Shares of Priceline (PCLN) are at another all-time high this morning after the travel kings posted yet another solid quarter last night. It’s a familiar refrain for investors savvy enough to have taken part in the company’s remarkable 1,411% rise in the last 5 years.
The growth was impressive across all major business units. Gross bookings rose 28%, U.S. growth beat, international was strong and mobile via Booking.com has grown eight-fold since 2011.
As Joe Fahmy of Zor Capital and I discuss in the attached video, Priceline has a growing asset that’s seldom discussed. Specifically the company knows more about what you do during your downtime than almost any company in the world. The company has always had an ad component and relationship with obvious partners like Hertz (HTZ) and hotel chains, but the depth to which Priceline knows about you, your family and spending preferences is huge and becoming more valuable every time you book a trip.
The way it works currently, Priceline is a net buyer of ads to raise awareness and build users. As Facebook (FB) has shown once your network is built there are all kinds of ways to monetize it. “It’s not just a travel play,” notes Fahmy, “they do have a lot of information on your travel habits and where you’re going exactly.”
If that doesn’t seem like a powerful asset Fahmy ticks some of the more unseemly inferences that could be drawn from knowing a person books annual trips to Orlando with 3 kids as well as solo visits to Las Vegas coinciding with his spouse’s travel.
Less salaciously, Priceline knows if you pay to upgrade on flights but not hotel rooms. They can distinguish between people who rent Escalades with GPS and Ford Fiesta’s without extra insurance without reducing the data to assumptions about wealth. As Priceline expands its products it learns more and more about what makes you tick. Maybe the Fiesta renter just hates cars but loves hotel suites. Being able to mirco-identify customers then exploiting that data is a big reason Google (GOOG) is able to print billions.
The value of a network lies in scale. The more transactions a company conducts the deeper it can dig into your life. It’s a simple point with two rather large implications. First, Priceline has assets it hasn’t even started to exploit. Second, every online company on earth knows everything you do and with a decent data mining system they can focus an ad so precisely that getting it actually feels like a favor.
Welcome to the age of data. Don’t even bother trying to hide.
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