momondo bottle
5 months ago
 

Priceline Group buys Momondo for $550 million

The Momondo Group has sold to the Priceline Group, owner of rival travel search service Kayak, in a $550 million deal.

The deal will see the two brands within the group, Momondo and Cheapflights, “roll under” the Kayak division.

Regulatory approvals are needed to close the acquisition, a statement says, with it expected to wrap up by the end of 2017.

Kayak CEO Steve Hafner will have responsibility for all of Priceline Group’s travel search brands.

Priceline Group president and CEO, Glenn Fogel says “metasearch is appealing to consumers and we’re keen to expand our global footprint”.

“Momondo and Cheapflights will be nice additions to our meta portfolio under Kayak.”

The deal gives the Priceline Group a head-start in a few of the markets where it has failed to achieve any significant traction over the years, primarily in Europe.

Momondo is traditionally a strong player in its home markets in Scandinavia (it was born in Denmark).

Cheapflights was originally a travel deals business but switched to pureplay metasearch in 2015.

Momondo was bought by Cheapflights in 2011.

Hafner says Kayak is “looking forward to learning from them [Momondo] and sharing best practices as our brands expand globally”.

Hugo Burge, CEO of Momondo Group for the past six years, after joining the company in 2000 to help scale the original Cheapflights business outside of the UK, praises the new mothership for its “proven track record of operating successful, customer-centric travel brands all over the world”.

“We couldn’t be more excited to join such an esteemed group of loved brands and join forces with Kayak to bring the best in meta search to our growing customer bases worldwide.”

Still, the acquisition plays in front of the enormous backdrop of the Skyscanner sale to Ctrip from last year.

The $1.7 billion deal was seen by some as a coup and figurative stake-in-the-ground for the ambitions of the Chinese online travel agency giant.

Yet what it actually signified was how it and its friends at the Priceline Group (it had trousered a cool $700 million in investment from the US-based company) were cleverly positioning themselves as powerful players in the wider online travel landscape.

With Priceline Group owning Kayak and Momondo outright, plus Ctrip (with Priceline’s money) controlling Skyscanner, there is very little left for rival group Expedia Inc to capture when it comes to travel search.

Where Expedia still has a march on the global Priceline-Ctrip behemoth is in hotels, with Trivago dominating in Europe and attempting to do the same in North America and Asia.

Share on FacebookTweet about this on TwitterShare on LinkedInEmail to someone
 
 
Kevin May

About the Writer :: Kevin May

Kevin May was a co-founder and member of the editorial team from September 2009 to June 2017.

 

Comments

Your email address will not be published. Required fields are marked *

  1. Matt

    The homogenisation continues. How dull. The travel industry used to be cool.

     
  2. Oz Har Adir

    Three interesting financial aspects for the transaction:
    1. The macro story of our time is the funds available today in general and in travel in particular. The same Glenn Fogel who spent $133M on Booking.com in 2005 ($164M adjusted for inflation), with revenue growth potential of >100X, is paying $550M for Momondo, with revenue growth potential of <5X. Both were pure cash deals.
    2. This was a beautiful PE execution from Great Hill Partners, who took but 27 months to generate 356% ROI on their investment in Momondo ($330M on $130M invested), and a move that signals the importance of timing, as the same Momondo that was not such a hot property 2 years ago, was now a strategic asset for Kayak who is trying to position itself better against Skyscanner and the rising threat of Google Flights. I also think that the way Momondo positioned itself in the past year, staying in the news, launching the DNA campaign, the talks about the impeding IPO and pegging a deal range of $500-$1Bn were great moves that helped appreciate the price a bit further.
    3. The Momondo brand & product itself, which was valued at $80M just 27 months ago, was now worth to Kayak 5.2X as much, even if we assume that all the funds raised from Great Hill were reserved (they were not). Reminds me a bit of the Kayak acquisition/merger with Sidestep in 2007, where the company paid $200M to get its then startup competitor out of the market in US and pave the road to leading that market. For all its product prowess, Kayak is much more an Expedia who builds its way through acquisitions, than it is a Booking.com that grows faster organically.
    For me, that tells more about the pragmatism in Priceline’s leadership than anything else is their ability to master both types of financial dealing. They aren’t the most valuable travel company in the world for nothing at $80Bn market cap…

     
  3. William Beckler

    It’s pretty exciting to see another metasearch get bought, from the perspective of AllTheRooms.com!

     
  4. Timothy O'Neil-Dunne

    I would beg to differ on the options in front of Expedia on flights. As an Alumnus the company is smart (its been smarter!) The issue for flights is how the supply side takes the view of meta search. In my view the world has changed and the ability of true search to address customers needs represents a rather large elephant in the room. There are three issues here that need to be considered.
    How much inventory needs to go to search?
    The complexity of search with ancillaries added – hard or not?
    Alternative competition?
    Addressing these 3 questions must be the way forward for the Seattle company. And then – of course there remains the question of how well the infrastructure of the industry today can support this new world order of delivery that the consumer is demanding.
    That is interesting.

    Cheers

    Timothy

     
 
 

Newsletter Subscription

Please subscribe now to Tnooz’s FREE daily newsletter.

This lively package of news and information from Tnooz’s web site provides a convenient digest of what’s happening in technology that drives the global travel, tourism and hospitality market.

  • Cancel