Tom, PTVL's annual report reflects the same concern reported in the article linked to your post. From 10K:
Historically, typical
standard base commission rates paid by travel suppliers have been approximately 10% for hotel
reservations and car rentals and 10% to 15% for cruises and vacation packages. During the quarter
ended June 30, 1997, the commissions paid by most of the major airlines for online reservations was
changed from a typical base rate of 10% to approximately 5% (excluding overrides). In March 1998,
one large domestic airline announced that it was further reducing online commissions for domestic
tickets. Travel suppliers can further reduce current industry commission rates or eliminate such
commissions entirely,
Even the low 5% commissions are in jeopardy. Southwest Airlines announced that it pays zero commissions to online travel services. American Airlines last month further reduced online ticket commissions from $15 to $10/ticket.
During last Q, PTVL's online revenues were 6.7% of bookings which indicates the majority of bookings were for airline tickets. With further squeezing by the airlines, plus intense competition from myriad of online travel services, PTVL may never make money. But heck, like Parsiani said yesterday on CNBC, companies like PTVL are relying on the public to bail them out through secondary offering, tertiary offering etc... In the meantime, insiders will wisely take these opportunities to dump their shares.
Regards,
Tom |
