Interview with Mark Koehler, senior vice-president - Air, Priceline

Published: 01 Oct 2006

Interview with Mark Koehler, senior vice-president - Air, Priceline

Online travel company Priceline.com Inc. recently increased its third quarter financial guidance.

“Priceline.com continues to experience solid business momentum, particularly in Europe, where quarter-to-date gross travel bookings growth continues to exceed 100 percent,” said priceline.com president and chief executive officer Jeffery H. Boyd had said. “We believe these trends provide a solid foundation for earnings growth for the balance of this year and 2007,” said Boyd.

As the company expresses optimism about its future performance, EyeforTravel.com’s Ritesh Gupta got in touch with Mark Koehler, senior vice-president - Air, Priceline for an interview. Koehler shared info on trends in the US market, growth of OTAs etc.

Koehler, one of the speakers for The Travel Distribution Summit North America, to be held in Chicago on 4-5 October, joined priceline.com in June 2005 as its senior vice president of Air. Before joining priceline.com, Mr. Koehler was the vice president of Interactive Marketing at Starwood Hotels & Resorts Worldwide, Inc.

Excerpts from the interview:

What new trends have you witnessed as far as the US online travel market is concerned? How are the consumer’s preferences changing?

One of the biggest trends is that, with all of the travel reservation options available to them, consumers want reassurance that they’re getting the best price and quality products. Priceline.com has responded by offering a best price guarantee and a quality guarantee for its products. If consumers find a better publicly available price after making their priceline purchase, we will refund 100 percent of the difference.

We also guarantee that the product a consumer buys will match the quality parameters we promised. Both guarantees are reassuring to consumers.

Last year, there was increased emphasis on merchandising and dynamic packaging driven by OTAs’ to provide more value to both consumers and suppliers. How has this shaped up?

Since priceline.com offers many different travel products on the same site, one of our value-adds is the ability to assemble packages that include airfare and hotel, and can include rental car and local attractions. By purchasing a package, as opposed to buying their air and hotel separately, consumers can save up to $200. This is a compelling benefit.

The growth of OTAs in the US is being closely watched, with some people suggesting that they are at the top of their growth cycle. What’s your viewpoint on that assessment?

We believe there is still room to grow. In the second quarter 2006, priceline.com had domestic organic bookings growth of 17 percent. In Europe, our organic bookings growth was 116.9 percent.

Where do you see operations of OTAs headed in the next couple of years? How is Priceline positioned in the US market today to take on new opportunities?

Priceline.com is positioned to offer consumers more ways to save than any other major online travel reservation service. We’ve accomplished this by complementing our Name Your Own Price services with published-price services for our core travel products so consumers have a choice – they can pick the exact product they want at competitive published prices or, for deeper savings, they can name their own price.

How would you assess the performance of Priceline in the current environment?

In Europe , we are leading the market in hotel reservations with a supplier- and consumer-friendly business model delivering the highest growth rate in the industry. Domestically, we believe consumers have reacted quite favorably to priceline.com’s enhanced lineup of travel services. And, with suppliers eliminating discounting in published channels, our name your own price savings are becoming more unique and compelling.

What major challenges have you faced in the recent past from operations perspective?

Priceline’s largest challenge in the U.S. has been making the transition from a Name Your Own Price travel service into a full-service travel provider offering a broad array of published-price and Name Your Price options. We have addressed that challenge through an extensive offline and online marketing campaign that emphasises priceline.com’s ability to give consumers more ways to save than any other major online travel reservation service.

In Europe , Stef Norden and his team are successfully combining the strengths of Bookings BV and Active Hotels to build a powerful pan-European business.

Going direct to buy air travel means customers can benefit from lower fares, loyalty points, and greater functionality. So what is the future for OTAs selling air travel?

Priceline performs a valuable service by providing incremental value to travel-shopping consumers. We provide consumers with an easily comparable grid of prices and schedules for multiple airlines. We enable interline ticketing where it provides the lowest price. We enable consumers to combine their airline tickets with hotel rooms and rental cars for additional savings of up to $200. And, only priceline enables consumers to name their own price for an airline ticket.

How do you think you are in an advantageous position going forward?

Priceline gives consumers more ways to save on their travel purchases than any other major online travel reservation service through our unique combination of published-price and Name Your Own Price travel options. We also believe that priceline is the largest online seller of hotel rooms in Europe.