We are back blogging and will try to give our 5 cents on what’s changed in the U.S. travel scene in the last months, as things are certainly picking up and U.S. travel 2.0 winners are getting a clearer shape.
Biggest deal – Kayak buys Sidestep for $196M
The deal that closed 2007 gave Kayak the VC crown of travel search engines in the American market.
The funds behind Kayak and Sidestep joined arms and merged the two firms under the Kayak management and later on under the Kayak brand.
This table (taken from Techcrunch.com) is an analysis of the U.S. travel search engine market: it clearly shows how Kayak and Sidestep dominate this market, with the two combined serving 9.75M visitors in November 2007 and claim to generate $3.5 Billion of travel reservations combined in 2007.
This deal is an indication that until a better travel search design takes the market, the main battle is over. The combined Kayak is said to be thinking an IPO when the stock market tumble ends, with valuations ranging $1 Billion.
Yet, not everyone in the industry are sure that Kayak is a worthy leader. Michael Arrington at Techcrunch recently claimed that Mobissimo, a relatively small player, is doing more than Kayak to answer customers needs. In Europe so far, Kayak or its ‘me too’ followers are failing to gain ground – we will write more about that phenomenon shortly.
Inflated price deal – Microsoft buys Farecast.com for $115M
On April 2008 Microsoft purchased Farecast, the third largest travel search engine in the U.S. and on May added it under its Live Search family. As Farecast was not profitable and had about 1/4 of the traffic Sidestep had with an estimated 1.1M visitors in the month before the deal (according to Compete.com) this price seems rather high. However, Farecast had a superior technology compared with any other search engine in the market – technology that allowed it to predict prices for flight tickets and hotel rooms. This tech
nology was a weak differentiator in the travel search market but it might be more useful in other markets that Microsoft opt.
The most interesting thing about Farecast is a service it stopped offering – the firm was using its prediction ability to offer customers ‘price insurance’ against possible price rises or price drops. The service was not a commercial success for several reasons, including the price of the insurance ($10), the service complexity and Farecast accuracy level which ranged between 50%-70%, in the ranges of an educated guess and apparently not enough for consumers.
Their hotel price indicator (on the right) is a very useful feature that indicates a path travel search engines should follow by giving users clear indication on how valuable their price is.
The killer app deal- Tripit gets $5M series B investment
We wrote about Tripit in the past and noted to the usefulness of the service but also noticed its relative vulnerability. The fact that the ‘after sales’ market is an highly attractive but not yet crowded was enough for Sabre Hodlings, O’Reilly AlphaTech Ventures and European Founders Fund to support the Tripit team with $5.1M investment. Tripit is surely a great product that could also be monetized, but nothing is stopping other players in the ‘open market’ from copying its idea and offer similar service. Both the travel search engines and the user generated content travel sites should be working on such offering already, unless they prefer to cooperate with Tripit and make it a content partner. So far Tripit is performing rather modestly in the visitor charts and Compete.com ranks it with 60,832 U.S. visitors in May 2008 and a declined growth pace. The future will tell if Tripit can drive enough value to attract visitors or would end up to be sold to one of the players in the market, perhaps even Sabre itself.
