The consolidators are consolidating, and that can't be good news for conventional travel portals like Expedia (Nasdaq: EXPE), Orbitz Worldwide (NYSE: OWW), and Priceline.com (Nasdaq: PCLN).
Kayak is acquiring SideStep, uniting two of the most popular travel comparison shopping sites. Unlike the traditional booking sites, Kayak and SideStep scour hundreds of different sites -- from portals to direct providers like JetBlue (Nasdaq: JBLU) -- to arrive at the cheapest options through most of cyberspace.
Portal aggregators like Kayak and SideStep make logical sense. Why search through a single behemoth when a site like SideStep can spit back results from a portal like Orbitz, along with dozens of other alternatives?
Consumers aren't programmed to think that way, though. They would much rather do mainstream searches through Google (Nasdaq: GOOG) instead of going with a metasearch like CNET's (Nasdaq: CNET) Search.com or Copernic's (Nasdaq: CNIC) Mamma.com that sifts through the major engines to generate the results that have the greater consensus as relevant. Why should it be any different with travel?
Well, perhaps the problem is that the comparison sites don't have the marketing budgets to make their brands better known. Everyone sees William "The Negotiator" Shatner's Priceline ads or is familiar with the Expedia.com jingle.
Can you recall seeing a Kayak or SideStep ad? The companies are usually content to work behind the scenes, powering branded sites for others or serving up Facebook widgets. Coming together should change that.
With a bigger audience and what has to be healthier financials, given that this is a scalable business model, Kayak -- with SideStep as a trophy wife -- can begin taking bigger nibbles at the competition. I took a look this week at a few Internet companies that I'd love to see go public in 2008. Can I add Kayak to the list now, please?
So, sure, it may be just two private companies hooking up, but there are at least three very public companies that are going to be tossing and turning at night.
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