Kayak is increasingly a hybrid as its direct-booking option gathers momentum. It's a competitive advantage over other travel metasearch companies, and it shouldn't be long before some of them follow along.
More than one-tenth of Kayak’s revenue in the second quarter came from direct bookings as the company expanded the program beyond Travelocity and Air Canada to include Expedia, Getaroom, Hertz/Advantage and Avis/Budget.
This is a major turnaround for so-called travel metasearch companies, which as a rule transfer users to supplier and online travel agency sites when it comes to booking itineraries.
But, these handoffs can be a mess given the fact that metasearch companies such as Kayak, Fly.com, and Skyscanner sometimes deal with hundreds of partners, all with different levels of tech prowess and varying website experiences.
Kayak launched its direct-booking path program in March 2011 with the Travelocity Partner Network on a white label basis for hotel bookings, and added Air Canada for its flights in March 2012.
A growing percentage of total revenue
During its second quarter earnings call today, Kayak revealed that its direct booking path revenue amounted to 11.3% of its total $76.9 million in revenue. And, that was up from 2.7% of revenue in the second quarter of 2011.
Meanwhile, Kayak has added the Expedia Affiliate Network and Getaroom for hotels, and Hertz/Advantage and Avis/Budget for rental cars.
Kayak connects to each of these partners through their APIs.
CEO Steve Hafner said the prime reason for implementing the Kayak booking path in 2011 was to improve the user experience, although the company has seen commercial and monetization benefits.
Unlike at other travel metasearch sites, users don’t have to leave Kayak.com when they choose the Book Kayak option, and enter their personal information and credit card details. And, staying on the site instead of being transferred to a third-party site increases the likelihood that transactions would be completed.
Kayak is not the merchant of record for these transactions and the bookings are actually processed through the reservations systems of the third-party partners.
And, Kayak doesn’t have the headache of having to handle fulfillment or customer service.
Not an online travel agency, but this may ruffle feathers
“We are a tech and marketing company, not an online travel agency,” Hafner said.
While the Kayak booking path accounted for 11.3% of total revenue in the second quarter, the company expects that percentage to increase.
Hafner said Kayak seeks to offer a Kayak booking path option for every itinerary on the site.
Kayak is having discussions with “just about everyone in the space,” Hafner said.
This could lead to conflicts with other partners who decline to participate in the program.
Hafner dismissed the idea of conflict, saying non-participating partners have not seen their referral volumes decline because Kayak’s overall queries are increasing.
Peace with Orbitz?
Speaking of conflict, Hafner says Kayak and Orbitz reached a settlement on two contract disputes over Kayak’s advertising practices that had gone to arbitration.
Hafner said no material amount of monies are being exchanged between the two parties and their contract has not materially changed.
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