Saturday, December 22, 2007

Kayak-Sidestep deal reaction

News of the Kayak-Sidestep deal is sinking in on both sides of the Atlantic.

Travolution has collated some reaction - most of it, unfortunately, off-the-record - from various bosses of online travel companies and representatives from both companies.

Boss of rival UK search engine:

Given the promise of travel search has yet to be fully proven with the mass market consumer, this is consolidation too early. Are they buying/merging brand or technology or client relationships?

Maybe they are consolidating to be bought by a generic search engine?
Steve Hafner, Kayak chief executive and founder: is a technology company focused on perfecting travel search, and is a media company with in-house sales expertise and user-generated content.

By merging, each brand can improve its offering while continuing to focus on its individual strengths. With less than 10% overlap between existing and users, each site stands to gain millions of new users.
Another meta search boss:
Kayak want to dominate the meta search market in the US and as both sites are very similar they have simply bought more users and share. What

I am impressed with is taking on over £197m debt to finance the purchase. It will be interesting year in 2008.

I do not see a huge impact for us, as both Kayak and especially Sidestep have made no real ground this year in terms of market share or acquisition of visitors. Even their combined market share is still relatively small.
Rob Solomon, Sidestep chief executive:
From its inception as the first travel search engine, believed that consumers would prefer an objective and comprehensive travel shopping experience.

Joining forces with will help make this vision a reality for mass market consumers.
Former Sidestep senior executive:
Yes, big news - good for both I believe.
UK online travel chief executive:
Great vote of confidence in travel search. Kayak has always had a slight tech edge.

Great to see both firms becoming profitable: again, underlines the attractiveness of travel search as a business.

Thrilled that an East Coast tech company is doing so well.

A more powerful Kayak is just like a successful Google or Travelzoo, helping to convince travel companies that advertising on the web is more cost effective than traditional media.

The acquisition means that Kayak becomes a very clear leader in the USA in meta search with only very small companies (eg Mobissimo, Farechase) now to compete with.

Kevin May, editor, Travolution

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Dr Travel said...

Looks like the Kelkoo strategy to me: roll up the competitors early.

Search market structure tends strongly towards a very high level of concentration. If you conclude your technology is unlikely to get you to market dominance in a given segment of search (as Google's did in text search) maybe the practical way to get there will turn out to be this way.

Travolution Blogger said...

Dr Travel: Good points. First thing to note is what is happening to Kelkoo... Speculation abounded a few months ago that Yahoo was considering selling it off.

and did Google's text search really not work?

Dr Travel said...

Kelkoo's strategy worked for it's early shareholders, though it certainly helped that Yahoo was there to buy them out.

Technology innovation at Kelkoo seemed to stop from the day Yahoo bought them (maybe it stopped in fact some time before that, I don't know). Yahoo's failure with it should be seen in that light.

My point about the impact of Google's text search technology was not that it wasn't critical, rather that it may not be repeatable with other types of search. If so then consolidation may be the only way to get to a dominant search market share.

Roll-ups are dangerous though if the technology can still evolve unpredictably. This deal is a bet that it can't, in travel search.

Anonymous said...

This is a great move for Kayak, which is not fighting to be the #1 travel meta-search but rather the #1 travel *site*. In other words, it's Expedia they're after, and this helps them get there sooner. Also, bear in mind that Michael Moritz is (again) behind the round... he's definitely preparing his 'next-big-thing' when Google acquires Kayak for $700m+ or IPOs. Regarding Kelkoo: zero product innovation, terrible commercial policies - no wonder it's losing ground. And yes, *we* early shareholders were very happy then when Y! bought us :)