Priceline May Have to Keep Searching for New Business Lines
After starting out as an online air travel agent, Priceline (NASDAQ: PCLN ) today gets most of its business from facilitating hotel reservations rather than helping customers buy airline tickets.
The agency business of online air travel service alone could not have been a long-term, viable pursuit for Priceline, and the company has added other travel-related services over time, including car rentals and most recently restaurant reservations fromOpenTable. However, air travel was the logical place to get in for an aspiring online travel service company back in 1997 when using the Internet for many things, commercial and social, was just kicking into gear.
Diminishing flight booking service
In the old days, airlines relied on physical travel agents to distribute and issue tickets. Seeing the potential ease of online transactions, airlines initially sought to use specialized online flight booking sites to help with their ticket sales, such as that of Priceline. While similar third-party online ticket selling services remain ubiquitous today, airline companies now all have their own sophisticated online booking systems that prospective passengers can access directly. This makes the flight booking operations of Priceline and its peers no longer must-haves for people looking to purchase airline tickets online.