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  • jeff44293 jeff44293 Aug 15, 2003 12:42 AM Flag

    Expedia & Hotels.com Strong in Hawaii

    http://www.hawaiibusiness.cc/hb62003/default.cfm?articleid=8

    ****
    Castle Resorts & Hotels� Senior Vice President Alan Mattson says his properties are participating with the main online travel sites, too. �There�s Expedia and then there�s everybody else in terms of volume and ease of use,� he says.

    Castle Resorts was the first regional hotel company in the country to launch a private-labeled vacation package in partnership with Expedia. He says online electronic marketing represents about 22 percent of Castle�s total business, a huge jump from 3 percent a year ago.
    *****

    By the way, other hotels which have turned to Expedia's private label vacation package product for their air/car/hotel offerings online include:

    hyattvacations.com
    sheraton.com
    starwoodvacations.com
    wyndhamvacations.com
    whotels.com
    westin.com
    caribbean tourism board -- gocaribbean.com

    Airlines using Expedia's WWTE platform to sell hotels on their own website include:

    delta
    united
    american
    alaska
    hawaiian
    british air
    air france
    airtran
    westjet (canada's #2 airline)
    jetblue
    ...and more

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    • If Castle Resorts is the first and maybe only hotel to partnership with EXPE, is it surprising that they have nice things to say about you?

      <<Airlines using Expedia's WWTE platform to sell hotels on their own website include:>>

      Gross distortion. EXPE appears as a popup. Imagine how that must irritate travelers. EXPE receives no income from it or maybe they do the paying.

      • 2 Replies to phdry
      • "<<Airlines using Expedia's WWTE platform to sell hotels on their own website include:>>

        Gross distortion. EXPE appears as a popup. Imagine how that must irritate travelers. EXPE receives no income from it or maybe they do the paying."

        You don't know what you're talking about. Go to www.jetblue.com and search for hotels in Las Vegas on some set of dates. The search results you see are being sent to your browser by Expedia's web servers. You are no longer on jetblue's site.

      • >> If Castle Resorts is the first and maybe only hotel to partnership with EXPE

        But they are not.

        First, note that 10,000 hotels now have special rate contracts with Expedia.

        If that's not enough:

        1) HyattVacations.com is powered by WWTE, which EXPE developed, owns and operates.

        2) WyndhamVacations.com is powered by WWTE

        3) Sheraton.com's air/car/hotel vacations are powered by WWTE

        4) Westin.com's air/car/hotel vacations are powered by WWTE

        5) WHotels.com's air/car/hotel vacations are powered by WWTE

        6) Hilton named Expedia their "preferred third party internet travel site"

        8) Starwoodvacations.com is powered by WWTE

        9) Castleresorts.com is powered by WWTE for air/car/hotel vacation packages

        These are just the ones I could *find* in fifteen minutes or so of looking around. Makes you wonder how many more are out there...


        :-)

    • phdry, correcting your innacuracies is getting to be a little tiresome.

      First it was that "WWTE wasn't proprietary". (It is.) Then it was that "WWTE wasn't actually powering the air/vacation and hotel bookings for many major hotels and airlines". (They are.) Then, it was that it was "all based on private market softare", which you refused to name. (It isn't. It's proprietary.) Then it was that "EXPE generates $0.02/share in quarterly earnings". (It's more than twice that figure.)

      All posted without any kind of evidence or links for us to fact-check.



      Now, you write:

      >> At that time, they [Forrester] were predicting that the airlines, led by Northwest and KLM, were preparing to put web travel agencies at zero commission.
      It still hasn't happened yet because two congressmen came to the rescue.

      Wrong again.

