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Just what the doctor ordered for Kayak

November 13, 2012 | Online Travel

According to PhoCusWright, Priceline's acquisition of Kayak is neither about melding metasearch and OTA, nor going upstream in the consumer purchase funnel just to drive more to OTA assets. The real opportunity is in metasearch itself - and in taking Kayak's impressive business in the U.S. and multiplying it several times over in international markets.

It's not often that the travel industry gets a true bombshell. Along with the many accomplishments the management teams at Priceline and Kayak can count, catching us all off guard is now one of them. But as unexpected as Priceline's announcement of intent to purchase Kayak was on November 8, the tremendous potential of this collaboration is obvious. The move is not without risks, of course, but it is, quite simply, brilliant.

Kayak has grown to be a pretty big fish in a pretty big pond. As market leader of the metasearch arena in the U.S., it has proven its proposition against the likes of Google and successfully launched an IPO, which valued the company at US$1 billion. But apparently that was just a warm-up. Not even four months later, the valuation has nearly doubled with Priceline's announcement of its intent to acquire the company at a valuation of $1.8 billion.

There is no ambiguity about what Kayak must do now to create value for its shareholders and justify its price. The company needs to venture beyond its pond and transform itself from a U.S. brand into a global leader, and time is of the essence. Kayak has struggled for years to replicate its success in other markets, while other players have been establishing formidable competitive brands around the world. This scenario is practically déjà vu of what the big four U.S. OTAs went through roughly seven years ago. Only one, of course, managed to break through the international barrier with phenomenal success – Priceline.

Get the full story at PhoCusWright

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