Kayak CEO Says Metasearch Still Has Clout Despite Travel Industry’s Direct Booking Push

For consumers looking to book travel, the various online travel sites and apps look a lot alike. Yet Kayak.com was one of the early pioneers of a distinctive approach, where it compared the prices offered by airlines, hotels, and other suppliers side-by-side with offers from resellers like online travel agencies. So how are Kayak and the metasearch model faring at a time when the coronavirus pandemic has crimped travel, and short-term rentals have grown in popularity?

Kayak CEO Steve Hafner rejected the view that the importance of metasearch had declined in recent years when he spoke Wednesday at the Skift Live Online Travel and Distribution Summit.

“Meta will play just as important a role as it ever has, but the nuance is that the OTAs [online travel agencies] will perform better in the short run,” Hafner said.

Hafner acknowledged that online travel agencies have trimmed marketing spend on Kayak in favor of brand advertising, and both online resellers and suppliers are pushing direct bookings instead. But he predicted that metasearch in general, and Kayak in particular, would emerge from the crisis strong.

“Our advertising business has shrunken quite a bit, and our other business partners have raised their required return on investment for their marketing spends,” Hafner said. “So the meta channel is going to face more headwinds in getting back to performance, but once we get back there, we’ll take more than our fair share.”

Kayak’s Bet on Business

Kayak CEO Steve Hafner at Skift’s Online Travel and Distribution Summit.

To stay relevant, Kayak is adding functionality. Hafner teased that Kayak was developing a lightweight property management system for “independent and boutique hoteliers.” However, he declined to give specifics on how the software would “level the playing field with the big chains.”

The move would be intriguing because Trivago, the Expedia-backed lodging metasearch player, sold to Mews late last year its Base7Booking unit that provided hotels with property management software. (Trivago has maintained channel management and marketing tools for hoteliers.)

Anticipating a recovery in business travel after some time, Hafner said Kayak is expanding its business travel services, which it first announced in November 2019.

“This month, we’re rolling out Kayak for Business in 60 more markets and 28 more languages,” Hafner said.

What’s going to make Kayak for Business stand out from other tools? Hafner said it would be a more intuitive-to-use interface, and have few if any transaction and customer service fees. For context, see “What Is the Future for Metasearch in Corporate Travel?”

Kayak is also working on an enhanced loyalty program to encourage more repeat consumer usage, Hafner said.

Kayak Looks for Short-Term Rental Growth

Until now, Kayak hasn’t appeared to capture much of the growth in vacation rental and short-term rental shopping. But Hafner sees an opportunity there.

“There’s a big segment of consumers who think that properties on Airbnb are exclusively on Airbnb and that Airbnb has the best prices,” Hafner said. “That’s actually not true. Metasearch shows you that’s not true. So hopefully some other OTAs can amplify that message with marketing activities, and perhaps Kayak as one of the metasearch sites may get into that angle as well — to educate the consumer that it pays to comparison shop.”

Hafner clarified to Skift Executive and Founding Editor Dennis Schaal that Kayak right now doesn’t have much of a marketing budget. So he suspected it might be the sister brands in the parent company Booking Holdings that would lead the marketing charge there about educating consumers to shop around and not just rely on Airbnb.

Airbnb’s market cap was about $121 billion on Wednesday, while Booking Holdings, the parent company of Kayak, was at about $89 billion.

In discussing the differing market valuations, Hafner noted how Booking Holdings had generated dramatically higher profits pre-pandemic.

“It makes you scratch your head,” Hafner said.

CORRECTION: This article originally said Kayak for Business was expanding to 16 markets, rather than 60.