Online Travel Alliance Poses Triple Threat To Expedia

“Name your price” service pioneer priceline.com(Nasdaq: PCLN) and online travel sites Travelocity and Preview Travel (Nasdaq: PTVL) announced today that they are forming a marketing alliance that will consolidate access to their combined customer base of 20 million members.

The companies said that the agreement will allow Travelocity and Preview Travel members to name their own prices through the priceline.com service and give priceline customers access to the travel sites’ retail fares. The agreement will churn out revenue each time the companies facilitate the sale of each other’s products, the companies said in a statement.

No More Surfing

The alliance gives the companies access to a growing customer base, and one that is nearly twice the size of the next largest online travel site.

“This alliance is what Web travel customers have wanted for a long time,” said priceline.com President Daniel Schulman. “In the past, if you wanted the best travel deal, it meant surfing from site to site, spending precious time. This alliance will make it possible to go to our own sites or many of the nation’s largest search engines, ISPs and online services to buy travel products at the price you want.”

Going Places

In addition to shoring up their strong positions in their respective markets, the alliance also gives the three companies leverage against Microsoft’s Expedia travel service. Expedia was recently spun off by its parent company and is viewed with some trepidation by its competitors.

Travelocity announced in October that it would acquire Preview Travel and fold it into its service. The company will pay $50 million (US$) in cash and take a 70 percent stake, while Preview Travel shareholders will assume a 30 percent stake. The deal is scheduled to close early next year.

The new Fort Worth, Texas-based company will have a combined $1 billion in annual sales and 17 million customers.

While it is not directly involved in online travel like its counterparts, priceline does have a vested interest in besting Expedia. The Stamford, Connecticut-based company filed suit in a federal court last month against Expedia and Microsoft, claiming infringement on its copyright on “name your price” service for hotel rooms.

Priceline claims that its service accounts for two percent of all airline tickets sold in the United States. It also offers its service for hotel rooms, new automobiles, home mortgages, groceries and car rentals.