Hotwire adds airlines, rental cars to Web site

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by Michael Meehan

(IDG) -- Hotwire Inc., the new airline-funded rival to struggling Priceline.com in the online discount travel business, today announced that 19 international airlines and two large rental car companies have agreed to list available bookings on its Web site.

The new additions expand Hotwire's air travel offerings beyond the eight U.S.-based airlines that had previously signed up to use the San Francisco-based company's site. The international and rental car moves also follow last month's rollout of a hotel room reservation service by Hotwire.

The new airlines that will list fares with Hotwire include companies such as Aer Lingus Group, All Nippon Airways, Alitalia -- Linee Aeree Italiane, Deutsche Lufthansa, KLM Royal Dutch Airlines, Swissair and Virgin Atlantic Airways. In addition, Hotwire said its U.S.-based airline partners now plan to make their full international routes available to users of its Web site.

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On the rental car front, Hotwire said, Lisle, Ill.-based Budget Rent a Car and Park Ridge, N.J.-based The Hertz Corp. will offer reservations at specially negotiated prices at more than 200 airports in the U.S. All taxes and fees will be included in the listed price, and Hotwire users will be able to see the type of car being offered before committing to a purchase. But the company said it won't identify whether the rental is from Budget or Hertz until after a purchase is made.

Hotwire launched its site last October with financial backing from six of the largest U.S. airlines, targeting Norwalk, Conn.-based Priceline as a direct competitor. Both companies sell what the travel industry refers to as "distressed inventory" -- the otherwise empty seats that represent a potential lost revenue opportunity to airlines.

Priceline.com made a name for itself with its name-your-own price Web site and a high-profile ad campaign that starred William Shatner. But Priceline ran into financial problems last fall because of a drop-off in airline ticket sales and complaints about its customer service, and it has been forced to undergo a series of layoffs and other cutback moves.

Krista Pappas, an analyst at Gomez Advisors in Waltham, Mass., said Hotwire appears to be hitting the targets in its business plan so far. "I think they were positioned to be a fierce competitor to Priceline from the get-go, and these [new] announcements just add more diversity to their product line," she said.

Hotwire CEO Karl Peterson said the company's Web site attracted more than 1 million registered users and exceeded $25 million in revenue during its first 100 days of operation. With Hotwire now offering the travel industry trinity of air, hotel and rental car bookings, he added, a wider marketing push is likely to follow. "So far, we've been word of mouth, and it's been working quite well," Peterson said. "But we know there's a broader audience out there."

The completion of the company's start-up phase and the addition of international airlines also could lead to the development of Hotwire sites in other countries,according to Peterson. "We're investigating what to do and when, but it's something we're clearly interested in," he said.

Priceline announced ambitious international business plans early last year, but those have been curtailed as part of the company's recent cutbacks. In December, Priceline said it was dropping ventures that were due to set up versions of its Web site in Japan, Australia and New Zealand.

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Hotwire Inc.
Priceline.com

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