Skift Take

Six years after brashly boasting about how it would disrupt travel search, Hipmunk, which had to compete against larger players with more ample war chests, is exiting into the business travel portfolio of Concur. Hipmunk's turn toward business travel may make it more of a business-to-business play than its current consumer incarnation. As Concur's TripIt example shows, it remains to be seen how innovative Hipmunk can be given larger corporate priorities within SAP/Concur.

Concur, the corporate travel giant, has signed a definitive agreement to acquire the consumer flight- and hotel-metasearch site Hipmunk. The terms of the deal were not disclosed.

Hipmunk, which was founded in 2010 and had raised some $55 million in funding, is known for its Agony search, which sorts flight and hotel options by how stressful they are to users, but the company had a tough time breaking through to compete against larger players such as Priceline’s Kayak, TripAdvisor and Expedia’s Trivago.

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Tim MacDonald, Concur’s executive vice president of travel, told Skift Tuesday afternoon that Concur, which is owned by SAP, will keep the Hipmunk consumer brand going and hopes to improve Concur’s value proposition for frequent business travelers through learnings from Hipmunk. The approximately 50-plus strong Hipmunk team in San Francisco will stay on after the acquisition, which is expected to close in October, he said.

In a statement, Adam Goldstein, co-founder and CEO of Hipmunk, said, “Six years ago, our vision was to take the agony out of travel and travel planning. This combination means we can do an even better job for frequent travelers, in both their leisure and business travel.”

MacDonald, who said Goldstein agreed to stay on to lead Hipmunk post-acquisition, stated that Hipmunk had not been part of a formal sales process and that the acquisition talks grew “organically” over the years through partnership discussions between Goldstein and MacDonald. The two parties signed the deal yesterday.

MacDonald said the specifics about how Hipmunk might be integrated with some of Concur’s products, such as TripIt, have yet to be worked out. “Our aspirations are for that brand [Hipmunk] to continue to grow,” MacDonald said, adding that TripIt’s customer base grew from 2 million when Concur acquired it in 2011 to some 12 million today. “Much of Hipmunk’s work has been done to serve frequent travelers who usually turn out to be business travelers.”

On the other hand, one can legitimately raise the question as to whether TripIt, which serves as an itinerary management organizer, maintained its previous innovation pace after it was acquired by Concur. Skeptics might wonder likewise whether Hipmunk might lose some of its mojo within the broader SAP/Concur umbrella.

From Concur’s standpoint, given Hipmunk’s current status in the metasearch firmament, competing against a bevy of public or soon-to-be public companies, and the way changes to Google search have made it much harder for up-and-coming companies to compete, it wouldn’t be surprising if Concur didn’t pay top dollar for the Hipmunk acquisition. That’s the question on many observers’ minds: How much did Concur actually pay for Hipmunk?

>> Read More: The Real-World Challenges for Travel Startups, as Mirrored in Hipmunk’s Story

Business Shift

It seems apparent that Hipmunk as part of Concur will shift even more of its focus toward business travelers and in that way it would not have to compete as directly against the resources of Expedia, which plans on taking its Trivago unit public, and the Priceline Group’s Kayak, as well as TripAdvisor. Over the years Hipmunk developed various tools to help business travelers find hotels near their scheduled meetings, for example.

According to analytics firm Similarweb, from June to August 2016, Hipmunk averaged 2.7 million visits per month. Metasearch competitors Kayak and Trivago averaged 36.6 million and 21.7 million visitors per month, respectively, during the same period.

Discovery was a challenge for Hipmunk as well, especially against deeper-pocketed competitors. While 10 percent of Hipmunk’s search traffic came from paid search, for Kayak it was 15 percent and at Trivago a staggering 53 percent during the June to August timeframe, according to Similarweb.

Google’s moves to downplay organic search in favor of paid advertisements and Google Flights and Google hotel ads, both on desktop and mobile, didn’t help Hipmunk’s cause, either.

Hipmunk had raised nearly $55 million from at least 21 investors since launching out of Y Combinator in 2010, beginning with a $15 million seed round that included actor Ashton Kutcher and Expedia alums Erik Blachford and Rich Barton, and including Oak Investment Partners, Institutional Venture Partners, and Ignition Partners in later stages.

Concur, which is a unit of SAP, has acquired other consumer-facing travel brands in the past, including TripIt. Concur’s Perfect Trip Fund invested in companies such as Cleartrip, Evature, Buuteeq, Room77, Yapta, Taxi Magic, Table 8 and Trover, among others.

MacDonald of Concur said with many of these investments his company saw the opportunity to create better experiences for business travelers.

“Just as with TripIt, we see somebody [Hipmunk] doing really cool work in this space that will benefit our mission to deliver great consumer experiences to our customers,” MacDonald said.

UPDATE: As TechCrunch reported earlier this year, Hipmunk raised $5.75 million in what was believed to be a down round — at a valuation lower than in the previous round — of around $96 million in March 2016.

You can see the details of the April 2016 raise here. In that offering, Hipmunk had tried to raise some $10 million but settled for a little more than half of that.

While there may not have been a competitive bidding process, as Concur’s Tim MacDonald said, replete with a banker, Skift has learned from one source that other potential buyers declined to pull the trigger on a Hipmunk acquisition at figures below the $55 million raised.

Another source says it is known that Hipmunk shopped itself around. That is a routine and prudent course for any company on the block and looking for an exit.


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Tags: concur, hipmunk, mergers and acquisitions, metasearch, sap

Photo credit: Hipmunk rolled out new features in August. Today the metasearch site was bought by travel giant Concur. Hipmunk

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