Skift Take

In between four acquisitions so far this year, TripAdvisor has found the time to begin to give Kayak a run for its money in launching hotel metasearch. Kayak isn't going to roll over and play dead, but there will be a huge alternative for travelers to consider.

Google who?

That’s what the people at Kayak, who so feared the impact of Google Flight Search, must be saying as they watch events unfold at TripAdvisor, which likely is a much larger threat to Kayak’s business.

Consider that there is a lot more money in hotel metasearch (TripAdvisor) than flights (Google Flight Search), and Google Hotel Finder has yet to create a ripple.

Now TripAdvisor, which began rolling out hotel metasearch on mobile, tablets and desktops late last year, announced yesterday during its first-quarter earnings call that half of its branded sites around the world now feature hotel metasearch, and that it will be in place on 100% of its sites, with 200 million monthly unique visitors, by June.

The U.S. site isn’t fully rolled out yet, but TripAdvisor sites in the UK, Brazil, Canada, Germany, India, Ireland and Singapore already have the full treatment.

Once hotel metasearch, which brings TripAdvisor higher CPC rates and conversions than non-transactional traffic, is fully in place, TripAdvisor plans to launch its first global, offline advertising campaign, starting in the U.S. this summer.

Given TripAdvisor’s power and skills, the Kayak folks are definitely watching what TripAdvisor CEO Steve Kaufer yesterday referred to as TripAdvisor’s “big bet.”

“So I’m certainly counting on the fact over the long term, and this is our big bet that we totally believe in, that by delivering this better experience, by delivering the notion that not only can you pick the perfect hotel for you because of all this incredibly rich content, we’ve scoured the Internet, found you the best price as well. And there is in a lot of parts of the world — in many parts of the world a meaningful price discrepancy that we’re now helping users sort through and save them money on the trip.

“So you combine both of those. We get our message out. And yes, there’ll be some short-term revenue pain that kind of we consciously decided we’re willing to take right now because that user experiences is that much better, and we expect to get it back in spades in outgoing years, not part of the revenue-neutral equation.”

Kayak, which likely will officially be in the Priceline fold within a few weeks, barring a regulatory setback, is not about to roll over and play dead, but between TripAdvisor’s entry into hotel metasearch, and Expedia’s controlling stake in Germany hotel-metasearch site Trivago, the competitive set for Kayak is now much more formidable.

Julie Bradley, TripAdvisor’s CFO, noted that the rollout of hotel metasearch, the first-quarter acquisitions of Tiny Post, Jetsetter, CruiseWise, and Niumba, and the offline advertising campaign, may turn TripAdvisor’s EBITDA negative in the third and fourth quarters of 2013.

For people wondering about TripAdvisor’s acquisition blitz and how the company views it, below you’ll find Kaufer’s lengthy answer to a question on the strategy.

It is interesting to note in his answer that Jetsetter won’t be calling the shots during its life under TripAdvisor, with the inference being that TripAdvisor’s SniqueAway business will be taking the lead.

In addition, TripAdvisor, which has acquired “15 to 20” companies, according to Kaufer, isn’t done buying yet, and adding talent and technology to its Business Listings subscription business is one area that could be ripe for another big buy. Kaufer said:

“TinyPost, we look at and say, “Fun product,” “Already built,” “Mobile and social combined,” and “How cool it is to send a postcard when you’re on the road,” “What a great way to share the TripAdvisor brand with all of your friends in a fun way.” And we have a lot of travelers in market, so could be kind of really nice brand extension, not looking at it from a “I’m going to charge you $1 a postcard.” That’s just not on the table right now.

“Niumba vacation rentals, clearly we’re growing in Vacation Rentals. We’ve done 2 acquisitions. This is the third. And it expands our inventory footprint. Go back to the user perspective. And if you want to rent a place in Spain, we’ve just added a ton of great inventory to help you find the right place. We already have the infrastructure to — we already have the traffic, we already have the infrastructure. So it just kind of fits in with where we’re going.

“CruiseWise and Jetsetter, two acquisitions kind of led by other TripAdvisor Media Group businesses. And so, as running the whole media group, whenever any one of our businesses identifies a company out there that can make their core value proposition bigger, better, scalable or can extend them into a new market that’s particularly interesting, these two aren’t examples of that, but I would generally look favorably upon it because I like to let the — most of the businesses run on their own. So that kind of explains the CruiseWise and the Jetsetter.

“The other way I — the other lens through which I look at acquisitions is really furthering the core TripAdvisor offering globally. So we’d look at either something that adds lots of traffic in a market where we’re not strong in, or something that adds technology or features to something that, in fact, we can roll out globally because, again, we’re trying to leverage our traffic base, our content base, our reach, our membership, and those are pretty powerful assets that, if we brought a technology or a team, we can often make some nice hay with that.

“And then just sort of TripAdvisor for Business as a separate group serving up subscriptions to hoteliers and other folks interested in the — other businesses interested in reaching the eyeballs of travelers, that’s kind of another leg of the company that could be up for acquisitions in the future simply because we have the sales force, we have the traffic and we have the travelers. So maybe, there are some additional products that would fit there.

“In almost all of the acquisitions that we do, talent plays a key role. So it’s not that — obviously, we innovate and we build a lot of stuff ourselves, but we’re certainly not a company known for a “not minted here” situation as I think these folks would make it up to 15 or 20 acquisitions that we’ve done, something like that.”


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Tags: kayak, tripadvisor

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