How Can Priceline’s New Taxi Service, Rideways, Impact The Company and Its Other Brands?

December 28th, 2016 by Trefis Team
PCLN: Priceline Group logo
PCLN
Priceline Group

Priceline is the biggest online travel agency in the world today with a market capitalization of almost $75 billion. Maybe that is the reason why the OTA has the chance to invest in a vast array of services and products and even house brands that have the possibility of cannibalizing each other. For example, Priceline’s Rideways, which is a private car service for international travelers and small groups, and Priceline’s Rentalcars.com, which is a global car hire company, seem to be brands capable of undermining each other’s demands. However, this might also be the leading OTA’s strategy to capture all kinds of travelers through its car services. An international traveler might not have the requisite documents or confidence to ride in a foreign country, for example, in China, a Chinese driver’s license is required to drive a car, or an elderly couple might prefer renting a car with a driver than driving themselves. Under these circumstances, Rideways comes to help. In other scenarios, where a traveler needs to rent a car, they can use the services of Carrentals.com.

When Rideways’ present managing director, Hikmet Babayev, joined Rentalcars.com in 2014, he was asked to find ways in which the car rental business might get disrupted in the next few years by on demand cabs or driverless cars etc. Then, in 2015, Babayev was asked to launch Rideways with $2 million seed funding from Priceline. Though most of its business is in Europe currently, Rideways already has partners in local ground transport services, in 800 cities spread across 120 countries.

More than being a low cost option, Rideways aims to be a reliable and affordable choice for international travelers who might want services from a private car service from a known brand. Though it currently deals primarily with customers, the company is also keen on partnerships with hotels, airports, and airlines.

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The biggest advantage for Rideways is the cross promotion options under Priceline’s umbrella. Rideways is currently witnessing around 30% y-o-y growth in monthly bookings though its presence is still predominantly limited to Europe. The company is planning on an expansion to the U.S. after integrating with Kayak and Priceline.com.

If both the brands, Rentalcars.com and Rideways, can complement each other, catering to international tourists with different preferences, instead of cannibalizing one another, under that scenario both the brands together can capture a significant chunk of the hired car and cabs market. This, in turn, might cause Priceline’s revenue and margins on car rentals to increase significantly in the future.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Priceline

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