The following document contains media citations and links to articles about following major M&A deals in online travel: Travelocity -> Sabre Holding in 2002 for $420M Hotwire -> Expedia in 2003 for $663M Orbitz Inc. -> Cedant Corp (future Travelport) in 2004 for $1112M Booking.com -> Priceline in 2005 for $150M ebookers -> Cedant Corp (future Travelport) in 2005 for $324M Agoda -> Priceline in 2007 for $170M Venere -> Expedia in 2007 for $475M ITA Software -> Google in 2011 for $700M Kayak -> Priceline in 2012 for $1.8B Trivago -> Expedia in 2012 for $632M Opentable -> Priceline in 2014 for $2.6B Viator -> Tripadvisor in 2014 for $200M
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
The following document contains media citations and links to articles about following major M&A deals
in online travel:
Travelocity -> Sabre Holding in 2002 for $420M
Hotwire -> Expedia in 2003 for $663M
Orbitz Inc. -> Cedant Corp (future Travelport) in 2004 for $1112M
Booking.com -> Priceline in 2005 for $150M
ebookers -> Cedant Corp (future Travelport) in 2005 for $324M
Agoda -> Priceline in 2007 for $170M
Venere -> Expedia in 2007 for $475M
ITA Software -> Google in 2011 for $700M
Kayak -> Priceline in 2012 for $1.8B
Trivago -> Expedia in 2012 for $632M
Opentable -> Priceline in 2014 for $2.6B
Viator -> Tripadvisor in 2014 for $200M
Travelocity -> Sabre Holding in 2002 for $420M
«American Airlines began offering customer access to its electronic reservation system, SABRE,
in 1978 to travel agencies, and in the mid-80s on the CompuServe Information Service to
consumers under the "EAASY SABRE"[3][4] brand name. This service was extended to America
Online in the 1990s.
Travelocity was created in 1996 as a subsidiary of Sabre Holdings, itself a subsidiary of
American Airlines, and was run by long-time Sabre I.T. executive Terry Jones (businessman).
As one of the pioneers of web-based disintermediation, Travelocity.com was the first website
that allowed consumers themselves not only to access Sabre's fare and schedule information, but
also to reserve, book, and purchase tickets without the help of a travel agent or broker. In
addition to airfares, the site also permits consumers to book hotel rooms, rental cars, cruises and
packaged vacations.
Travelocity gained momentum after AOL's travel portal became associated with the brand in
1999. In 2000, Sabre negotiated a merger of Travelocity with another early web travel company,
Preview Travel. The resulting company was independently quoted on the NASDAQ exchange,
with Sabre continuing to own around 70 percent of the combined company's outstanding stock.
In 2002, with Travelocity's fortunes suffering from competition including Expedia and Orbitz,
Sabre consummated a tender offer for the remainder of the outstanding shares in Travelocity and
remerged the business into Sabre as a subsidiary. Jones left the company shortly afterward».
«A recent profile of Priceline in Fortune magazine touched on some reasons for the success of
the acquisition.
Europe was an unexpected cash cow. Europeans spend many more weeks and weekends on vacations than Americans, meaning the opportunity for extracting repeat business from satisfied customers was much greater than in the US.
Booking.com’s results were heavily driven by the agent model, which Europeans were familiar with. Priceline averages a 15% commission on each room reserved, analysts say, and payment is usually collected at the time of the hotel stay.
After the merger, Priceline resisted the temptation to bring the company onto its US-based merchant model. It also didn’t disrupt the entrepreneurial structure in place at its takeover target.
In another perk for Booking.com, the European hospitality market has been far less consolidated than in the US, with far fewer hotel chains and far more independents who often struggle to market their businesses».
Why Priceline’s purchase of Booking.com was the most profitable travel deal of the 2000s (Tnooz, 02.10.2012)
ebookers -> Cedant Corp (future Travelport) in 2005 for $324M
«"We haven't bought ebookers in order to make job cuts but to grow what it's already got," said
Mr Wilson. "We bought the business with the intention to grow it."
Michael Healy, finance director of ebookers, who is staying with the business after its sale to
Cendant, said becoming part of a larger group was "a new stage" for the company.
