Asia next battleground for travel Web sites

By Kyle Peterson

LOS ANGELES (Reuters) - U.S. Internet travel companies, well entrenched at home and in Europe, are preparing to slug it out for dominance in Asia, where economic growth and increasing Web usage make the region a tempting target, leaders of two travel companies said.

Without predicting when it would happen, both Priceline.com (PCLN.O: Quote, Profile, Research, Stock Buzz), the No. 4 U.S. online travel agency, and travel search site SideStep see Asia as the next frontier, their CEOs said at the 2007 Reuters Hotels and Casinos Summit in Los Angeles.

The race to establish footholds in Asia is part of a trend among travel sites, which have almost saturated U.S. markets and must look abroad for growth opportunities.

"We view the Asian markets as very attractive," Priceline Chief Executive Jeff Boyd said. "A travel destination attractive to Americans and Europeans."

Priceline built its reputation with a "name-your-own-price" auction service, but it now also sells traditional air fares and hotel bookings.

Priceline's presence in Asia, where it owns 15 percent of an Internet travel business, is very small. But Boyd said it will eventually apply the same tactics in Asia that led the company to more than double its European bookings in the fourth quarter of 2006.

Priceline's growth in Europe has been largely by acquisition. In 2005, it purchased Bookings.com, the business that propelled much of its European expansion.

"I don't think the timing is that critical," Boyd said, adding that Priceline likely would focus on China and South Asia, rather than Japan, where rival Expedia Inc. (EXPE.O: Quote, Profile, Research, Stock Buzz) last year unveiled a new site.

Privately owned SideStep, a much smaller player in travel with more limited resources, also sees huge potential in Asia but will proceed with caution, CEO Rob Solomon said.

"Asia is a very tough market," he said, noting significant cultural differences in Asian travel-booking habits.

He said SideStep would likely advance in Asia through partnerships or acquisitions.

"It would be crazy for us not to at least dabble in Asia," Solomon said. "I think we should be in South Asia in 2007."

He predicted more rapid Asian expansion in 2008 and 2009.