Skift Take

Hafner once called metasearch a lousy business with slim margins. What's clear is some of the same dynamics making life difficult for TripAdvisor, including Google Hotel Ads and Trivago's substantial marketing spend, are also proving challenging for Kayak.

skift forum europe london

On April 4 in London, hundreds of the travel industry’s brightest and best will gather for Skift Forum Europe 2017, our first conference in Europe. In only a few short years Skift’s Forums — the largest creative business gatherings in the global travel industry — have become what media, speakers, and attendees have called the “TED Talks of travel.”

This year’s event at Tobacco Dock in London will feature speakers including CEOs and top executives from InterContinental Hotels Group (IHG), Norwegian Air, Google, Lonely Planet, Momondo Group, and many more.

The following is part of a series of posts highlighting some of the speakers and touching on issues of concern in Europe and beyond.

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Kayak CEO Steve Hafner has seen the evolution of travel metasearch first-hand since his experience at the beginning of the 2000’s partnering with SideStep at Orbitz and a few years later co-founding Kayak.

At Skift Forum Europe in London, Hafner will discuss the future of metasearch and the competitive landscape. Parent-company the Priceline Group has a pending acquisition of the Momondo Group in the works.

But in the run-up to the Forum, Hafner had some very provocative things to say about some of his rivals.

Among them, Hafner, in arguing that TripAdvisor is operating in a very tough competitive environment, predicted that TripAdvisor co-founder and CEO Steve Kaufer will have to alter the way the company is handling Instant Booking, or there will be a change in leadership.

“I know I wouldn’t keep my job at Kayak here for very long, if I were going down a similar track,” Hafner said.

Informed of Hafner’s statements, TripAdvisor spokesperson Brian Hoyt said: “TripAdvisor continues to be focused on the long-term growth of our company. As you know and I will continue to point out…our scale, revenue per shopper and our unique number of hotel shoppers continues to increase as we work to build the best hotel shopping experience online.”

Hafner also speculated that Ctrip may try to turn Skyscanner, which it acquired a few months ago, into an online travel agency.

The following is an edited version of the Skift interview with Kayak’s Hafner.

Skift: In the Priceline Group’s fourth quarter earnings call, CEO Glenn Fogel said some very nice things about metasearch. He said that increasingly travel shoppers or many people prefer metasearch. It’s growing and it could get bigger. That sounds like a really different tone than what I heard from former CEO Darren Huston when he was around. So has that really changed anything for you operationally, or is Priceline’s acquisition of Momondo proof enough of the change?

Steve Hafner: The reason Darren wasn’t so upbeat on that was because he came from being the CEO of [before he became Group CEO while retaining the CEO post, as well]. And if you’re an OTA [online travel agency] you kind of see meta as the opposition, whereas Glenn has more of an enlightened view as corporate management of Priceline, which is, hey we want to help people experience the world. We don’t necessarily want to change how they actually do their travel planning. So let’s [make that part of] every different segment of that experience. Meta is an important segment.

Skift: So do you think this altered perspective on metasearch led in part to the Momondo acquisition? Are you feeling like the company is going to be more committed to meta than it was in the past?

Hafner: Yeah, going back to my first comment, I don’t agree with you that there is an altered perspective. When [former CEO and current executive chairman] Jeff Boyd was the CEO of the company, and he bought Kayak for a pretty penny [$2.1 billion], right?

And since then, those guys have helped us at Kayak expand geographically and marketing-wise. And now we’ve tacked on this Momondo acquisition, pending regulatory approval. And $550 million is not a small acquisition. Not as big what the Ctrip paid for Skyscanner [$1.74 billion] but it’s not a small thing.

Well it’s an area of the business that the Priceline Group is committed to. Kayak is the lead brand, we’re committed to operating globally and across every vertical like hotels and cars. And we’re very happy with the hand we have.

Skift: Are you further along in your thinking about how the brands will intersect with one another in terms of Cheapflights, Momondo and Kayak?

