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.
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.]
>>>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?
...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.
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
"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.
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
Who the hell are you kidding ?
Are you Barry ?
Yes, you are absolutely correct. I do not have a "buy" or "strong buy" on either USAI or EXPE.
That said, I do think their future business prospects are very bright.
There is no question they will be much bigger than they are today several years from now. The only real question is just how much bigger.
I did indeed sell the majority of my long position at $54, after buying it about two years ago for about 10% of that price. Cheers
"Analysts rate their industry relative to the primary market index appropriate to that global region (such as the S&P 500 in the U.S.). Analysts rate an industry as Overweight, Marketweight or Underweight depending on their projection of the industry's performance relative to the primary market index."
If you can rely on any of it?
I prefer buying from the source of lowest price and best selection.
Maybe because they (airlines) are not considered an "internet site" in this survey, they didn't consider the airlines direct-
EXPE lost deals and will probably lose more-in powering sites (Northwest Airlines)
I could never book with them, always found them higher or poor selection.
Your argument suggests that people will always prefer buying from the supplier rather than the middlemen.
If that is true, why does no single travel supplier show up on the list of top internet sites?
Why does EXPE account for 20% of all travel sold online, INCLUDING the supplier sites?
Why do many of the supplier's own sites strike deals with EXPE to power their hotel and car rentals? (e.g., American Airlines, United, Jet Blue, Hyatt (vacations), Wyndham (vacations), others)
Why has the conversion rate (the percentage of people visiting EXPE divided by the percentage of people booking) GROWN steadily over the past two years?
Why do EXPE and ROOM account for over 60% of all hotel dollars spent online INCLUDING the supplier sites?
Are we to believe that to the hotels and airlines, the Internet is a brand new thing? Isn't it 2003?
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.