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140 days ago
 

Priceline to buy OpenTable for $2.6 billion

Busy time for Priceline as its announces its second acquisition in a week with a plan to buy restaurant booking service OpenTable.

The definitive agreement to buy OpenTable is an all cash transaction values OpenTable at $2.6 billion.

The deal is $0.8 billion higher than what Priceline paid for US metasearch giant Kayak in late-2012.

OpenTable makes reservations more than 31,000 restaurants worldwide and claims to be helping around 15 million restaurant goers each month.

On mobile alone, OpenTable says it has seated seating more than 125 million customers since it first introduced reservations via devices in 2008. It has apps for Apple, Android, Blackberry and Windows operating systems.

Earlier this week Priceline dipped its toe into the B2B space when it bought hotel digital marketing service startup Buuteeq for an undisclosed fee.

Priceline CEO and president Darren Huston says:

“OpenTable is a great match for the Priceline Group. They provide us with a natural extension into restaurant marketing services and a wonderful and highly-valued booking experience for our global customers.

“We look forward to helping the OpenTable team accelerate their global expansion, increase the value offered to their restaurant partners, and enhance the end-to-end experience for our collective customers across desktop and mobile devices.”

Priceline says OpenTable will continue to be operated from its San Francisco offices, retain its existing management team and run as an independent business within the wider group.

The online restaurant booking space has become hotly contested in recent weeks with TripAdvisor plugging gaps in its offering through the acquisition of La Fourchette.

In its Q1 earnings, TripAdvisor CEO Steve Kaufer described the segment as “extremely under-penetrated”.

Meanwhile, Concur invested in Table 8 in May plugging further gaps in its Perfect Trip quest.

OpenTable CEO Matt Roberts says:

“We couldn’t be more excited to join a group of brands leading in their space, and we look forward to the next chapter of our own journey as we continue to enhance the dining experience for our customers worldwide.”

The deal is expected to close in the third quarter of 2014, subject to regulatory clearance in the US.

OpenTable was created in 1998 and saw a significant growth spurt following the acquisition of TopTable in 2008 (with the latter rebranding to its new owner shortly after). With 600 staff in tow, OpenTable now has a presence in almost 20 markets around the world, including China, Canada, Japan, Ireland and Mexico.

The company claims its reservations have generated $20 billion for restaurants.

Running within the heart of the reservation platform is the user generated content aspect, with a dizzying 400,000 reviews contributed to the site every month by customers.

 
 
Kevin May

About the Writer :: Kevin May

Kevin May is editor and a co-founder of Tnooz. He was previously editor of UK-based magazine Travolution for nearly four years and web editor of Media Week UK from 2003 to 2005.

He has also worked in regional newspapers (Essex Enquirer) and started his career in journalism at the Police Gazette at New Scotland Yard in London. He has a degree in criminology and a postgraduate diploma in magazine journalism.

 

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  1. Peter Ulrich

    Do all of you work for Priceline? :)

     
  2. Daniele Beccari

    Mobile, mobile …

     
  3. RobertKCole

    For those thinking it’s time for TripAdvisor to Buy Yelp…

    – Yelp’s market cap at 5.3 Billion is double OpenTable’s at $2.43 Billion (before the sale)

    – TripAdvisor’s market cap is 14.6 Billion compared to Priceline’s $63.2 Billion

    – Priceline has $6.7 Billion in cash; TRIP has $461 Million

    – Priceline has a 35.7% operating margin, TripAdvisor is at 30.5% operating margin, OpenTable at 23.5% & Yelp’s is -3.3%

    – OpenTable is profitable and has good margins – Yelp lost money past three years & won’t be profitable until 2015.

    Simply put, I don’t see it. While i believe TripAdvisor’s management could help Yelp significantly, an acquisition looks like a project Steve Kaufer would not want to take on.

     
  4. Aash Shravah

    It is a natural fit. Those who use OpenTable will naturally fit the Priceline world and vice-versa. Even though they are saying they will run as independent entities, it will be fun to watch the integration between the two.

     
  5. Simon Lenoir

    It’s good to see travel giants diversifying. OpenTable acquisition might accelerate the OTAs race to find ancillary revenue markets. If you consider the restaurants market size, 31,000 restaurants (after 16 years in business) is a small number. It proves the low penetration across all this emerging online markets such as professional services, massages/spa, ground transport, and the obvious tours and activities industry.

     
 
 

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