Growth Matters: Kayak.com travels with $200 million in capital
Mar 2nd 2009 1:45PM
Updated Mar 24th 2010 12:58PM
With all the gloom in the global economy, I got to wondering whether there is anything else going on in the world of business. I'm looking for growth because I think that's what will ultimately bring the economy out of the doldrums. Not surprisingly, that growth is coming from technology companies. In Growth Matters, I look at consumer technology companies that point the way to growth trends -- and in the process introduce services and products you may want to explore.
If you're looking for the best deal on a trip you've decided you want to take, check out Kayak.com. As Kellie Pelletier, Kayak.com's VP of Communications, explained to me, "Co-founders of Orbitz, Travelocity, and Expedia created Kayak.com to provide consumers with more comprehensive travel options in one place. The site searches more than 100 different travel sites and provides real-time prices and availability for hundreds of airlines, 158,000 hotels, all leading rental-car companies, and 17 cruise lines. Kayak.com displays more choices of available itinerary/price combinations than any other travel site. Kayak.com even offers consumer comments and professional reviews to assist with trip-planning decisions."
"Kayak.com is a travel search engine or 'meta-search site' and not a retailer, so the site does not sell anything. Kayak.com is especially helpful because it links travelers directly to the airlines, hotels, and rental-car companies to make their reservations, which means users avoid paying the high service fees charged by online agencies and benefit from incentives offered on supplier sites such as reward points and upgrades."
This strategy has yielded tangible results in terms of market share and return on advertising investment for travel advertisers. According to Drew Patterson, Kayak.com's VP of Marketing, "According to Compete.com's December 2008 survey, we are the seventh-largest online travel site. We are in the search marketplace, and we get our revenues from travel advertisers. Our conversion rate is 10% to 15%, and we get paid per click -- which represents 100% of our revenues. And we see ourselves at being really good at travel consideration -- which is helping people absorb large bodies of information so they can make sense of it."
Consider this: Patterson told me that, as of November 2008, Kayak.com had raised $200 million in venture capital. These days, that amount of capital must be some sort of record. So if you're considering travel, paddle on over to Kayak.com.
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book is You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He has no financial interest in the securities mentioned.