|Headquarters||San Francisco, CA|
Hotwire is a discount travel website that offers low prices on airfare, hotel, rental cars, and vacation packages by selling off unsold travel inventory at discounted prices.
Hotwire was launched in 2000 by Karl Peterson, Eric Grosse, Gregg Brockway, and Spencer Rascoff and by six major airlines: American, Northwest, Continental, America West (now US Airways), and United. They were funded by a leading private equity firm, Texas Pacific Group (TPG) with an initial $75 million investment. Prior to its formal launch, it was codenamed Purple Demon.
In September 2003, IAC/InterActiveCorp announced its acquisition of Hotwire.com for $663 million. (Expedia spun off from IAC in 2005.) Hotwire's co-partners under IAC included Citysearch, Evite, HSN, Ticketmaster, LendingTree, RealEstate.com, Entertainment.com, and Match.com.
In 2007, J.D. Power and Associates Independent Travel Web Site Satisfaction StudySM recognized Hotwire for ranking "Highest in Customer Satisfaction for Independent Travel Web Sites" for the second year in a row. In 2009, they were given the 2008 award for the third time in a row.
Hotwire first launched with opaque airline tickets. They started selling opaque hotel and rental cars a few months later. Package offerings started in 2003. In 2004, Hotwire began to offer select retail travel products. In June 2007, Hotwire removed all airfare booking fees.
Method of operation
When hotel rooms, airline seats, or rental cars go unsold, travel companies use Hotwire to fill them. Hotwire does not identify the participating companies until after the purchaser has paid so as not to directly compete with regular retail sales of the travel partners. This sales model is known as "opaque". According to the Hotwire web site, they deal with brand-name travel companies exclusively. This strategy allows Hotwire partners to clear out their supply and sell inventory that would otherwise go unsold. Hotwire reveals the prices and the travel dates of all their products upfront and does not sell via a "bidding" or "auction" model. Hotwire also offers a set of open travel APIs that can be used in travel applications.
Customers should be wary of booking opaque deals through Hotwire as they often employ deceptive and misleading tactics to hook customers. For example, star ratings are often inflated compared to customers' reviews and other travel sites. Additionally, while the customer is given an idea of the location of the hotel through the title of the opaque deal, a green map, and yellow circles on the map, these three pieces of information may not all be accurate. For instance, a hotel listed as being "on the Las Vegas Strip" may actually be up to a half-mile from the strip. Another tactic used by Hotwire is offering for sale properties without a legally defined star rating, for example a "4-diamond" boarding house (US) / guest house (UK), unlawfully being sold as a "4 star hotel"; currently being investigated by UK Trading Standards.
Karl Peterson, one of Hotwire's four founding members, served as Hotwire's first CEO. In 2006, Hotwire was overseen by Hotwire's 2004-2006 CFO Eric Grosse, another one of Hotwire's four founding members. In January 2009, Eric Grosse became the President of Expedia Worldwide and Clem Bason took over as President of the Hotwire Group.
Hotwire operates with one General Manager and six Vice Presidents on its management team. Hotwire began with 4 employees, and then grew to 80 within months. Currently, Hotwire has over 300 employees.
- "Hotwire Launch to Provide Yet Another Way to Offload Cheap Inventory". World Airline News. 2000. Retrieved 2000-09-08.
- "Can Purple Demon avoid Orbitz errors?". Retrieved 2000-07-05.
- "InterActiveCorp grabs onto Hotwire". News.com. Retrieved 2003-09-22.
- "J.D. Power and Associates Ranks Hotwire.cc Top Travel Site for Second Consecutive Year". MSN Money. Retrieved 2008-01-23.
- "Clem Bason press release". In 2013 Clem left the company and Henrik Kjellberg became President of hotwire.com, after joining from Expedia Affiliate Network, also as President.
- "Hotwire Management".