A new competitor in discount online travel

Includes: BKNG, IAC, OSTK
by: David Jackson

Overstock.com CEO Patrick Byrne outlined plans for his comany's expansion into the online travel market. His key points, made in the company's earnings conference call:

  • Overstock.com launched its travel business a year ago.
  • According to Byrne, the site wasn't very good and the customer service provided by the vendors was lacking.
  • Since then Overstock has been contacted by multiple vendors looking for efficient liquidation of travel inventory and unhappy with current options.
  • New site went active on January 1st offering only cruises.
  • Expect other categories (eg. flights) to be filled in during next 4 to 12 weeks.

How will Overstock.com differentiate itself in online travel? Byre says:

  1. Lowest booking fee in the online travel industry.
  2. Unique, low-price offering.
  3. Superior user interface.

Overstock's marginal costs should be below those of the other big travel sites due to Overstock's site traffic and pre-existing e-commerce infrastructure.

Stock impact: Which firms are most at risk from a new cut-price travel competitor? Those that play at the discount end of the market - probably Priceline.com and the discount travel sites owned by IAC.