"From an ebookers point of view, it's a good deal for our shareholders, a good deal for our staff,
our customers as well as our suppliers," he added».
Ebookers chief gets £92m from sale to Cendant (Guardian, 03.12.2014)
Agoda -> Priceline in 2007 for $170M
"We believe that Agoda, while relatively small today, will be an important part of
priceline.com's expansion into Asia," said priceline.com President and Chief Executive Officer
Jeffery H. Boyd. "With priceline.com's expertise, worldwide hotel inventories and customer
demand, we see an opportunity to leverage Agoda and offer the most complete and compelling
inventory and content to customers traveling in Asia."
"Online travel is still a relatively nascent industry in many Asian countries," said Glenn Fogel,
priceline.com's Managing Director, Corporate Development and International. "However, we
believe the time is right for priceline.com to begin growing our presence in the Asia Pacific
region, and Agoda gives us the ability to do so with a team of skilled professionals on the ground
in this important region."
"Agoda's mission is to make booking hotels in Asia easy and affordable for customers around the
globe," said Agoda's Chief Executive Officer Michael Kenny. "We are very excited to be part of
the priceline.com team that shares our same commitment to customers. We believe that the
emerging markets of Asia, where Agoda is based, are particularly promising as Internet usage,
credit card adoption and domestic economies continue to grow."
Priceline.com Acquires Asian Online Hotel Reservation Service Agoda Company (Agoda, 2007)
Venere -> Expedia in 2007 for $475M
“Dara Khosrowshahi, President and CEO of Expedia, Inc.:
Acquiring Venere will bring a well-known, respected European consumer brand to the Expedia
portfolio. Additionally, it will immediately expand our supply footprint in Europe, the Middle
East and Africa, and enable Expedia to diversify our business model approach to hotel partners
worldwide.
Marco Ficarra, CEO of Venere Net S.p.A.:
We are thrilled at the prospect of becoming part of Expedia because our dedication to offering
superior service to travelers via our extensive network of hotels and Bed and Breakfasts is a
great fit with the most respected group of brands in travel. In addition, our team of passionate
travel professionals located in Rome, London and Paris will complement Expedia’s global team,
as we continue to provide hotels new ways to optimize their distribution mix».
Expedia to Buy Venere.com (Venere.com, 2008)
ITA Software -> Google in 2011 for $700M
«On July 1, 2010, Google announced an agreement to acquire ITA Software, a Cambridge,
Massachusetts flight information software company, for $700 million, subject to adjustments.
Google’s acquisition of ITA Software will create a new, easier way for users to find better flight information online, which should encourage more users to make their flight purchases online.
The acquisition will benefit passengers, airlines and online travel agencies by making it easier for users to comparison shop for flights and airfares and by driving more potential customers to airlines’ and online travel agencies’ websites. Google won’t be setting airfare prices and has no plans to sell airline tickets to consumers.
Because Google doesn’t currently compete against ITA Software, the deal will not change existing market shares. We are very excited about ITA Software’s QPX business, and we’re looking forward to working with current and future customers. Google will honor all existing agreements, and we’re also enthusiastic about adding new partners».
Facts about Google’s acquisition of ITA Software (Google, 2010)
Additional opinions and links included on «Facts about Google’s acquisition of ITA Software»
page.
Kayak -> Priceline in 2012 for $1.8B
“Priceline CEO and president Jeff Boyd says:
“Kayak has built a strong brand in online travel research and their track record of profitable
growth is demonstrative of their popularity with consumers and value to advertisers,
Increased advertising placements by Priceline brands on Kayak since the site’s acquisition
helped boost growth, they said.
Kayak has helped the group improve its number of air transaction numbers in particular,
executives said.
The inclusion of Kayak in results added about 7% of growth for the quarterly results — a share
boost that it said was disproportionately high for the first quarter relative to its expectations for
Kayak’s contribution later in the year.
Huston said that metasearch is an important channel for the company — growing as a source of
demand. But meta is not “dramatically” increasing as a proportion of the sources of demand for
the group.
