January 15, 2013

Expedia/Trivago likely to pay off sooner than Priceline/Kayak

While Priceline will first need to invest in building the Kayak brand overseas to ultimately drive ROI, Trivago is established in the highly fragmented European market, generating a substantial amount of hotel queries.

Will an online travel agency’s acquisition of a metasearch service result in a genuine referral service or just a bigger billboard? That’s what some analysts are asking in the wake of recent decisions by Priceline and Expedia to acquire metasearch travel sites Kayak and Trivago, respectively.

Metasearch engines like Kayak, Trivago and Hipmunk, which was founded in 2010, have grown in popularity as more people book travel through the Internet and put a greater emphasis on the best deal than on any particular brand loyalty. For the three months ended Sept. 30, Kayak processed 302 million queries, up 31% from a year earlier.

Such growth in metasearch popularity will likely be duplicated and even increased overseas, where the hotel market is far more fragmented than it is in the U.S. and where customers will value metasearch’s broader reach and its ability to track down the best prices.

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