It’s surprising that Momondo Group CEO Hugo Burge would depart the moment the acquisition of his brands by Priceline Group would close. But Kayak’s promise of boosted marketing spend suggests the Momondo and Cheapflight brands will live on.
There’s a notable absence at the meeting, though. The biggest immediate change is that longtime Momondo Group CEO Hugo Burge stepped down Monday morning. In a comment on Twitter, he says: “I’m rooting for our team, now part of Kayak, to carry on the fight for better travel search.”
The UK-based company will become part of the Kayak operation, which the Priceline Group acquired in 2013 for $1.8 billion.
Skift exclusively reported in January that Kayak-Momondo deal talks were underway.
Kayak chief executive Steve Hafner says in an interview that the Momondo Group brands will report to him but will retain their offices in the UK, Copenhagen, and Boston.
Hafner hopes Momondo will help the operation’s push into new markets. To achieve that, he expects to increase the marketing dollars that Momondo Group was already spending to promote its brands.
The spending will happen in markets where Momondo and Cheapflights — a London-based metasearch engine that is part of Momondo Group — already have strong brand recognition, such as Momondo’s reputation in Scandinavia and Russia and Cheapflights’ robust performance in the UK.
The company will likely decrease the marketing on those brands in places where Kayak has shown greater traction, such as France and Germany, Hafner says.
Hafner offered a few rationales for the deal. The main one, he says, is to expand Priceline Group’s geographic scope by making its services available in more markets and to improve the collective groups’ products.
On the product front, he anticipates a three-month effort to combine the groups’ back-end technology. He expects the various teams will learn from each other about the best practices in speed, inventory, and user interfaces.
Another aim is to “provide more commercial value to travel providers and our online travel agency partners,” says Hafner.
He adds that he presumes some employees will be let go to avoid redundant efforts in the combined operation but that such cost savings were not what was motivating the logic of the deal.
“Meta-search or limited-search”?
Recently there has been grousing from some smaller online travel players about the difficulty of breaking into so-called core search, or the main listings that consumers fetch when they check for prices on flights, hotels, and other travel products.
While Kayak and Momondo have each recently touted that they aggregate data “from hundreds of services,” trade insiders point out there may be more than 50 smaller online travel sites with unique inventory that don’t make the cut to be included in Kayak or Momondo listings.
Some of these companies have recently said to Skift anonymously that they had been told by Kayak and Momondo that if they advertised on the various brands for a few years, and if they “performed well”, they would be introduced to the business development teams at those companies for consideration to be included in the core search results of Kayak, Momondo, and Cheapflights.
But these small players say they’ve been doing advertising for a few years now yet haven’t gotten into core search results via an API (application programming interface, or a method used for retrieving data) — or via other prominent placements.
While Momondo and Kayak have had different thresholds for judging which companies to include in their results, Hafner says to Skift there will be “no change in the dimension of the scope of who gets included.”
He says: “We want to work with providers that can support our volume of queries on their systems. We only exclude companies that fail to meet one or our criteria, such as providing accurate pricing in real-time, which is hard. When you hear grousing, it’s from companies that don’t meet that and other key criteria.”
So why does Kayak (and now Momondo) take the online travel player money and posts advertisements for their services if Kayak doesn’t think they’re good enough to include in search results?
Hafner is unequivocal in his response: “The ads don’t show real-time pricing. A lot of small providers say they have, say, the Hyatt Regency in such-and-such a destination for $109 but when you click through it doesn’t include a $25 service fee or some other trick. We absolutely want to provide a consistent apples-to-apples, fast, transparent set of pricing for our customers.”
Merger of “near equals” in Europe
As for the acquisition, Hafner doesn’t have much more to add to explain the strategy for managing several competing brands, other than the mention of playing to geographic strengths.
“We’ll know more once the product teams have evaluated the relative strengths and weaknesses of all sides,” he says.
Glenn Fogel, chief executive of the Priceline Group, says in a statement: “Momondo and Cheapflights are premium brands that have garnered a loyal customer base throughout key markets in Europe.”
Priceline Group executives are said to have been wary of moves by rivals in Europe, such as Chinese travel giant Ctrip expanding with its $1.74 billion acquisition metasearch player Skyscanner as a means to expand Ctrip’s international footprint.
Skyscanner is reporting growth in its hotel sales since the acquisition.
For Burge, Monday’s announcement is the end of a long journey. He joined and invested in London-based Cheapflights in March 2000. He led the acquisition of Copenhagen-based Momondo and became CEO of the combined group in 2011.
In a comment on LinkedIn, he says: “I have so many wonderful memories and a warm sense of pride as I watch the brands become part of something bigger, stronger and even more able to carry on the fight for better travel search.”
He tells Skift in a statement that he plans to keep focusing on Howzat Partners, the investment fund he co-founded that invests in early-stage digital businesses.
“It is going great guns, so I’ll spend a bit more time with David Soskin and Sascha Hausmann on that,” he says. “But otherwise I’m taking a brief break.”
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Photo credit: Momondo Group CEO Hugo Burge, left, speaks with Skift's Luke Bujarski at Skift Forum Europe in London in April. Burge announced Monday morning he has stepped down from the role as the acquisition of Momondo by Priceline Group closed. Russell Harper / Skift