Like the convergence of TV, mobile, phone and broadband, companies that book commodity flights and hotels have long looked for that next big revenue stream. Rental cars just weren't ubiquitous enough a purchase.
The question is, do restaurants fall into a bracket that would be profitable, or at least generate cross-selling opportunities?
My family visits a restaurant once or twice a week. I think the industry would class this as casual dining: we choose the same Indian or Portuguese-style chicken restaurants that generally don't need to be booked.
If our behaviour is typical, what does Priceline get from continuing to invest very large sums of money into OpenTable's expansion into ever more restaurants? Many takeaway restaurants with JustEat and HungryHouse in the UK have started to complain and remove their offering the websites (while newer entrants pop-up and try to fulfill the latent demand for pizza, Indian and Chinese).
And why is any of this relevant to real estate?
If the 14-year old property portal (online classifieds) model is to grow, do they continue to increase fees on their agency customers (equity analysts call this Average Revenue Per Agency (ARPA)) or enable an increasing number of new competitors?
With the current crop of new market entrants being cut price online agents with no discernible USP beyond price, do they each have the margin to innovate and provide value to consumers? Considering the fragmentation and high levels of competition, there would have to be some aggressive M&A activity to create a large player that can aggregate enough supply to generate the revenue required to compete.
As this is unlikely, where do the portals go for revenue growth? In Australia, REA Group's Realestate.com.au and Property.com.au offer more than dumb classified listings with the ability to book viewings (they call them inspections - which would be terrifying in the UK - http://www.realestate.com.au/buy/in-melbourne/inspection-times-1?), and for consumers to pay REA for 'depth' products. Here's an excerpt in the REA Group 2013 annual report from CEO Greg Ellis (who has since left for Scout 24, a German online classifieds company):
"We are constantly looking to the future and our
strategy is to increase our role in the property
value chain. This could include connecting our
property communities with the practical services
they need to live their property dreams such as
energy, telecommunications and finance."
And what enables them to increase their role in people's lives? The humble smartphone:
"Recognising that consumers are increasingly
accessing the internet – and our sites – via
mobile devices, our business has adopted a
‘mobile first’ approach. This means we develop
products for mobile devices first, then for desktop.
With downloads of our Australian mobile apps
exceeding 2.2 million in June 2013, we expect the
majority of traffic to our sites will come via mobile
devices by the end of the 2013 calendar year."
In the UK, Rightmove have fared better with mobile usage from anecdotal evidence (people either side of me on the London Overground browsing Rightmove on Android and iPhones) and as evidenced by equity analyst reports on Rightmove's dominance.
What will Rightmove do with that dominance? Will they continue to lead the industry and finally innovate for consumers? Or are they continuing their laser-focus on their estate and lettings agency paymasters, with price rises projected year-after-year?
Agents' Mutual, the agency-led challenger portal, might be a catalyst for Rightmove to pursue consumer innovation (and fees from consumers). Agents in the UK really do hate Rightmove's endless dominance enough to desert. If that happens, Rightmove need to maintain their strangehold on consumer eyes, and the only way to do that is continue to innovate faster than the rest.
As an example, Spareroom.co.uk have had the genius insight of making access to all their listings free, while charging consumers for 'Early Bird' access to call up within the first 7 days. The perception, especially in London, has been that property will be gone if not acted on quickly. Playing on these irrational fears/added value, through a readily accessible mobile interface, may be where Rightmove's next revenue steam is hiding.
Back to Priceline; the opportunity in mobile booking of anything is massive. Imagine a smart calendar that can book restaurants or (lucrative) theatre tickets on your behalf? All that data Priceline has access to would come in mighty handy.