Publicly traded travel site Travelzoo has launched the beta version of its new comprehensive airfare search engine, Fly.com. At first glance, Fly.com is a Kayak-look alike (except that Fly.com searches are limited to airfares only). The two sites offer virtually the same feature in searches, except that Fly.com’s price comparison sites are limited to Priceline and Hotwire, whereas Kayak offers comparison searches on Priceline, Hotwire, Expedia, Travelocity and Airfare.com → Read More
As Lehman Brothers sells off its assets following its bankruptcy, there is still a big question as to what will happen to its venture arm and, more importantly, how any change in ownership will affect the companies in which Lehman Brothers Venture Partners holds a stake. Like many investment banks, Lehman got into venture investing in the mid-1990s to try to capture some of those venture returns. The investment management group that it was a part of was sold off to Bain Capital and Hellman & Friedman on Monday, but the venture arm was not part of that sale. Instead, Lehman Brothers Venture Partners is trying to spin itself off as a separate venture firm with about $800 million in assets.
But if it cannot do that, it will either go to hungry creditors or a financial buyer who may be more interested in liquidating the fund than in nurturing the startups in its portfolio. Those startups include Kayak, SearchMe, Jaxtr, Endeca, and about 80 more (A partial list from CrunchBase is below. Other than comScore, most are still private).. They could wake up tomorrow and find that they have a new shareholder who is even more impatient for a quick exit than its existing ones. It’s like being an orphan and wondering who your next foster parents will be. → Read More
After years of ceding the upper hand in online travel to booking sites like Kayak and Orbitz, American Airlines is about to fight back. According to the CEO of a competing travel site, American Airlines is about to pull its airline listings out of Kayak and is considering doing the same with Orbitz. If it does so, other airlines such as Continental and Northwest may follow suit. Airlines don’t like the booking sites because they have to pay them a referral fee for every ticket they sell, as opposed to capturing the full fare when travelers book on their individual sites. Even though that only amounts to a few dollars per ticket, every dollar counts to the troubled airlines—especially now with fuel prices going sky-high and the consumer spending going down. American Airlines has a particular beef with Kayak because it tends to show AA flights through its partnership with Orbitz instead of directly from American. That means American has to pay a double tax, once to Kayak and once to Orbitz. (The deal between Kayak and Orbitz, charges the competing CEO, was meant to drive up traffic numbers on Kayak as it was potentially seeking an IPO prior to raising $200 million instead last December). The decision to sever ties with Kayak supposedly has already been made. The only question is whether Orbitz can salvage its relationship with the airline. This should strengthen competing travel sites, especially newer ones that link directly to the airlines like Mobissimo and Yapta. CrunchBase Information Kayak Orbitz Information provided by CrunchBase → Read More
Connecticut startup Kayak has raised $223 million in venture capital and employs 58 people to build and grow its travel search site. Its chief competitor, San Francisco based Mobissimo, has raised $1 million and has just 15 employees. Mobissimo also became profitable last year, and the company doesn’t have to raise more money unless it’s to fuel faster growth or acquisitions. It’s also clear even from a cursory comparison of the two sites that Mobissimo is trying harder than Kayak to help you find exactly the flight and hotel you are looking for. Kayak is largely similar to other travel search sites – enter where you want to go and get back results from a number of providers, sort by price, etc. But Mobissimo has implemented a number of just plain smart features that provide the kind of travel options that you usually need a human operator or travel agent to get to. In addition to normal search results, for example, users also see options for the lowest priced non-stop fares, the lowest priced alternative dates, and the lowest priced business class fares (without doing new searches). And if there’s a train between the two destinations, Mobissimo will show those results along with the flights – you may get there faster and cheaper that way, and you’d never think to search for train schedules separately. And even better, the service will look for related destinations and show you the lowest fares there, too. For example, a search for flights to Poland may show other Eastern European destinations if the prices are a lot lower. Or if you are looking for flights to an airport near a beach, Mobissimo will show you other flights to other beach destinations, perhaps thousands of miles away (and skiing, and wine regions, etc.). It’s very hard to find these kinds of travel options with online searches. If you are flying to Warsaw, you just don’t think to do a search to Prague, too, to see if it’s vastly cheaper. And if all you want to do is find a quick getaway to gamble, play golf, drink wine, go to a beach or just about anything else, you can search primarily by activity, too. Mobissimo also has widgets on the site that pull in third party information about the destination. Weather, Flickr photos and (soon) travel guides are included in the left sidebar. All of this → Read More
