the exact same enterprise. But there are definitely valuable analogs to be drawn.

      Thanks

    • Jeff, I stated I was bullish on america in the expe and feel the same way. You called my reasons "odd".

      I find your anaolgy of EXPE to Wallmart almost beyond logic equating your arguments equal to sayng some acid dropping 60's hippie is capable of running the US government.

      I'm not even gonna get into a debate here. You are clearly and insider who has cahsed out of EXPE and is now riding the USAI gravey train of theft and deception.

      I'm not saying you are wrong to be right but just that EXPE is a fuckin travel website. It's not some massive retail conglomerate with generic brands and loads of inventory and real estate.

      Who the hell are you kidding ?

      Are you Barry ?

      Come clean.

    • jeff-you said

      "You can buy 100% of the items you find at Wal-Mart from other stores. Sometimes, you can even find a better price on them elsewhere.

      Exclusivity isn't the issue.">>>


      I know you can buy all the items found at Walmart at other stores. I said WalMart suppliers (99.9%) are not in direct competion and do not sell directly to consumers.

      Expedia's suppliers are all in direct competition, and they even control the availibility (to EXPE). You can go directly to their suppliers and usually get a better deal.

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