A bomb just dropped in the online travel world: Priceline, the world’s largest travel company, has agreed to acquire travel meta-search company Kayak, for about $1.8 billion. This a great deal, and Priceline is probably among the best acquirers in internet history. Booking.com turned out to be among the best acquisitions ever, so did its buyout of Agoda.com, and now Kayak, which it will keep separate, could be in a similar vein.
Kayak has gone through many death watches before: the first was when Google bought ITA Software, formerly an independent maker of software for the travel industry, and everyone thought this would be the end of Kayak’s metasearch life and Google would throttle it. Nothing like that happened, as Google’s own travel metasearch efforts have been minuscule and ITA Software is still being licensed to competitors, including Kayak and Bing, among others. Then came Kayak’s own IPO, which almost never took off, but then did and since its initial offering on July 20, the stock has actually done well, all macro issues considered.
Kayak has also moved beyond metasearch into direct connections with airlines and hotel brands, so it is clearly building a long-term future. Startup competitors such as Hipmunk are still very small, still unproven and are purely innovating on user interface. Unless it gets fully in bed with the travel/airlines/hotel industry, it’s going to be tough to build a larger, bigger brand.