Huston says it sees that meta is becoming a more important channel for all the OTA groups.
Kayak earns more of its revenue from click-based advertising rather than from transactions
booked. It spends less on advertising than Priceline’s other businesses, improving the group’s
overall marketing efficiency».
Priceline boosts its revenue, thanks to Kayak, but says no to TripAdvisor’s instant booking
(Tnooz, 2014)
“I would say that Kayak, since the day we acquired it, has exceeded our expectations from a
profit standpoint,” Huston said. “And I’m really proud of the work that Steve [Hafner] and his
teams have done. I would say we are not as aggressively investing. We certainly don’t want
to invest at a loss to build the Kayak business, so we have done a lot of experimentation and
we feel pretty good about the results in particular in Europe.”
“The other area that I’m really proud of at Kayak is the product continues to improve. We get
great accolades from the customers who use Kayak and the investments that we’re making there
seem to be at least from the data seem to be paying off very well and we’re still very optimistic
that there is more that we can do at the Kayak investment over time but to-date, I would
say [we’re] overall quite pleased and beyond our expectations but look to see the effect of
the various experiments that are going on and our ability to profitably roll this business out
to more parts of the world.”
Priceline Downplays Kayak While Expedia Gets Aggressive With Trivago (Skift, 2014)
Trivago -> Expedia in 2012 for $632M
«What the analysts asked:
In terms of protection against Google, Trivago is seen as a ‘strong asset that adds more fuel to the fire’ in Europe with two-thirds of consumers recognising the brand which is not overly dependent on the search giant
Proposed acquisition also ‘diversifies’ Expedia’s traffic sources but it will continue to invest in all marketing channels including Google and Kayak (post Priceline acquisition).
Trivago provides more exposure in Europe, is already one of the ‘fastest growing and large variable channels’ for Expedia
Building relationships with hotels directly has been part of Trivago strategy for a while and ‘hotel direct’ business has increased in ‘relevance’
No plans to display Expedia more prominently within Trivago meta results and no immediate plans for a direct booking path as lines between OTA and metasearch increasingly blur
On potential synergies or benefits of the proposed acquisition, Expedia describes it as more of a sharing of best practises similar to strategy with TripAdvisor. Trivago analytics seen as first rate while Expedia can help on search engine marketing and optimisation
No plans to add car rental or air products.
Expedia president and CEO Dara Khosrowshahi says:
“The Trivago team built one of the largest, fastest growing and most well known travel sites in
Europe conducting more than 100 million hotel searches annually through a culture focused on
developing great products, building a strong brand and promoting partners’ businesses.
“These attributes closely align with our Expedia, Inc. strategy and values and we are thrilled to
have them join our portfolio.”
Rolf Schromgens, Trivago co-founder and managing director, adds:
“Our passion and focus will remain on independently evolving our comprehensive and
individualized hotel search. We will stay committed to our mission: To empower consumers to
find their ideal hotel at the lowest possible rate.”
Expedia pays $632 million for majority stake in Trivago, let the travel search games begin
(Tnooz, 2012)
«On the plus side, Trivago performed well (growing 80% year over year) and eLong expanded
aggresively in Asia.
Trivago added 11 points of growth to sales and marketing in Expedia Inc’s performance, so
things would have been worse for Expedia Inc without its acquisition of the European brand last
December.
Expedia Inc assumes that Trivago will become net profitable within the second half. Trivago’s
model relies heavily on TV advertising to build up a brand, so right now it is requiring more
incremental investment than it’s delivering in net revenue. Trivago is currently in 39 countries
and the plan is to make it broadly global.
Expedia shifted marketing dollars away from TripAdvisor toward marketing its new acquisition
of Trivago as well as of eLong».
Expedia admits that TripAdvisor and Booking.com are hurting it hard (Tnooz, 2013)
“How is metasearch performing in the Expedia Inc group?
Meta has been performing extremely well for us. Over the past year, we have been investing
heavily in the Trivago brand. You see it all over the place.
Every time I go to the gym, the Trivago Guy is on every TV channel.
The Trivago guy is even more famous than we ever expected.