Do you see Priceline’s strategy as effective or ineffective?Why?

Do you prefer Priceline or Expedia to find low travel prices?Headquartered in Norwalk, Connecticut, Priceline.com Inc. is theleading online travel company where buyers “name their own price”for airline tickets, hotel rooms, rental cars, cruises, andvacation packages. Founded in 1997 with a patented business model,Priceline.com operates through the Booking.com, Priceline.com,TravelJigsaw, and Agoda brand names. Priceline.com uses excellentstrategic management to dominate the online travel business. Forexample, the company generates annual sales of more than $4 billionand has an EPS of more than $30. Priceline’s common stock (PCLN)had the best five-year (2007–2011) performance of all companies inthe S&P 500: a total return of 972 percent. Many analysts havea $750.00/share price target for Priceline stock. In the last 12months, PCLN’s return on assets was 23.08 percent, compared to itscompetitors Expedia (EXPE)’s 4.19 percent and Orbitz World Wide(OWW)’s 2.60. PCLN’s return on equity was 48.41 percent, muchhigher than EXPE’s 13.44 percent and Orbitz World Wide OWW’snegative 21.25. PCLN’s profit margin for the last 12 months was25.58 percent, compared to EXPE’s 10.42 percent and OWW’s negative4.83. With more than 5,000 employees, Priceline’s customers canchoose set-price options. For airline tickets and hotelreservations, Priceline.com generates sales on the margin, keepingthe difference between the price paid by the individual and whatPriceline.com paid for the ticket or hotel room. Priceline’s recentsuccess has been especially driven by international travel,particularly to emerging market destinations. About 65 percent ofPriceline.com hotel room bookings are expected to be non-Europeangoing forward, up from 42 percent the prior year. Pricelineprovides price-disclosed hotel and rental car reservation serviceson a worldwide basis with approximately 185,000 hotels andaccommodations in 160 countries. The company’s rental car servicesoperate through its Name Your Own Price demand-collection system,as well as vacation packages consisting of airfare, hotel, andrental car components; cruise trips; and destination services,including parking, event tickets, ground transfers, and tours inthe USA. Priceline provides an optional travel insurance packagethat covers trip cancellation, trip interruption, medical expenses,and emergency evacuation, as well as for loss of baggage, property,and travel documents for air, hotel, and vacation packagecustomers; and collision damage waiver insurance for rental carcustomers in the USA. Priceline’s major competitor, Expedia, wasfounded in 1996, a year before Priceline. Priceline has four timesthe volume of revenues of Expedia, but the two firms aggressivelycompete every day for customers worldwide.