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In practice, Hotwire isn't nearly as different from -- or as superior to -- Priceline as the conventional wisdom posits. Like Priceline, Hotwire does indeed serve up fares that are lower than those found on sites such as Travelocity or Expedia. Like Priceline, it also extracts a price for these discounts -- and the price is a lack of flexibility and a requirement that consumers commit to a purchase before they really know what they're getting. The criticism of Priceline has always centered on a flaw that is baked into Hotwire's cake as well: You have to put up with planes that may not be on the airline you want, or at the time you want, in order to get the discount. This has launched probably hundreds of stories with anecdotal leads that begin, roughly, "Bob Smith was sitting on his bags at 2 a.m. in a strange airport, and he was steamed at Priceline.com." But absolutely nothing about Hotwire suggests that these same stories won't also be written about it. PIG IN A POKE. Both Hotwire and Priceline require you to commit to a nonrefundable sale before you know what flight you're on. On Priceline, you make a bid for the price you'll pay, and the site searches for an airline that's willing to ferry you between the cities you name, on the days you name, for the price you name. Before Priceline will make that search, however, you have to give your credit-card information and commit to buying any matching fare Priceline can produce. On Hotwire, you tell the site where you want to go, and on what day, and enter your credit-card data. Hotwire gives you a price one of its partner airlines will accept. But it doesn't tell you which one. It doesn't tell you what time the flight is, and it doesn't tell you whether there's a connection involved, much less how tight a connection. Once the price quote is unveiled, you have 30 minutes to accept or reject it. Then -- and only then -- does Hotwire tell you whether your flight is leaving at midday or after work, whether your plane back from the beach is a 6:30 a.m. special that will swallow your last day of sun, and so on. On both Priceline and Hotwire, you get a discount only if you're content to buy a pig in a poke. The prices the two sites deliver are quite similar, at least on the sample trips I looked into. A long-weekend jaunt from New York to Florida, booked about two weeks in advance, was $160 on Priceline and $164 on Hotwire. Expedia and Travelocity both quoted more than $200, but these conventional travel sites offer a choice of flights that lets consumers make their decision with their eyes open. Obviously, many people value that: A colleague of mine with two young children won't use Priceline because no discount is worth toting two sleepy toddlers through O'Hare at 10 p.m. to make a transfer. He'd rather spend the extra $80 a ticket. He wouldn't be likely to use Hotwire either. Whether Hotwire or Priceline is right for any given customer depends on that customer's needs. Price is only one element of value. Priceline does have one clear advantage over Hotwire, at least for the time being. The airlines backing Hotwire have bothered to build only an airline-reservation system. Unless you like sleeping on the street and taking taxis, you're probably going to gravitate to Priceline, where you can also name your own price on hotel rooms and rental cars. Perhaps that isn't the most obvious consideration for someone building a travel site to keep in mind. But I'd have trouble thinking of something more obvious. Priceline is selling well over $1 billion a year worth of travel now, and most statistics on the loyalty of its customers suggest they've learned to live with the compromises the site demands. (Plus, people know its name and associate it with bargain-seeking in a way Hotwire will have to spend tens of millions to replicate.) People will learn to live with Hotwire's compromises as well: There's a place for all kinds of approaches in the $10 billion online-airline-ticket market that consultants predict will develop by next year. Hotwire's approach is only one. It'll move some tickets, and it'll please some of the people some of the time. But it's no great big innovation. Mullaney covers e-business for Business Week from New York |
