The Priceline Group's acquisition of Buuteeq, the largest of two hotel marketing-related acquisitions in the second quarter of 2014, was likely more substantial than most observers imagined. It is part of Priceline's strategy to become a B2B service provider for hotels.
Overshadowed by the Priceline Group’s $2.6 billion acquisition of OpenTable in late July, how much did Priceline pay to acquire two companies, buuteeq and Hotel Ninjas, that will help the company get into the business of being a tech and marketing service provider to hotels?
The answer has just come in as the Priceline Group disclosed in its 10-Q report for the second quarter that it paid $98 million, net of cash acquired, for “certain businesses which provide hotel marketing services.”
The Priceline Group is also slated to provide these businesses with substantial performance-based payments if they hit certain targets over the next four years.
Priceline took on a $24 million liability for these contingency payments in the second quarter, and the payments could max out at $90 million through 2018.
The overwhelming majority of these acquisition payments undoubtedly go to buuteeq, which had 200 employees at the time of the acquisition, and provides digital marketing services to hotels.
The Priceline Group announced its acquisition of Buuteeq on June 10, and the acquisition of Hotel Ninjas is believed to have taken place in the second quarter, as well.
Prior to its acquisition, buuteeq, founded in 2010 and headquartered in Seattle, had raised about $17 million from Concur Technologies and Madrona Venture Group, among others.
Two-year-old Hotel Ninjas, based in Barcelona, Spain, had raised only seed and governmental funding, and had no venture capital funding, prior to its acquisition by the Priceline Group in the second quarter.
The acquisition of Hotel Ninjas, which provides hotel-management software, was so small and of such little financial consequence to the Priceline Group that the company didn’t initially announce the acquisition, but merely confirmed a press report about it.
Photo credit: Members of the buuteeq team at its Seattle headquarters. buuteeq