Hafner: It’s too early to tell. We can’t really talk to those guys [at Momondo] directly because of regulatory approval. We actually don’t have a solid view. I will say that Momondo did a great job in countries where Kayak hasn’t. And we’re eager to learn from that. And Kayak’s done a great in some of the countries where they haven’t. So that they can learn from us.

Skift: I get the feeling from Ctrip that they’re not about to pour loads of new money into Skyscanner. If that’s true, what does that mean for your ambitions for Kayak and Momondo in Europe? What do you think the implications are?

Hafner: I think Ctrip is a super-aggressive player. They’re also a partner of the Priceline Group so it’s not a love-hate relationship but it’s mutual respect and admiration. But we’re still fiercely competitive. I think Skyscanner for them made a lot of sense because they like the flight business. What they’re looking to do, what I understand from her [Ctrip CEO Jane Sun’s] public remarks, is to push that further down and actually turn Skyscanner into an OTA, or flight booking experience. That’s something that Kayak will watch with interest. We’re not ready to make that move although that’s something we keep taking a look at. Historically, the Priceline Group hasn’t been terribly enamored with the economics of the flight business. That’s an area that we’re going to be the leaders on.

Skift: When you say it sounds like Ctrip is going to turn Skyscanner into an OTA, do you mean that Skyscanner would be doing more facilitated bookings [like TripAdvisor Instant Booking]? Or something more?

Hafner: I’m suggesting something more. Yes, absolutely. Ctrip wants to control the customer experience. They want to have call center support etc. Yeah, she [Sun] would like for Ctrip to be a global brand. But my suspicion is that Ctrip will be the flight OTA and Skyscanner will be the mouth that feeds that stomach, right? So the consumer will go do a search on Skyscanner, find a flight they like, and Ctrip will be the booking option.

Skift: Right. Or at least the primary booking option, right?

Hafner: Yeah it may be the only booking option. If  I were them, I’d test it right? You say, OK, we’re going to have Ctrip as one of many OTAs plus supplier direct. Or it’s going to be Ctrip and only-supplier? So two options. Or maybe for some airlines, just Ctrip.

Skift: Speaking of the facilitated bookings [where consumers can book on the meta but the supplier does the customer service], Kayak pioneered it years ago, I remember you predicted awhile ago that TripAdvisor was going to find out that it’s not such a big deal, it wasn’t going to work, and would eventually abandon Instant Booking. So we’re seeing TripAdvisor really struggling now. Do you think that’s the way it’s going to play out? And what does it mean for Kayak if it does?

Hafner: TripAdvisor is encountering challenges on numerous dimensions. They’ve got Google clamping down on their free traffic on SEO [search engine optimization] by sending that to their [Google’s] own Hotel Price Ads. They’ve got Trivago massively outspending them to get the hotel shopper to test direct. And then they’ve got the self-inflicted wounds of Instant Book, which has cracked their economics and then clicking out of their consumer experience and it hurts their ability to invest in marketing.

So they’re [TripAdvisor] in a tough spot. I typically don’t give free advice out to fellow CEOs especially to ones I respect as much as Steve Kaufer. But I think he will make some changes on the Instant Book side.

Skift: I guess we’re going to find out soon. They can’t keep going on like this for too long, I don’t think.

Hafner: Yeah, I mean, if it does, you’re going to have a change of leadership there. Unfortunately.

I know I wouldn’t keep my job at Kayak here for very long, if I were going down a similar track.

Skift: And it’s sort of the natural evolution of things that often, as you know, founders don’t make the cut as the company matures. So we’ll have to see how it goes.

Hafner: Yeah, I wouldn’t put Kaufer in that bucket. That guy is a long-term, strategic thinker. So he’s making all the right moves; he’s just doing it in a very difficult operating climate. If Google wasn’t being as aggressive in Hotel Price Ads and Trivago wasn’t being as aggressive with marketing spend, his push for Instant Book might make a lot more sense.

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Tags: kayak, skift forum europe, tripadvisor

Photo credit: Kayak CEO Steve Hafner (background, right) will speak at Skift Forum Europe in London on April 4. He's pictured in the company's Fuselage conference room at headquarters in Stamford, Connecticut. Jesse Neider / Kayak

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