Once derided by many in the travel industry, travel metasearch has come of age and is viewed by Expedia, Priceline and others as a necessary weapon in an assault on global growth. Expedia is hedging its bets and playing the field with Trivago and Room 77.
Expedia Inc. joined some of hotel-metasearch company Room 77′s existing investors in a $30.3 million Series C financing round in the latest chess move as online travel agencies grab a piece of the comparison-shopping market.
The investment binge, which brings Room 77′s total funding since 2010 to $43.6 million, follows the still-pending Priceline $1.8 billion acquisition of Kayak, and Expedia’s own $632 million deal to take a 62% stake in Germany’s Trivago.
Expedia joined Room 77 existing investors Sutter Hill Ventures, General Catalyst Partners (a Kayak investor until the Priceline deal closes), Concur Technologies, Felicis Ventures, Expedia founder and Zillow chairman Rich Barton, ex-Expedia CEO Erik Blachford, and Zillow CEO Spencer Rascoff in the funding round.
That’s a lot of Expedia DNA in there, but a Room 77 spokesperson says each of the companies made an equal investment in the latest round. Room 77 founder and chairman Brad Gerstner still owns a majority of the company.
With the Series C financing, Jim White, managing director of Sutter Hill Ventures takes a seat on the Room 77 board.
Meta world piece
What is going on with all of these investments in travel metasearch over the last couple of months?
It is clear that Priceline and Expedia, in particular, see travel metasearch as profit generators, advertising vehicles, a boost to their hotel businesses, and a plus for their mobile and technology offerings.
“We believe metasearch is an increasingly important model and complementary to our travel transaction business,” says Dara Khosrowshahi, Expedia CEO. “The level of innovation and depth of content at Room 77 excites us about its future role in this important customer acquisition channel.”
Expedia and Concur concur on metasearch
So why would Expedia invest in both Trivago and Room 77?
Metasearch, as in other aspects of the travel business, is clearly not a winner-take-all game, and Room 77 has plenty of room to grow in the U.S. and elsewhere.
This is apparently the first time that Expedia and Concur have participated in funding the same company, although The Concur Perfect Trip Fund has $150 million in capital tied to investments in emerging companies.
“We’re building a travel ecosystem that dynamically responds to the needs of business travelers, the companies that they work for and the suppliers that serve them,” says John Torrey, executive vice president, corporate strategy, for Concur. “When travelers choose a hotel room that uniquely fits their preferences, they have a better travel experience.”
“Through The Perfect Trip Fund and the Concur T&E Cloud, we’re bringing some of the best innovations like those from Room 77 together to revolutionize business travel,” Torrey added.
General Catalyst’s latest investment in Room 77 comes as its investment in Kayak will cease, once the Priceline-Kayak deal goes through.
Rooms with a view
Kevin Fliess, Room 77′s general manager and vice president of product, says the new funding will enable the company to accelerate its growth domestically and internationally, as it invests in “the team, product and marketing.”
“What we are going to do now with the increased capital is build the brand,” Fliess says.
Launched in beta in February 2011, Room 77 initially focused on building a database, including views from the window and floor layouts, related to individual hotel rooms.
But, Room 77 launched a travel metasearch service in March 2012, enabling users to book rooms from Room 77 on the site, or to book on the sites of online travel agencies and hotel partners.
One thing that distinguishes it from other services is that it displays published rates, as well as military, government, senior, and motor club special rates.
Fliess says Room 77 still has unique content about 1 million individual hotel rooms, and enables customers to request particular hotel rooms when booking a four-star or higher hotel, or making a booking for $400 or more.