All of the commotion about a possible Google acquisition of ITA Software has been a setback to Kayak’s IPO prospects.
The betting is that a Google-ITA combo would transform Google into a major travel-metasearch player and with that kind of threat to Kayak, coupled with all of the uncertainty in the air, Kayak would be hard-pressed to price its IPO high enough to get the kind of return its investors envision, given its roughly $800 million valuation.
So, where does that leave Kayak for now?
The company is said to be hard at work breaking with metasearch orthodoxy and developing a booking capability — not merely for its mobile apps — but for Kayak.com, as well.
That would put Kayak into direct competition with online travel agencies like Expedia, Travelocity, Priceline and Orbitz.
Word on the street, too, is that as Kayak works on its booking acumen — instead of merely being a referral site — it is playing down its relatively new Private Sale offering.
You might want to chalk up Kayak Private sale as an experiment that didn’t produce the hoped-for results.
Developing booking capabilities might be considered another Kayak experiment.
Wall Street likely would await the outcome of that sea-change for Kayak, as well as how Google-ITA plays out, before becoming more open to entertaining Kayak’s bold IPO notions.
The thinking is that if Google becomes a serious air- and hotel-metasearch competitor, Kayak’s growth prospects would be reined in.
So, where does this leave Kayak?
The company likely would be open to the wooings of a strategic buyer — one which had very deep pockets.
Or Kayak will have to plod onward, building its product and opening new markets, and waiting to see how its prospects develop.
Related posts:
- Kayak exclusives to include flights, hotels, vacation packages
- Kayak Private Sale continues to draw public questions
- Kayak gets clubby with exclusive hotel deals
- Kayak’s collection of customer information would ‘assist’ its media business
- Kayak goes public with Private Sale hotels, rewriting metasearch playbook
I hope Kayak remains private as long as possible. I love observing their constant testing, new product features, and innovation, and fear the shift to public markets would have a stunting effect.
As for adding direct booking capabilities, it’s an interesting thought although hard to see how they would do it w/ out having to go on a hiring binge to counter their notoriously low headcount. While this is certainly possible, the revenue upside would need to be huge for it to be profitable. Although I guess they could tie into other reservation partners’ backend to avoid sales & customer service requirements, but that would make it less of a true competitor to the big OTAs.
Agree with Pete that Kayak is very innovative and testing things all the time. I just came across their new Explore feature which is in beta and I hadn’t seen before. They find very interesting things to do with their data.
nice article Dennis
Pete: I don’t know how long Kayak will remain private, but a go-it-alone strategy is no longer in play. Hence, an IPO is not on the agenda. Perhaps a public company will buy Kayak or maybe it will find another strategic buyer.
I agree with Pete and Jim that Kayak has been innovative and contributes much to the metasearch arena specifically and online travel in general.
I look forward to see what Kayak is going to do with a booking capability, and how it will handle it.
And, Jonathan, muchas gracias.