Kayak and SideStep to merge

21 Dec

Travel search site Kayak has decided to acquire SideStep in a deal valued at roughly $200mm. Investors appear to intend to take the company out (go public, to the unitiated) sometime in 2008.

Both companies offer a similar solution now fairly recognizable to most anyone reasonably experienced sourcing and purchasing travel products online, although they appear to go at it differently and appeal to slightly different user bases.  Details on the deal and the attendant sound bites from the investors will be well-chronicled in the trade press soon enough, so there’s no sense in rehashing the particulars here, although props should go out to Matt Marshall and the VentureBeat crew for — if not entirely breaking the story — certainly covering it with depth and alacrity.

There will no doubt be copious amounts of handwringing and pontification in the days to come over the impact of this deal, how it was structured, the profile of the investors (some well-known, others less so), but this observer can only see this as something of a harbinger for a flurry of travel-related mergers, deals and partnering that will inevitably occur in the New Year.

Some might regard all the Doh-See-Doh’ing that will go on as some kind of perverse musical chairs among companies that will now struggle for relevance and survival in a Kayak-cum-SideStep landscape. True, to an extent. That said, I think it will be emblematic of an industry that is consolidating just as rapidly due to consumer demand for more robust solutions offering a convergence of functionality that now exist across platforms, devices and services.

Kayak and SideStep did many things well, but I consider their solution(s) as going beyond traditional travel products (airline tickets, hotels, car rentals, etc) to encompass “experiential” features and functionality that consumers are beginning to demand en masse. In time, the tendency for these two companies to lean a bit farther forward on the skis might very well end up become their compelling and sustaining value. It has been my opinion for some time that there will continue to be an increased convergence of travel products and ecommerce with travel information and experiential features such as GPS and location-based services to deliver as near a one-stop solution as can be envisioned with current technology. For a long time the “last mile” in travel has been the mile from the airport at the traveler’s destination to the hotel at which the traveler is staying. Technology in the travel space has been inarguably front-loaded. In other words, there is tons of it in the sourcing, searching, reviewing, evaluating, and purchasing of travel products from the user’s home base, but once the traveler is in his booked hotel room, he is back to relying on bulky guide books, maps, and the unqualified ‘recommendations’ of hotel concierges and shuttle drivers who might have other axes to grind and competing interests to juggle. Travel search companies that are pursuing strategies to continue to serve travelers even after the outbound flight takes off will be well-suited to competing in this increasingly competitive space and instilling the kind of customer loyalty that is almost without measure.

If anything at all, the Kayak/SideStep deal was a shot across the bow for any players that feel the current travel product search-to-checkout model is sustainable on its own. This is getting interesting…


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