priceline biggest travel acquisition 2000s

Why Priceline’s purchase of was the most profitable travel deal of the 2000s

In July 2005, The Priceline Group acquired European hotel booking website, helping to catapult Priceline from a profit of $10 million in 2003 to a profit of $1.1 billion last year.

No other acquisition in the digital travel space in the 2000s has proven as profitable.

Priceline bought for a mere $135 million in cash.

The parent company folded an earlier purchase, (for $165 million in cash), into the’s subsidiary. Together, their agreements with hotels jumped from 10,000 to more than 100,000.

Since then, sales have soared.

PCLN’s overseas revenues grew at a compound annual growth rate of 68% between 2006 and 2010, compared with a 15% rate for domestic US revenue.

Gross bookings from international markets as a percentage of total bookings have spiked from 55% in 2007 to around 78% last year.

According to Priceline’s 10-K, international operations accounted for four-fifths of consolidated operating income. is also the king of Google AdWords, as Tnooz has noted before.

Why did the purchase work out so well?

Herman Leung, senior analyst, internet equity research at Susquehanna International Group, points out in an interview:

The deal was far and away the most profitable acquisition in the travel space in the 2000s.

The importance of the deal is so large that I think it should contemplate changing its name to It’ s that big and impactful of an acquisition.

I can’t think of another company that owes tens of billions of market cap to a company that it acquired. has consistently driven the profit and cash flow going to the bottom line of Priceline.

Dan Su, senior equity analyst at Morningstar in Chicago, has this say:

Yes, Priceline’s acquisition of in 2005 has been the most profitable acquisition in the online travel space over the past decade.

Priceline stock returned about 2,680% on a cumulative basis since the July 2005 acquisition.

I think the bulk of it is driven by the strong growth in Europe thanks to priceline biggest travel acquisition 2000s

What explains the success of the deal?

A recent profile of Priceline in Fortune magazine touched on some reasons for the success of the acquisition.

  • Europe was an unexpected cash cow. Europeans spend many more weeks and weekends on vacations than Americans, meaning the opportunity for extracting repeat business from satisfied customers was much greater than in the US.
  •’s results were heavily driven by the agent model, which Europeans were familiar with. Priceline averages a 15% commission on each room reserved, analysts say, and payment is usually collected at the time of the hotel stay.
  • After the merger, Priceline resisted the temptation to bring the company onto its US-based merchant model. It also didn’t disrupt the entrepreneurial structure in place at its takeover target.
  • In another perk for, the European hospitality market has been far less consolidated than in the US, with far fewer hotel chains and far more independents who often struggle to market their businesses.

Priceline’s own verdict

Company spokesperson Brian Ek told Tnooz:

The profitability comment on…. strikes me as a bit simplistic when you consider that our European hotel business is actually a combination of two acquisitions – Active Hotels in the UK, which was our first, and then

There was a lot of knowledge and best practice sharing that went into the combined business you see now.

Also, we have two other contributors to our overseas success in (our Asia-based hotel service) and, based in the UK which is our international car hire brand.  It was named TravelJigsaw at the time we acquired it.

I can say that the Active/Booking acquisitions have worked out well for us, mostly for the following reasons:

  • There was very little overlap in terms of the hotels that priceline and each of these companies was working with, so it was highly additive in terms of supply,
  • They have a business model that hotels like,
  • There was not much complicated technology integration with priceline, as we did not try to put all companies onto the priceline platform (so no major additional post-acquisition IT investment required),
  • The existing management teams knew their businesses very well and remained with us after the acquisition,
  • Finally, their views toward cost controls are very much in sync with

To be sure, isn’t the only reason Priceline has seen so much growth over the years.

Rental car bookings worldwide have also experienced strong growth rates of as high as 55% year-over-year in recent quarters.

As Ek notes, that has been partly been driven by the company’s acquisition of TravelJigsaw, since renamed

Looking ahead

What might be the big travel deal of the 2010s?

One possibility would be a Priceline takeover of, China’s OTA powerhouse. While state regulators might not embrace that today, the regulatory situation is clearly in flux.

As a prelude to a takeover, Priceline could take a stake in CTrip, similar to Expedia’s investment in  eLONG, another major OTA in China, which expanded last week.

In August, Priceline forged a partnership with will now provide an overseas hotel reservation platform for domestic Chinese consumers under a commission deal.

Whatever the future holds, clearly has the potential to be the gift that keeps on giving.

Article corrected on 3 October to reflect a typo on the date of Priceline’s purchase of

NB: Image of the headquarters in Amsterdam courtesy of pandemia/Flickr/Creative Commons.

Share on FacebookTweet about this on TwitterShare on LinkedInEmail to someone
Sean O'Neill

About the Writer :: Sean O'Neill

Sean O’Neill had roles as a reporter and editor-in-chief at Tnooz between July 2012 and January 2017.



Your email address will not be published. Required fields are marked *

  1. Rie

    does this mean searching motel availability enables Priceline to make changes to contracted rates provided by the motel

    • Sean O'Neill

      Sean O'Neill

      Tnooz doesn’t have the answer to that, but maybe someone else in the reader community does. — Sean

  2. Venkat

    So working in a Agent Based Model ?

  3. James

    It would be nice to see an article about what inventory is shared between the different PCLN owned domains. My lodge gives inventory to, when, if ever, will it show up on searches for other sites as well.. kayak? priceline? agoda?

  4. Richard Carrick

    It must also be said that Active Hotels had exceptional leadership, people, technology and analytics. In the right combination, together with no small amount of luck and timing, they tend to determine what makes a good acquisition, but it’s important not to discount any of these ingredients in any analysis.

    • Sean O'Neill

      Sean O'Neill

      So glad you mentioned those other variables, which sound vital.
      I’m surprised more case studies haven’t been written about the deal.
      If any MBA or PhD candidates are reading this, pay attention.

  5. Peter Matthews

    As someone who saw first hand the Priceline/Active/Bookings acquisitions taking shape, the obvious advantage Active and Bookings had over other OTAs was that they both focussed on growing higher margin hotel bookings when competitors remained obsessed with flights and ‘dynamic packaging’. Priceline realised this was a valuable competitive advantage and let them get on with it. It has taken years for competitors to try and catch up with their inventory and clarity of brand proposition. @nucleuslondon

    • Sean O'Neill

      Sean O'Neill

      That’s an excellent point that should have been mentioned in the article.
      Thank you!

  6. David Davidsson

    That building shown to be the HQ hasn’t been used by the company in almost a year.

    • Sean O'Neill

      Sean O'Neill

      Thanks for pointing that out. That was the only free-for-republication photo I was able to find. Perhaps I should have gone a different route.

  7. Merjerz

    Excellent article highlighting the challenges, and potential, for M&A.
    Merjerz mavericks have recently anticipated your suggestion of PCLN-CTRIP, see: Go to to see other travel deals, be a voter and help the best M&A happen. Some interesting travel -industry ideas (eg. Google-TripAdvisor) are waiting for your insight.

  8. Brad Gerstner

    I think this article under-states what PCLN has accomplished. Active, Booking, and Agoda represent three of the most successful and profitable M&A deals of all time – not to be limited to either the internet or to travel.

    • Sean O'Neill

      Sean O'Neill

      Hi, Brad,
      Thanks for your comment. As founder of Altimeter Capital and someone whose well known for his expertise on disruptive startups, your opinion is especially valued.



Newsletter Subscription

Please subscribe now to Tnooz’s FREE daily newsletter.

This lively package of news and information from Tnooz’s web site provides a convenient digest of what’s happening in technology that drives the global travel, tourism and hospitality market.

  • Cancel