      Northwest indeed did set commissions to zero, BUT after Expedia turned them off of the site altogether, after about three weeks Expedia and Northwest miraculously came to an agreement. The terms of the agreement were unnamed BUT Expedia indicated that it would be "immaterial" from a profit standpoint. That was over a year ago. During that time, Expedia's earnings have quintupled.

      http://www.usatoday.com/travel/news/2002/2002-10-02-northwest-expedia.htm

      http://www.expedia.com/daily/press/releases/northwest.asp?CCheck=1

      http://www.expedia.com/daily/press/releases/Continental.asp

      (By the way, Continental also tried the same thing -- and, you got it -- came back to EXPE, and EXPE's profits continued to rise.)



      Expedia does more than 100,000 purchase transactions every single day. That is a reasonably strong amount of bargaining leverage. Scale matters.


      With all these innaccuracies WITHOUT evidence, I'd say your credibility is waning fast.

      That's why I say that it's perfectly legitimate to be short (or long) on any given stock. But don't go spouting off rumors or inuendos without at least a little evidence.

    • Saying Ticketmaster and LendingTree are #1 in their market places is actually an understatement. They completely dominate their market places. And Expedia, with loads of competition, good competition, still nails it's numbers in a SARS - post 9/11 - Iraq war environment. Imagine if the airlines were not going bankrupt and people weren't afraid to travel and unemployment wasn't rising...imagine the day (not to distant future) when disposable income is back for most people. Expedia will knock Ebay off the pedistal.

      Diller et al have built a winner by buying winners. God...if he only owned Google...Gates would have serious competition for Billionaire of the year.

    • On Wall Street Week this weekend, there was a professor on from the University of Michigan who did a study whose results indicate that companies where cash earnings dramatically exceed GAAP earnings outperform the market over time.


      as long as they're not run by Harvard grads......:)

      http://moneycentral.msn.com/content/p57151.asp

    • the only problem PRC has very tiny footprint ouside the U.S.

    • phdry wrote:

      >> And how much does the shining star, EXPE contribute to IACI's net income quarterly? Less than $0.02.

      Where did you get that number? I get roughly $0.05/share in quarterly earnings, more than twice your figure.

      1) EXPE generated GAAP net income of about $41,300,000 last quarter. Source, EXPE earnings release, below.

      2) IACI has about 825 million shares outstanding, which is a HIGH estimate after all the dilution events. Source: IACI earnings release.

      3) 41.3 million divided by 825 million is about $0.05/share

      http://biz.yahoo.com/prnews/030805/sftu026_1.html

    • True, the GAAP earnings for IACI are much lower than you might expect for a company on course to exceed $1,200,000,000 in cashflow this year alone. And one which is increasing its rate of cashflow generation.

      What is going on? Well, IACI has lots of non-cash... NON-CASH expenses that they do on the books. Things like writedowns of the VUE stake, which is likely to turn into cash some day, but whose value until that day remains unknown. Things like RSU's related to the acquisitions of Expedia & ROOM. Things like option expenses. Things like free advertising that was given to Expedia by USAI at the time of the first purchase of share from MSFT, which is expensed each quarter it is used. Things like fairly generous tax reserves, which are built up on the books despite the fact that no such taxes are actually paid out to anyone (nor is there any certainty yet that they actually will be).

      Each of these P&L expense items are NOT outlays of cash, nor is it clear that they will some day correspond to outlays or inflows of cash. In acquisitive companies, there are lots of non-cash expenses that happen.

      What is interesting to me about this is that in general, the vast majority of "sneaky companies" almost always have cashflow that is FAR LOWER than actual earnings. GAAP earnings are trumped up, but when you do the analysis on cashflow, it is a pittance. In fact, I know of no such large company in the recent record of flameouts where cashflow dramatically exceeded earnings.

      There is a reason why the phrase is "Cash is king". Because, it is. It tells a story worth listening to, along with all other factors.

      On Wall Street Week this weekend, there was a professor on from the University of Michigan who did a study whose results indicate that companies where cash earnings dramatically exceed GAAP earnings outperform the market over time.

      Why?

      He makes the point that over the LONG run, GAAP earnings and cashflow MUST match. GAAP accounting essentially gives a company the freedom to move earnings between periods (through accruals, non-cash expenses, balance sheet prepaid liabilities, etc.), but eventually, earnings do equal cashflow.

