|by Robert Firpo-Cappiello||Hotel Booking Strategies, Airfares & Flying, Airlines, Rental Cars, Vacation Rentals||0|
If Priceline and Kayak are front-and-center in your trip planning routine, you should know that Priceline announced late last week that it will acquire Kayak for $1.8 billion in cash and stock.
The deal will have to be approved by regulators and by Kayak's shareholders and will likely take effect in early 2013. (Two law firms are investigating Kayak to make sure that the best interest of shareholders has been pursued.) For Kayak, the deal represents a resounding success—the company went public in July with a price of $26 per share and will be bought for $40 per share. As you probably know, Kayak lets you find travel deals on airfare, hotels, and rental cars by searching across many travel-booking sites, including Priceline and competitors such as Expedia, Orbitz, and Travelocity.
Kayak was founded in 2004 by some of the same people who helped to launch Expedia, Orbitz, and Travelocity, and it earns revenue by taking a small cut of travel bookings and also by selling advertising space on its Web pages. According to Bloomberg, the company keeps more than 90 percent of its gross revenue as profit, a very high margin. In addition, Kayak is attractive to Priceline because it can help expand its share of the consumer travel market. Priceline has said that it will keep Kayak as an independent site, so at this point it's not clear whether consumers will notice any difference in their travel-booking experience due to this acquisition.
Priceline, of course, rose to prominence when it partnered with actor William Shatner, who lent his flamboyant style and high visibility to TV and radio ads that made his outsize personality virtually indistinguishable from the brand itself.
Talk to us! While Kayak and Priceline are two of the highest-profile travel sites, there are an ever-increasing number of competing sites and breakthrough technologies out there. We'd love to hear what your go-to Web resources are when it comes to researching and booking travel deals.