Seattle based Farecast, a service that predicts and guarantees airline prices, has expanded its reach outside of the United States, with international coverage in key markets. Farecast, which launched in May 2006, tries to predict flight price changes for consumers so they know whether to buy now or wait. In late 2006 they added guarantees, effectively allowing consumers to buy insurance policies against price increases in the event they decide to wait. More recently, Farecast added hotel bookings as well. The site now offers predictions for over 200 markets between U.S. cities and Europe, Mexico, the Caribbean and Canada. According to USA Today, travelers can search for international trips up to two weeks long and six months out and Farecast will predict whether fares will go up, down or hold steady over the next week. The new extended service still has limitations, for example a search for San Francisco International (SFO) to London Heathrow (LHR) offers airfares, but doesn’t provide a prediction service despite LHR being a major gateway into Europe, where as SFO to Mexico City now does. Farecast can be used in a similar fashion to general travel sites such as Expedia as a general airfare and booking service; a search for Melbourne (MLB) to SFO gave similar results to the SFO-LHW search, although despite Farecast providing price comparison links to sites including Expedia, there was no price advantage at all over the other sites. Farecast operates in a highly competitive space, more so since Kayak acquired Sidestep in December. Farecast’s traffic has trended up over the long term, but it is still lagging in third place (see comScore chart below). CrunchBase Information Farecast Kayak SideStep Mobissimo Information provided by CrunchBase (thx to Mark Douglass for the tip) → Read More
Last night, Yahoo signaled that it is serious about competing in the travel price-comparison search market in the wake of Kayak’s recent $200 million acquisition of Sidestep. Yahoo Travel put its FareChase property, formerly a tab, front and center on the travel homepage. FareChase is now the default search engine for pricing flights, hotels, cars, and vacations. [Update: Yahoo says it is not the default for everyone. Some people will see it, some people won't]. Yen Lee, the CEO of travel search startup Kango and a former general manager of Yahoo Travel, noticed the change and offered this analysis on Kango’s blog: It seems like just yesterday that the travel sector crowned Kayak the undisputed heavyweight champion of price comparison search following their acquisition of SideStep. But wait! It looks like Yahoo has (finally!) unveiled FareChase, the price search engine they acquired back in 2004. On the Yahoo Travel homepage, the Travelocity booking engine is no longer the default search option, it has been re-labeled ‘classic search’ and FareChase is the default search. . . . Presumably this brings a new competitive element that Kayak might not have expected (let’s be serious, four years after the acquisition, did ANYONE expect Yahoo to finally launch FareChase?). Sounds like the move surprised him. That Travelocity deal must have been pretty lucrative, even if it was from another era. Could Yahoo be sacrificing short-term profits for the bigger game of maintaining and capturing market share? Lee also notes that Yahoo searches more travel sites than Kayak, which could help it ferret out better prices. Of course, as a tangential competitor to Kayak (although Kango is more about travel planning than pricing), it is in his interest to point out new threats to its business. Regardless, it may now be Yahoo that is facing the threat. According to comScore, the combined traffic to the Kayak and Sidestep networks in December in the U.S. was 6.3 million individuals, which is within striking distance of Yahoo Travel’s 7.3 million. Price shopping is perhaps the main draw to any travel site, so Yahoo has to step up its game to maintain its lead position. CrunchBase Information Kayak SideStep UpTake Information provided by CrunchBase → Read More
Discount travel site Kayak has acquired rival SideStep for $200 million. This story was set to be announced tomorrow but word is leaking all over the place after Sidestep CEO Rob Solomon told his company employees the news at an all hands meeting. This is a two part deal. Kayak raised $196 million in a new round of financing from their existing investors (Sequoia Capital, General Catalyst Partners and Accel Partners), two of SideStep’s existing investors (Norwest Venture Partners and Trident Capital), new investors (Oak Investment Partners and Lehman Brothers Venture Partners) and debt lenders (Silicon Valley Bank and Gold Hill Capital). Prior to this new round, Kayak had raised $27 million in capital. Kayak subsequently acquired SideStep. Terms are not being disclosed, but we are hearing that the deal was for $180 million in cash. An additional $20 million that SideStep holds in cash is being distributed as well, making the total deal size around $200 million. SideStep and Kayak are the two leaders in the discount travel search space (along with Mobissimo and Farecast). Kayak is reportedly doing around $50 million in yearly revenues, compared to SideStep’s $35 million. This marks quite a turnaround for SideStep. Two years ago the company was on the ropes. Founding CEO Brian Barth had been ousted. Rob Solomon, previously Yahoo’s SVP Commerce, joined as CEO and replaced 40 of the company’s 50 or so employees. In the last two years he grew the company from $14 million to $35 million in revenue, and turned it profitable. SideStep has raised $32 million in venture capital. Twenty or so of SideStep’s seventy five employees will stay on at Kayak over the long run. Rob Solomon and a few others will remain for a sixty day transition period and will then be back on the market. Update 1: Worldwide Comscore numbers for the four companies are below. Kayak says that there is less than 10% overlap between SideStep and Kayak users. Update 2: I just spoke to the Kayak and Sidestep executive teams for a more complete briefing. The combined company will have 60ish employees once the merger is completed and the 60 day transition period ends. The company is very profitable on the combined revenues. In addition to affiliate fee from sales, SideStep does a large display advertising and email marketing business, which Kayak lacks. Total ticket sales for Kayak are around $2.5 billion/year. → Read More
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