      He notes that those companies where cashflow dramatically exceeds earnings tend to outperform the market over the long run. Interesting research and worth a listen if you've got WSW in your area.

    • >>EXPE contributed 71% of IACI's operating income in Q2.<<
      That post sort of makes my point>>

      A good point that deserves further analysis.
      That means that the ten others in IACI's stable of donkeys COMBINED contributed 29%.
      And how much does the shining star, EXPE contribute to IACI's net income quarterly? Less than $0.02. Then all the others combined contribute less than $0.01.
      That is what dilution, much talked about on this board, does to you.
      And EXPE may or may not grow. I just finished reading an article from 2001, by Forrester, the market research firm. At that time, they were predicting that the airlines, led by Northwest and KLM, were preparing to put web travel agencies at zero commission.
      It still hasn't happened yet because two congressmen came to the rescue. Instead, the hotels are tightening the noose now.
      That is the kind of vulnerable, cut throat business EXPE is in. And the rest of them in this stable of donkeys apparenly are much worse.
      That is the genius of Diller, the media mogul. To be able to fool Wall Street into believing he was putting together something big. To take care of details even to the extent that a full time con artist is working this board..
      It is amusing that the retail investors wised up quickly to represent one third of their initial trading volume. The overinvested Funds, however, are finding it difficult to shake off this POS. Apparently, they can only sell to other funds and to do that, it would seem that they must increasingly sell at discount.

    • Bravo Jeff, you're working so hard this Sunday night.

      Can't Diller hire at least one more hypster to take some work load off your back?

      Now Barry isn't cheap, is he?

    • >> You are correct when you indicated that EXPE would have produced almost $0.05 in earnings this quarter on IACI's balance sheet.

      Thanks for acknowledging your error -- you were more than 200% off -- but note that I didn't say that it effects the balance sheet. That's because earnings pertain to the income statement, i.e., the P&L, not the balance sheet. :-)

      >> Travelocity was No. 1 not long ago. All will continue to have their margins cut.

      Expedia overtook them about a year and a half ago and hasn't looked back. Contrary to your thesis, (a) EXPE's lead is widening, not narrowing, (b) EXPE's profitability is much stronger than that of rivals, (c) EXPE's gross operating profit has INCREASED dramatically over the past three years in both real and percentage terms, especially compared with competition. We sure haven't seen evidence yet that EXPE's margins are eroding, despite the fact that you believe it *will* happen, it hasn't yet -- at least as of a month ago. It's also quite likely that even if margins decline a bit, that volume growth will easily swamp it.

      Remember -- Expedia doesn't NEED every single hotel, or every single airline for that matter -- to give it rock-bottom cost of goods sold. It probably only needs 20 or so hotels for any given market for consumers to have a good selection. And the reality of the hotel business is that it is far too fragmented and locally-run right now.

      Expedia's volume completely FILLS, from completely-empty to completely-full, over 100 large-sized hotels every single night. Let me say that again: Expedia can pack 100 hotels every single night... and consumers and business travelers are relatively indifferent between hotel brands. Expedia did over 3 MILLION room nights last quarter alone. That is a lot of volume.

      Now, you are an owner/manager of a hotel in Hawaii, let's say. You see that hotels listed with Expedia Inc. drive a lot of volume. You see that they are sold on sites like hawaiianair.com and united.com and aa.com and via Classic Vacations and also -- as of two days ago -- via telephone travel agents. You see companies like Castle Resorts improve their own revenue by offering WWTE on their own site.

      Your own hotel occupancy has been floundering in the 60-70% range for some time. Do you list with Expedia? Do you give them good rates (i.e., cost of goods sold) to get featured near the top? Do you want to be one of the top 10 choices, if Expedia completely fills 100 hotels every night?

      Probably.

      Multiply that scenario by every single market in the world, by 365 days a year, and that's the potential that some of us longs have been talking about, and which the numbers suggest is definitely emerging.

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