Priceline Acquires AS Digital To Expand Its Global Presence In The Restaurant Reservation Segment

September 4th, 2015 by Trefis Team
PCLN: Priceline Group logo
PCLN
Priceline Group

Priceline (NASDAQ: PCLN) is gradually gearing up to provide TripAdvisor (NASDAQ:TRIP) with tough competition on the restaurant reservation segment outside the U.S.  So far, Priceline had been the undisputed leader in online restaurant booking in North America post its OpenTable acquisition in 2014. TripAdvisor, on the other hand, had been aggressively expanding its presence outside the U.S. with multiple acquisitions of restaurant reservation websites. Currently, TripAdvisor is the leader in Europe in this segment. However, Priceline was developing its OpenTable to make it ready for international growth and towards this end it acquired Australian-based restaurant reservation website, AS Digital, on September 3rd. AS Digital will be integrated with OpenTable and it will help build OpenTable’s presence in Australia, Japan, and across the Asia Pacific region. [1]

Our price estimate of $1,282 for Priceline’s stock is slightly higher than the current market price.

See Our Complete Analysis for Priceline Here

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AS Digital operates a table reservation and management software solution called ResPAK with a feature that aids thousands of restaurants across 40 countries to manage their table booking and reservation related operations seamlessly. AS Digital has around 2,500 partners worldwide and has seated over 250 million diners through the current date. With its brand, bookarestaurant.com , AS Digital also powers mobile applications, widgets, and websites that help customers find and book tables at restaurants from across the globe. [1]

Priceline acquired OpenTable in mid 2014 thus making an entry into the online restaurant reservation business. OpenTable is the leader in the North America’s online restaurant reservation segment, with around 50% market share. [2]

Prior to being acquired, in Q1 2014, OpenTable reported a customer base of over 31,500 restaurants and it seated around 47 million diners at these restaurants. 90% of its restaurant base were for North American restaurants. Our compiled quarterly data revealed that since Q1 2008, through its acquisition in 2014, OpenTable seated almost 570 million diners worldwide, with the number of diners growing at an average annual rate of 35%.

Priceline realized that OpenTable has a huge potential for international growth as the scope for growth in the online restaurant reservation category is much bigger in international markets than it is in North America. While over 20% of restaurant bookings in the U.S. occur online, the percentage stands at low single digits in nearly every international market. [3]

In Q2 2015, OpenTable witnessed double-digit growth in the domestic diner segment, with worldwide revenues of $62 million. Over the last couple of quarters, Priceline made significant investments towards shifting the OpenTable B2B software into a modern, cloud-based platform. Priceline was readying OpenTable for international expansion, which according to the management is slated for the latter half of 2015. [4] Post its integration with OpenTable, AS Digital will further help OpenTable in its expansion plans, specifically across the Asia Pacific region.

TripAdvisor Is Currently Priceline’s Biggest International Rival In The Restaurant Reservation Category

TripAdvisor has been on a restaurant reservation website acquiring spree since 2014.  It acquired LaFourchette, the leading online restaurant reservation systems in France and Spain, in May 2014. In the fourth quarter of 2014, TripAdvisor acquired mytable and restopolis in Italy, and Iens in The Netherlands. TripAdvisor continued its tryst with European restaurant booking websites with the acquisition of Portugal-based Best Tables in April 2015. Best Tables also operates in Brazil and has a database of 1,200 bookable restaurants. [5] TripAdvisor further acquired Australia-based restaurant booking website, Dimmi in May 2015. Dimmi reportedly boasts of the largest Australian restaurant reservation network, featuring around 30% of Australia’s restaurants. [6] Priceline’s AS Digital will provide direct competition to TripAdvisor’s Dimmi in Australia.

As a result of its restaurant reservation platform acquisitions, TripAdvisor has expanded the restaurant booking business into 12 countries, in less than a year’s time. TripAdvisor re-branded its restaurant platform as TheFork. Currently, TheFork now caters to reservations in over 28,000 restaurants. [7]

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Notes:
  1. The Priceline Group Announces the Acquisition of AS Digital, Priceline Press Release, September 3, 2015 [↩] [↩]
  2. The Priceline Group Agrees to Acquire OpenTable, Inc., Priceline Investor Relations, June 13, 2014 [↩]
  3. TripAdvisor’s (TRIP) CEO Stephen Kaufer on Q1 2014 Results – Earnings Call Transcript, Seeking Alpha, May 06, 2014 [↩]
  4. Priceline’s Q2 2015 Earnings Call Transcript, Seeking Alpha, August 5, 2015 [↩]
  5. TripAdvisor Acquires Restaurant Reservation App In Portugal, Skift, April 9, 2015 [↩]
  6. Hungry again, TripAdvisor acquires Dimmi, a restaurant-booking site Down Under, tnooz, May 20, 2015 [↩]
  7. TripAdvisor’s Q2 2015 earnings Call Transcript, Seeking Alpha, July 23, 2015 [↩]