Digital Booking Sites

Yelp Isn’t Worried at All by Priceline’s Intrusion Into Local With OpenTable Buy

@denschaal

Jul 31, 2014 6:30 am

Skift Take

Without a doubt, Yelp, which marks its 10th year this summer, is in play regardless of how company officials seek to downplay all of the merger and acquisition activity swirling around them.

— Dennis Schaal

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Yelp

Yelp recorded its first quarterly profit in the second quarter of 2014, and company officials are saying all the right things regarding not being concerned about Priceline's acquisition of OpenTable. Yelp


In the second quarter, Yelp recorded a $2.74 million profit, its first in more than two years as a public company.

On potential looming challenges, CEO Jeremy Stoppelman said the company’s focus is unchanged following Priceline’s acquisition of OpenTable, which provides restaurant reservations services to Yelp.

“I think both we and, as far as I know, OpenTable/Priceline continue to be happy with the relationship that we’ve got,” Stoppelman said during Yelp’s second quarter earnings call. “And so that continues on, and we continue to book lots of reservations through Yelp and the Yelp platform as they go to OpenTable. And so I think that remains unchanged.”

As a matter fact, Stoppelman said both Priceline’s acquisition of OpenTable this month and TripAdvisor’s May acquisition of Lafourchette, a restaurant reservations platform in Europe, won’t deter Yelp from its strategy of focusing on expanding its community and fostering high-quality content.

“But I think fundamentally, we remain focused on fostering, growing communities and the content quality as the way to grow and penetrate into these markets, and we continue to see success in growing our communities,” Stoppelman said. “And we think ultimately, as we have more and more high-quality content that we’ll be recognized and we’ll become a stronger and stronger brand in the markets that we’re operating in.”

Yelp and OpenTable have a revenue-share relationship as consumers can make a restaurant reservation through Yelp when the restaurant is a Yelp business listings customer that is also part of the OpenTable network.

Yelp would face a challenge if OpenTable, under Priceline, ended the relationship, but it seems that both parties benefit from the arrangement.

For smaller restaurants that may not need a “full, front of house management product,” as provided by OpenTable, Stoppelman said Yelp has developed Yelp Reservations, a less robust feature that informs restaurants of reservations by email, for example.

Meanwhile, on the financial front, Yelp posted a $2.74 million profit in the second quarter of 2014, its first quarterly profit as a public company, compared with an $878,000 loss a year earlier.

About its first quarterly profit, Stoppelman said: “While this is an important milestone, we still have a large local opportunity ahead of us.”

Net revenue increased 61% year over year to $88.8 million.

On the negative side of the ledger, Yelp officials said international traffic declined in June, compared with May, because of changes to Google’s search algorithms.

Stoppleman said Yelp has been successfully competing against Google for local business for years, and the recent changes to Google’s search algorithms did not have a material impact on Yelp.

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